Congressmembers publicly oppose illegal sharing of taxpayer information by Trump Administration

WASHINGTON D.C. (KEYT) – Senator Alex Padilla joined a bicameral group of over one hundred members of Congress in an amicus brief for a case concerning the sharing of taxpayer information with immigration enforcement agents in violation of federal law.

"This case is pretty cut and dry: the IRS broke the law," stated Congresswoman Linda Sánchez of California. "By handing taxpayer data over to DHS [Department of Homeland Security], the Trump administration not only violated clear privacy protections and put taxpayers' personal data at risk but also betrayed decades of trust and undermined confidence in our entire tax system."

The case currently before the U.S. Court of Appeals for the District of Columbia Circuit, Center for Taxpayer Rights v. Internal Revenue Service, was appealed after a federal court found that the federal tax collection agency violated privacy protections within the Administrative Procedure Act.

"Congress enacted section 6103 [of the Administrative Procedure Act] to assure taxpayers that their information will not be disclosed except for statutorily identified and compelling reasons that Congress specifically authorized," opened the bicameral amicus brief. "The head of a requesting agency or other designated officials must: identify the taxpayer by name and address, specify the taxable period, identify the criminal statute under which the investigation is proceeding, and state the specific reason why disclosure is relevant. Return information must be disclosed only to officials who are "personally and directly engaged" in the investigation and must be used "solely for" that purpose."

According to the brief, the Department of Homeland Security's requests with the Internal Revenue Service (IRS) did not include the names and addresses of the subjects of the requests and the requests used an identical explanation for the action instead of a specific reason as required by federal law.

"Regarding the vast majority of disclosures (90.3%), the IRS matched requests solely by taxpayer identification number and name, without any verification of address information," shared the amicus brief. "As the district court found, the IRS "violated the IRC [Internal Revenue Code] approximately 42,695 times by disclosing last known taxpayer addresses to ICE through TIN [Taxpayer Identification Number] Matching without confirming that ICE's request set forth the 'address of the taxpayer'."

Congress created the Individual Taxpayer Identification Number (ITIN) program so that people ineligible for Social Security could still pay their taxes and the IRS made public statements that federal law protected the personal information of taxpayers to encourage compliance detailed the Congressional members.

"Taxpayer privacy is the foundation of a functioning tax system," argued Congressional Hispanic Caucus Chair, Representative Espaillat of New York. "Congress wrote laws that make the tax system a lockbox against abuses, and no Administration has the legal authority to simply ignore them. We are making clear to the D.C. Circuit that Congress means what it wrote."

The amicus brief added that the Department of Homeland Security stated that a single official was responsible for investigating over a million taxpayers, something the brief described as, "a construction of the statute that would effectively eliminate the limitations on recipients of return information as circumscribed by Congress."

In addition to those federal privacy violations, the impact on revenues is notable.

In 2022, taxpayers without Social Security numbers paid $59 billion in federal income tax and the Yale Budget Lab estimated that the policy of the IRS sharing taxpayer information with the Department of Homeland Security could cost around $313 billion in lost tax revenue through 2035 shared the brief.

"Millions of taxpayers relied on these assurances by filing returns and contributing billions of dollars to the federal treasury," noted the amicus brief. "The IRS, by sharing the return information of immigrant taxpayers, departed from these longstanding positions without acknowledging its policy reversal, without offering a reasoned explanation, and without assessing the foreseeable consequences for voluntary compliance and federal revenue. This is precisely the kind of arbitrary and capricious decision making that Congress enacted the APA [Administrative Procedure Act] to prevent."

The Individual Taxpayer Identification Number program also ensures billions in tax payments to state governments as well added the amicus brief.

"The IRS also has not considered, or even publicly acknowledged, the profound reliance interests at stake. When the government reverses a policy that has induced widespread reliance, it must confront both the reliance itself and the scope of the consequences," argued the amicus brief. "The IRS spent nearly three decades assuring taxpayers that return information was for tax purposes only and promoting voluntary compliance among immigrant taxpayers, for example, through the ITIN program. Those assurances induced millions of individuals to enter the federal tax system, generating billions in revenue."

Congress passed the privacy protections after taxpayer information was misused for political purposes.

According to the amicus brief, before 1976, the IRS shared about 80 million transcripts per year with other federal agencies, but after the weaponization of taxpayer information during the Nixon Administration, Congress passed legal limitations on taxpayer information shared by the IRS.

President Trump, both on the campaign trail and while serving his second term, has repeatedly pledged to prioritize the detention of violent criminals as part of the push to increase detentions and expulsions.

The sweeping detentions that have characterized the Trump Administration's immigration policy have been found to largely impact those without criminal records.

According to nonpartisan research group Transactional Records Access Clearinghouse (TRAC), 71.5 percent of all people held in Immigrations and Customs Enforcement (ICE) custody in late September of last year had no criminal convictions and the CATO Institute found last summer that violent offenders were less than seven percent of all ICE bookings that fiscal year.

The focus of federal law on specific criminal investigations regarding the disclosure of taxpayer information has not caught up with the stated beliefs of the current administration.

"The distinction between legal and illegal immigration becomes meaningless when both can destroy a country at its foundation," argued Matthew Tragesser, a spokesperson for the U.S. Citizenship and Immigration Services Office of Public Affairs in a press release in November of last year. "Unchecked mass migration floods the American labor market, depressing wages and taking jobs away from hardworking Americans, while straining healthcare, education, and housing systems."

On Nov. 21 of last year, U.S. District Court for the District of Columbia prohibited the Department of Homeland Security and its components from seeking taxpayer information in the method that violated federal privacy laws.

Oral arguments in the appeal of the decision are scheduled for May of this year.

"The IRS's decision to share taxpayer data with DHS is in direct contradiction with the law and does absolutely nothing to keep Americans safe," said Nevada Senator Catherine Cortez Masto, Ranking Member of the Senate Judiciary Committee. "Instead, it has struck fear in hardworking immigrant communities and led to a lack of trust in government to protect taxpayer privacy. I urge the Court to swiftly hold this Administration accountable for its violations of the law."