Federal Judge Blocks ICE from Using IRS Data

ICE vs. IRS: What the February 2026 injunction changes—and what it doesn’t—for immigrant taxpayers

The key distinction to grasp is this: the preliminary injunction targets ICE’s use of IRS return information for immigration enforcement. It does not change your obligation to file accurate U.S. tax returns, report foreign accounts, or pay tax due.

On February 5, 2026, a Federal Judge—U.S. District Judge Indira Talwani in Massachusetts—issued a preliminary injunction that blocks DHS/ICE officials and agents from inspecting, viewing, using, copying, distributing, relying on, or otherwise acting on certain taxpayer “return information” that came from the IRS under an interagency Memorandum of Understanding (MOU) signed in 2025.

Because this is a preliminary injunction, the case is not fully decided. The court applies an early-stage standard. In plain English, the judge found the plaintiffs were likely to win on the key legal issue. The judge also found that the harm from allowing ICE to use the information while the case proceeds would be difficult to undo later.

Operationally, the order functions like a pause button. It stays information-sharing tied to the MOU. It also addresses where data may reside. The order treats continued storage on a government device as part of the violation. It required notice and confirmation steps related to that device handling.

This matters for immigrant taxpayers for one central reason. The U.S. income tax system depends on voluntary compliance. If people believe filing a tax return can become an enforcement tool, filing rates can drop. That concern sits at the heart of IRS confidentiality law.

Side-by-side: What the injunction restricts vs. what remains required

⚠️ Warning: Don’t skip filing because of headlines about ICE or IRS data. Failure-to-file and failure-to-pay penalties can apply even when no enforcement action occurs.

The legal basis: IRC §6103 and why the court found likely problems

The backbone rule is Internal Revenue Code (IRC) §6103. The concept is simple: tax returns and “return information” are confidential by default. IRS employees generally cannot disclose them. Other agencies generally cannot receive them. Disclosures must fit a specific statutory exception.

For immigrants and visa holders, this is more than a technical point. The IRS collects sensitive identifiers and addresses. Congress built §6103 to encourage honest filing. That includes people in mixed-status families and newcomers who file with an ITIN.

Judge Talwani’s order reflects a finding that the plaintiffs showed a likelihood of success. That means the judge believes they have a strong chance of proving a legal violation as the case proceeds. It is not a final ruling on the merits.

The court’s concerns centered on how the MOU was implemented. In §6103 cases, the “how” matters. Agencies typically need clear purpose limits, procedural safeguards, and compliance controls. Those controls are meant to prevent mission creep and unauthorized use.

For readers who want the baseline rules in IRS language, start with IRS Publication 519 (U.S. Tax Guide for Aliens) and the IRS international portal at irs.gov/individuals/international-taxpayers.

What ICE asked for, what IRS provided, and why matching creates risk

The dispute was not about a single person’s file. It involved a large-scale query. ICE sought address-focused matching. The IRS returned matched identity and address information for a smaller set of “verified” matches.

A “verified match” generally means the IRS systems found a correspondence between ICE-provided identifiers and IRS-held data. It does not mean the person has violated immigration law. It also does not mean the address is current. Addresses can lag. People move. Families share addresses. Some taxpayers use preparer addresses or secure mailing locations.

Large-scale matching raises three practical risks:

• False positives: a mismatch can identify the wrong person.
• Outdated addresses: enforcement actions based on stale data can target the wrong household.
• Downstream effects: once an address is treated as actionable, the cost of correcting errors can be high.

This is also where “chilling effects” begin. If immigrant taxpayers think an old address on a return can be used as an enforcement lead, they may avoid filing. That can create bigger tax compliance problems.

The IRS has separate systems for taxpayer address updates. For example, taxpayers can change addresses using Form 8822. None of those routine processes are paused by the injunction.

Harms the court emphasized: compliance, revenue, and misidentification

Courts grant preliminary injunctions when harm would be difficult to repair later. Here, the court pointed to several categories that immigrant taxpayers will recognize immediately.

1) Reduced tax filing and cooperation.
If community trust drops, fewer people file. That can also reduce participation in lawful programs. Examples include claiming eligible credits, reporting self-employment income, or correcting prior-year mistakes.

