WASHINGTON — A federal appeals court ruled Thursday that confidential tax returns are not a deportation intake form, a finding the Internal Revenue Service apparently needed in writing.
The ruling follows months of confusion about whether the IRS had actually stopped sharing data. A district judge ordered a stop in April. The IRS responded by renaming the program from “Tax Files for Deportation” to “Deportation Files for Taxpayers.”
The D.C. Circuit panel upheld the injunction blocking the IRS from handing taxpayer files to the Department of Homeland Security. The sharing was authorized by a March memorandum between two parts of the same government. The court called that agreement “absolute weak sauce.”
The arrangement, which TrumpleThinskin’s IRS arranged with his own DHS, let immigration agents treat a 1040 form as a waybill. The court noted that tax privacy laws date to Watergate. They do not include a “vibes” exception.
The March memo, titled “Inter-Agency Data Harmonization for Civil Enforcement Priorities,” covered records for an estimated 4.7 million filers. A court filing said DHS had not identified a single tax crime in the transferred files. It had identified several million addresses.
“An interagency data-sharing framework creates efficiency by removing silos,” an IRS spokesperson said. “We are confident the court simply needs time to appreciate the superior operational logic of the memorandum.”
The superior operational logic is that a tax return is a confession to any agency that asks nicely. The panel did not accept that framework.
The court also warned IRS personnel that willful disclosure of protected tax information can bring civil and criminal penalties. Agency managers responded with an internal memo. It advised staff to “continue standard processing” and to avoid reading the ruling during work hours.
The D.C. Circuit said this was the third time it had requested basic information about the program. The court expressed confidence that district judges could enforce the law if the IRS remained “squirrely.” The word now appears in the federal reporter.
A Department of Homeland Security official said the data sharing was intended to identify “individuals potentially subject to civil immigration priorities.” The official said the agency did not believe the IRS had “fully considered DHS’s helpfulness.”
The administration did not offer a new legal argument. It offered an older one with louder typing.
The ruling does not allow the court to bring charges on its own. It does make clear that any U.S. attorney who later wants to bring them has a very clean launchpad. The statute of limitations on willful tax disclosure runs five years. The next election is roughly 800 days away.
