Trump Admin Wins Court Ruling Allowing IRS to Share Illegal Immigrant Data with DHS

A federal judge has ruled that the Internal Revenue Service can legally share tax data with the Department of Homeland Security to identify illegal immigrants, delivering a significant victory for President Trump’s enforcement agenda.

Key Takeaways

U.S. District Judge Dabney Friedrich denied a motion to block the IRS from sharing data with DHS for immigration enforcement purposes
The IRS and DHS formalized their arrangement through a Memorandum of Understanding signed on April 7, 2025
The ruling supports a key element of President Trump’s immigration enforcement strategy, including efforts to identify undocumented immigrants
Civil liberties advocates argue the data-sharing agreement violates privacy protections and could discourage tax compliance among immigrant communities
The former acting IRS commissioner resigned over concerns about the legality of the data-sharing arrangement

Judge Rules IRS-DHS Data Sharing Is Legal

U.S. District Judge Dabney Friedrich has ruled that the Internal Revenue Service can legally share certain taxpayer information with the Department of Homeland Security, marking a significant win for the Trump administration’s immigration enforcement efforts. The decision denied a preliminary injunction sought by Centro de Trabajadores Unidos in a lawsuit against Treasury Secretary Scott Bessent, effectively allowing the data-sharing arrangement to continue while the case proceeds through the courts.

The ruling centers on a Memorandum of Understanding (MOU) signed between the IRS and DHS on April 7, 2025, establishing protocols for exchanging information related to criminal investigations. Judge Friedrich, who was appointed during President Trump’s first term, determined that the agreement does not violate federal tax laws that typically protect taxpayer confidentiality.

Legal Framework and Limitations

In her ruling, Judge Friedrich emphasized the narrow legal question at the heart of the case. “At its core, this case presents a narrow legal issue: Does the Memorandum of Understanding between the IRS and DHS violate the Internal Revenue Code? It does not,” wrote Judge Friedrich in her decision.

“information will only be used by officers and employees of ICE solely for the preparation for judicial or administrative proceedings, or investigation that may lead to such proceedings,” said the court document.

The court determined that federal law does permit the IRS to share certain information for criminal enforcement when specific criteria are met. According to the ruling, while tax return information is generally confidential, not all data held by the IRS falls under these protections. For instance, a taxpayer’s identity, including name and address, is not classified as protected tax return information, and the IRS can disclose information obtained through audits rather than directly from taxpayer filings.

Internal Resistance and Controversy

The data-sharing agreement has generated significant controversy within the government. Former acting IRS commissioner Melanie Krause resigned over concerns about the arrangement’s legality. Immigration advocates worry that the policy will have a chilling effect on tax compliance among immigrant communities, even those legally present in the country.

“[Disclosing immigrant tax records to DHS for immigration enforcement] will discourage tax compliance among immigrant communities, weaken contributions to essential public programs, and increase burdens for U.S. citizens and nonimmigrant taxpayers,” said Tom Bowman.

ICE leadership has attempted to address these concerns by emphasizing that the data-sharing program would be used only for “major criminal cases,” not routine immigration enforcement. However, civil liberties advocates remain skeptical about how narrowly the authority will be applied in practice. The Treasury Department has consistently defended the arrangement as a necessary component of President Trump’s broader immigration enforcement strategy.

Next Steps and Continuing Challenges

While the plaintiffs expressed disappointment with the ruling, they have indicated that they are considering their options for appeal. Attorney Alan Butler Morrison, representing the plaintiffs, stated that they will closely monitor how DHS and the IRS implement the agreement to ensure compliance with legal limitations.

“The plaintiffs are disappointed in the Court’s denial of our preliminary injunction, but the case is far from over. We are considering our options,” said Alan Butler Morrison.

As part of the ruling, Judge Friedrich also denied American Oversight’s motion to intervene in the case but ordered most of the MOU and related briefs unsealed, citing no compelling interest in keeping the full agreement confidential. The court maintained limited redactions only to protect the privacy of lower-level government employees named in the documents.