Court ruling halts exchange of confidential taxpayer information between IRS and ICE as illegal act

Federal Judge Colleen Kollar-Kotelly ruled Friday that the Internal Revenue Service (IRS) violated the law when it entered into an agreement to share secret taxpayer data with Immigration and Customs Enforcement (ICE), ordering an immediate halt to that practice. Kollar-Kotelly, who was appointed by former Democratic President Bill Clinton to the District of Columbia court, called this sharing between the two agencies clear "illegal conduct" that not only violated tax laws but also various procedures.

"Plaintiffs have shown that the IRS’s implementation of the Address-Sharing Policy was arbitrary and capricious because the IRS failed to recognize that it was departing from its prior policy of strict confidentiality, failed to consider the reliance interests that were engendered by its prior policy of strict confidentiality, and failed to provide a reasoned explanation for the new policy," the judge wrote.

Kollar-Kotelly said ICE's argument to justify its action was suspect

Similarly, Kollar-Kotelly asserted that, according to various documents disclosed in the case, ICE initially sought information on more than 7 million taxpayers across the country, later limiting itself to only 1.28 million "immigrant taxpayers." While the IRS initially refused ICE's request, it eventually decided to cooperate after the immigration agency narrowed its scope and asserted that the 1.28 million individuals were being investigated for having committed the crime of remaining in the country 90 days after receiving a deportation order.

The judge suggested that ICE's argument was suspect because the agency went so far as to claim that only one person was "personally and directly" involved in the 1.28 million investigations. Similarly, Kollar-Kotelly commented that the IRS at no time provided a valid reason to justify the decision to enter into an exchange agreement with ICE, adding that the agency's stated reason for requesting the immigrants' addresses was not strong enough to meet the legal standards that allow the IRS to disclose such information. "ICE’s June 27 request failed to provide a specific reason or reasons why the taxpayer information it requested was relevant to the criminal investigations or proceedings it was conducting," the judge wrote.