District Court Stays IRS Taxpayer Address Sharing Agreement With ICE

(Parker Tax Publishing December 2025)

A district court issued a preliminary injunction staying the IRS's policy of sharing confidential taxpayer address information with Immigration and Customs Enforcement (ICE). The court found that the Plaintiffs in the case - a nonprofit that provides tax advice to low-income Americans, an association of small businesses, and two labor unions -- showed a substantial likelihood that the IRS's adoption of the address-sharing policy, and subsequent sharing of taxpayer information with ICE, were arbitrary and capricious and therefore unlawful under the Administrative Procedure Act. Center for Taxpayer Rights, et al., v. IRS, 2025 PTC 379 (D.D.C. 2025).

Background

The Center for Taxpayer Rights (the Center) provides tax advice to low-income Americans. The Center, along with an association of small businesses and two labor unions (the Plaintiffs), filed a lawsuit seeking a preliminary injunction to stay the implementation of a new policy through with the IRS has begun sharing certain taxpayer data with Immigration and Customs Enforcement (ICE).

The Plaintiffs claimed that the IRS changed its longstanding policy of strictly protecting confidential taxpayer information and, in its place, implemented a new "Data Policy" that prioritizes large-scale, inter-agency sharing of confidential taxpayer information. Under this new Data Policy, the IRS entered into an April 2025 agreement with ICE to share confidential taxpayer address information (Address-Sharing Policy). Pursuant to the Address-Sharing Policy, on August 7, 2025, the IRS disclosed to ICE the confidential address information of approximately 47,000 taxpayers. As a basis for its decision to transfer this information to ICE, the IRS relied on a representation from ICE that a single individual at ICE was "personally and directly engaged" in more than one million criminal investigations or proceedings. Under Code Sec. 6103(j)(2), disclosure of taxpayer information is allowed to individuals "personally and directly engaged in" a nontax criminal investigation or proceeding, provided that several other conditions are satisfied.

The government filed a motion to dismiss, arguing that the Plaintiffs lacked standing, the policy they challenged was not reviewable final agency action, that the Plaintiffs were unlikely to succeed in showing that policy was unlawful, and that the balance of the equities and the public interest did not warrant a stay or other injunctive relief.

In order to succeed on their motion for preliminary relief, the Plaintiffs had to establish that they were likely to succeed on the merits. The merits of the Plaintiffs' motion were governed under the framework of the Administrative Procedure Act (APA). Under the APA, judicial review of agency action is limited to actions that are "final." Agency action is considered final if it (1) marks the consummation of the agency's decision-making process (i.e., it is not of a merely tentative or interlocutory nature) and (2) constitutes action by which rights or obligations have been determined, or from which legal consequences will flow. Agency action must satisfy both prongs in order for the action to be final.

Analysis

The court granted the Plaintiffs' motion for a stay of the Address-Sharing Policy and denied the government's motion to dismiss the Plaintiffs' APA claim regarding the broader Data Sharing policy. However, the court also found that the the APA affords a meaningful and adequate basis for judicial review of the Data Policy, and therefore the court dismissed the Plaintiffs' ultra vires claim for similar relief on non-statutory, equitable grounds for failure to state a claim.

The Data Policy was, in the court's view, a final agency action for which there was no other adequate remedy in a court. Based on the data transfer that occurred on August 7, 2025, the court also found there was a substantial likelihood that the IRS took final, judicially reviewable agency action by adopting and implementing a policy of disclosing the confidential address information of tens of thousands of taxpayers to ICE under Code Sec. 6103(i)(2), in reliance on representations from ICE that the addresses were relevant to and would be used for immigration-related criminal investigations and proceedings - even when ICE identified only a single ICE employee (or a small number of ICE employees) as the employee(s) "personally and directly engaged" in each of the tens of thousands of relevant criminal investigations or proceedings.

