Immigration Crackdown Advances After Trump Admin Wins IRS-DHS Data Case

Federal judge rules IRS can legally share tax data with Homeland Security, handing President Trump a significant victory in his administration’s push to strengthen immigration enforcement.

Key Insights

Judge Dabney Friedrich denied a motion for a preliminary injunction against the IRS-DHS data-sharing agreement, ruling it doesn’t violate the Internal Revenue Code.
The April 2025 Memorandum of Understanding allows ICE to cross-check suspected undocumented immigrants’ data against tax information for criminal investigations.
Former acting IRS commissioner Melanie Krause resigned over the controversial data-sharing arrangement.
The ruling represents a significant legal win for President Trump’s immigration enforcement strategy.
Critics argue the policy will discourage tax compliance among immigrants and raise privacy concerns for all Americans.

Court Gives Green Light to Data Sharing

A federal judge has ruled that the Internal Revenue Service can legally share tax information with the Department of Homeland Security for immigration enforcement purposes. D.C. District Court Judge Dabney Friedrich denied a motion for a preliminary injunction in a case challenging the controversial data-sharing agreement, delivering a significant victory to President Trump’s immigration enforcement agenda. The lawsuit was filed by Centro de Trabajadores Unidos against Treasury Secretary Scott Bessent after the IRS and DHS formalized their cooperation.

The agreement, signed on April 7, 2025, establishes a framework for the agencies to exchange information specifically for criminal investigations. According to court documents, the 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.” This arrangement allows Immigration and Customs Enforcement to cross-check suspected undocumented immigrants’ data against tax filings, providing a powerful new tool for enforcement efforts.

Judge Finds No Legal Violations

Judge Friedrich, who was appointed by Trump during his first term, determined that the data-sharing agreement operates within the boundaries of federal law. “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 ruling. Her decision follows her previous refusal to issue a temporary restraining order in the case, signaling her consistent view on the legality of the arrangement.

“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 Dabney Friedrich.

The judge also ruled that while tax information is generally confidential with criminal penalties for improper sharing, federal law allows IRS data sharing for criminal enforcement if certain criteria are met. Her ruling specified that the IRS can disclose information obtained through audits, though not exclusively from taxpayer filings. Additionally, she noted that a taxpayer’s identity, including name and address, is not considered protected tax return information under current law.

Administration Victory Amid Internal Tensions

The court decision represents a significant win for the Trump administration, coming after considerable internal conflict within the federal agencies involved. The ruling follows the resignation of former acting IRS commissioner Melanie Krause, who stepped down over concerns about the data-sharing deal. The Treasury Department, under Secretary Bessent’s leadership, has strongly supported the arrangement as a crucial component of President Trump’s comprehensive immigration enforcement strategy, which includes mass deportations and workplace raids.

“So far, DHS has not made formal requests for taxpayer data and plaintiffs will be keeping a close watch to be sure that the defendants carry out their promises to follow the law and not use the exception for unlawful purposes,” said Alan Butler Morrison.

ICE leadership has attempted to ease concerns by stating that the collaboration is intended only for “major criminal cases.” However, civil liberties advocates remain unconvinced, arguing that the sharing of tax records with DHS will discourage tax compliance among immigrants and potentially set a dangerous precedent for government access to confidential information. The plaintiffs have expressed disappointment with the ruling but indicated the legal battle is far from over as they consider their options for appeal.

Privacy Concerns and Future Implications

Critics of the data-sharing agreement have raised significant concerns about its implications for privacy and tax compliance. Advocates argue that the policy violates privacy laws and ultimately affects all Americans’ privacy rights, not just those of immigrants. “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, a tax policy expert cited in court documents.

As part of her ruling, Judge Friedrich also denied American Oversight’s motion to intervene in the case but ordered that most of the Memorandum of Understanding and related briefs be unsealed. This decision reflects her finding that there was no compelling interest in keeping the agreement fully sealed, except for protecting the privacy of lower-level government employees. The plaintiffs have pledged to monitor DHS and IRS compliance with legal limitations, stating they will “keep a close watch” on how the agencies implement the data-sharing program.