Federal Judge Upholds IRS-DHS Partnership on Taxpayer Data for Immigration Enforcement

A federal judge has rejected a request to block the Department of Homeland Security (DHS) and the Internal Revenue Service (IRS) from collaborating on an initiative that grants U.S. Immigration and Customs Enforcement (ICE) access to taxpayer information to locate undocumented immigrants facing deportation.

U.S. District Judge Dabney Friedrich issued the order in response to a lawsuit filed by Centro de Trabajadores Unidos and other immigrant rights organizations against Treasury Secretary Scott Bessent. The plaintiffs, including Centro de Trabajadores Unidos, Immigrant Solidarity DuPage, Somos Un Pueblo Unido, and Inclusive Action for the City, sought a declaratory judgment and an injunction to prevent the IRS from sharing personal tax information with the DHS for immigration enforcement purposes.

The core of the legal challenge centered on whether the Memorandum of Understanding (MOU) between the IRS and DHS violated the Internal Revenue Code. Judge Friedrich ruled that it did not.

Non-profit organizations Centro de Trabajadores Unidos and Immigrant Solidarity DuPage, which represent immigrant workers in the Chicago area, initiated the lawsuit against Secretary of the Treasury Scott Bessent, the IRS, and Commissioner of Internal Revenue Melanie Krause. Their aim was to prevent the disclosure of taxpayer personal information and confidential tax records to the DHS for immigration enforcement.

Tricia McLaughlin, the DHS assistant secretary of public affairs, emphasized the importance of information sharing among federal agencies to identify undocumented immigrants. She stated that it is essential to identify potential public safety and terror threats, remove these individuals from voter rolls, and determine which public benefits they are using at taxpayer expense. McLaughlin asserted that the Trump administration implemented a necessary practice of inter-agency information sharing to address such issues. She contrasted this approach with that of the Biden administration, which she claimed allowed millions of undocumented immigrants, including those with criminal backgrounds, to enter the country and subsequently lost track of them due to mismanagement.

McLaughlin added, "Information sharing across agencies is essential to identify who is in our country and determine what public safety and terror threats may exist so we can neutralize them, scrub these individuals from voter rolls, as well as identify what public benefits these aliens are using at taxpayer expense." She characterized the court’s decision as "a victory for the American people and for commonsense."

A senior Treasury Department official noted that an earlier MOU between DHS and the IRS incorporated safeguards to protect sensitive taxpayer information while allowing law enforcement to pursue criminal violations. The agreement permits DHS to request confirmation of addresses of undocumented immigrants suspected of violating deportation orders from the IRS. The IRS can share data to assist criminal investigations but is barred from sharing information for civil matters, such as facilitating deportations.

The Treasury Department official stated, "The Treasury Department is committed to protecting the privacy of law-abiding taxpayers, but a criminal exception obligates the agency to assist law enforcement."

The agreement would enable ICE to submit the names and addresses of undocumented immigrants to the IRS. The IRS could then cross-reference those names against tax records and provide the immigration agency with current address information.

Judge Friedrich explained, "The Court agrees that requesting and receiving information for civil enforcement purposes would constitute a cognizable injury, but none of the organizations have established that such an injury is imminent. As the plaintiffs acknowledge, the Memorandum only allows sharing information for criminal investigations."

The judge further noted that the Memorandum’s stated purpose is to establish procedures enabling requests for addresses of individuals subject to criminal investigation.

The agreement comes amid President Donald Trump’s continued efforts to increase deportations, a key promise from his campaign.

The Justice Department has also indicated that it might invoke the state secrets act in certain deportation cases. This adds another layer of complexity to the ongoing debate about immigration enforcement and the balance between national security and individual rights. The state secrets privilege allows the government to withhold information in litigation if its disclosure would harm national security.