The court further found that the Plaintiffs showed a substantial likelihood that the IRS's adoption of the Address-Sharing Policy and the IRS's subsequent sharing of taxpayer information with ICE were unlawful under the Administrative Procedure Act (APA). In the court's view, the Plaintiffs succeeded in showing that the IRS's implementation of the Address-Sharing Policy was arbitrary and capricious because the IRS failed to acknowledge and explain its departure from its prior policy of strict confidentiality, failed to consider the reliance interests that were engendered by its prior policy of strict confidentiality, and failed to provide a reasoned explanation for implementing the new Address-Sharing Policy. Furthermore, the court found that the Plaintiffs showed that the IRS's disclosure of confidential taxpayer address information to ICE was contrary to law because it did not comply with Code Sec. 6103(i)(2). For similar reasons, the court concluded that the Plaintiffs plausibly alleged that the broader Data Policy was unlawful under the APA.

In the court's view, the IRS's unlawful conduct created a substantial likelihood that the Plaintiffs and their members would suffer irreparable harm. The court found that the Center for Taxpayer Rights is experiencing a significant decline in interest and engagement with its core activities of providing pro bono services to low-income taxpayers, including immigrant taxpayers - potentially jeopardizing its federal funding - which it has attempted to mitigate by diverting resources to education and outreach. Meanwhile, the Plaintiffs' members face an imminent risk that the confidential address information they have provided to the IRS will be impermissibly used by ICE for civil immigration enforcement.

For a discussion of the rules for confidentiality of returns and return information, see Parker Tax ¶262,140.

Disclaimer: This publication does not, and is not intended to, provide legal, tax or accounting advice, and readers should consult their tax advisors concerning the application of tax laws to their particular situations. This analysis is not tax advice and is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer. The information contained herein is general in nature and based on authorities that are subject to change. Parker Tax Publishing guarantees neither the accuracy nor completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. Parker Tax Publishing assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein.

Parker Tax Pro Library - An Affordable Professional Tax Research Solution. www.parkertaxpublishing.com

We hope you find our professional tax research articles comprehensive and informative. Parker Tax Pro Library gives you unlimited online access all of our past Biweekly Tax Bulletins, 22 volumes of expert analysis, 250 Client Letters, Bob Jennings Practice Aids, time saving election statements and our comprehensive, fully updated primary source library.

Try Our Easy, Powerful Search Engine

A Professional Tax Research Solution that gives you instant access to 22 volumes of expert analysis and 185,000 authoritative source documents. But having access won’t help if you can’t quickly and easily find the materials that answer your questions. That’s where Parker’s search engine – and it’s uncanny knack for finding the right documents – comes into play

Things that take half a dozen steps in other products take two steps in ours. Search results come up instantly and browsing them is a cinch. So is linking from Parker’s analysis to practice aids and cited primary source documents. Parker’s powerful, user-friendly search engine ensures that you quickly find what you need every time you visit Our Tax Research Library.

Dear Tax Professional,

My name is James Levey, and a few years back I founded a company named Kleinrock Publishing. I started Kleinrock out of frustration with the prohibitively high prices and difficult search engines of BNA, CCH, and RIA tax research products ... kind of reminiscent of the situation practitioners face today.

Now that Kleinrock has disappeared into CCH, prices are soaring again and ease-of-use has fallen by the wayside. The needs of smaller firms and sole practitioners are simply not being met.

To address the problem, I’ve partnered with a group of highly talented tax writers to create Parker Tax Publishing ... a company dedicated to the idea that comprehensive, authoritative tax information service can be both easy-to-use and highly affordable.

Our product, the Parker Tax Pro Library, is breathtaking in its scope. Check out the contents listing to the left to get a sense of all the valuable material you'll have access to when you subscribe.

Or better yet, take a minute to sign yourself up for a free trial, so you can experience first-hand just how easy it is to get results with the Pro Library!

Sincerely,

James Levey

Parker Tax Pro Library - An Affordable Professional Tax Research Solution. www.parkertaxpublishing.com