type: timeline_event A three-judge panel of the D.C. Circuit Court of Appeals rejected a preliminary injunction that would have blocked the IRS from sharing taxpayer data with ICE on February 24, 2026. The panel ruled that immigrant-rights nonprofits challenging the arrangement were "unlikely to succeed on the merits" of their claims under Internal Revenue Code Section 6103, the longstanding statute that governs the confidentiality of taxpayer information. The ruling effectively greenlit the continued operation of a data-sharing memorandum of understanding signed by Treasury Secretary Scott Bessent and DHS Secretary Kristi Noem in April 2025.
The MOU allows ICE to submit names and addresses of undocumented immigrants for cross-referencing against IRS tax records. The arrangement creates what critics described as a perverse trap: millions of undocumented immigrants who had voluntarily paid federal taxes using Individual Taxpayer Identification Numbers—doing so specifically to comply with the law and demonstrate good faith—now found that their compliance records were being weaponized against them. The very act of following the law became the mechanism for their identification and potential deportation.
The implications extended far beyond the individuals directly affected. Tax policy experts warned that the ruling would devastate voluntary tax compliance among undocumented immigrants, who collectively pay billions in federal taxes annually. If paying taxes becomes a pathway to deportation rather than a demonstration of civic participation, the rational response is to stop filing—a result that would reduce federal revenue and push more economic activity into untraceable cash transactions. The ruling thus illustrated how the weaponization of government institutions for immigration enforcement could undermine the functioning of entirely separate government systems that depend on public trust.