2) Public finance and administration concerns.
The court noted the tax system’s reliance on voluntary reporting. It referenced large revenue consequences in general terms. The key point for readers is the IRS depends on broad compliance. That compliance can be fragile.

3) Wrongful enforcement from errors.
Misidentification is not hypothetical. Address-based matching can be error-prone. Names can be similar. Dates of birth can be transposed. Families can share addresses across generations. Even lawful permanent residents and naturalized citizens can be swept in when matching is sloppy.

4) Spillover harm to community organizations.
Groups that encourage lawful filing may pull back if they fear clients will be placed at risk. That can reduce access to legitimate tax preparation and financial services.

How this order fits with the earlier injunction and what remains unresolved

This was described as the second major court order in this area. An earlier injunction issued in Washington, D.C., by U.S. District Judge Colleen Kollar-Kotelly limited disclosure outside narrow contexts and remains in effect during an appeal.

When multiple injunctions point in the same direction, agencies often become more cautious. Even if one order is narrowed later, the other can still restrict behavior. Practically, overlapping court orders can reinforce a continued pause on any MOU-based flow of return information.

What remains unresolved:

• Whether appellate courts modify or lift any injunction.
• Whether any revised information-sharing framework could meet §6103 requirements.
• What compliance reporting or auditing the courts may require of agencies.

What DHS/ICE says, what tax professionals should do, and what doesn’t change

DHS/ICE has said it has not used the information for enforcement and will not use it while injunctions remain in place. That position matters for public messaging. But immigrant taxpayers should still focus on what the law requires of them.

Here is what does not change for tax year 2026 (filed in 2027):

• Filing obligations remain. Your residency status still controls your filing rules. See IRS Publication 519 at irs.gov/pub/irs-pdf/p519.pdf.
• Tax residency still matters more than visa labels.
• Many H-1B and L-1 workers meet the substantial presence test and file as residents on Form 1040.
• Many F-1/J-1 students and scholars are “exempt individuals” for the substantial presence test for a limited period, but they may still have U.S. filing duties on Form 1040-NR.
• Foreign reporting remains a major compliance area.
• FBAR (FinCEN 114): file if foreign accounts exceed $10,000 aggregate at any time during the year.
• FATCA Form 8938: for many U.S. residents, thresholds begin at $50,000 (end of year) or $75,000 (any time) if single.

📅 Deadline Alert: For most individuals, the Form 1040 due date is April 15, 2027 for tax year 2026. Extensions typically run to October 15, 2027 using Form 4868. FBAR has an automatic extension to October 15.

If you are concerned about privacy and compliance, take steps that are already standard best practice:

• File complete, accurate returns. Keep copies of what you filed.
• Update your address with the IRS using Form 8822 if you move.
• Use reputable preparers and protect your identity documents.
• If you have prior-year noncompliance, ask a qualified professional about correction options.

IRS forms and publications are available at irs.gov/forms-pubs.

Common mistakes immigrants make after news about IRS data—and how to avoid them

1) Not filing at all due to fear.
Avoid it: File if you have a filing requirement. Penalties and interest can grow quickly.

2) Filing with the wrong residency status.
Avoid it: Apply the green card test and substantial presence test rules in Publication 519. Dual-status years need special handling.

3) Using a friend’s address “just for mail.”
Avoid it: Use a reliable address you can document, and update it promptly with Form 8822.

4) Ignoring foreign accounts and assets reporting.
Avoid it: Track maximum balances. File FBAR when the $10,000 aggregate threshold is met.

You are [X] if…

• You are a U.S. tax resident if you meet the green card test or the substantial presence test for 2026, and you generally file Form 1040 reporting worldwide income.
• You are a nonresident alien for tax if you do not meet those tests (or you qualify as an “exempt individual,” such as many F-1 students early in their U.S. stay), and you often file Form 1040-NR for U.S.-source income.
• You are an FBAR filer if your foreign financial accounts exceeded $10,000 in aggregate at any time in 2026.
• You are potentially a Form 8938 filer if your specified foreign financial assets exceed the applicable thresholds for your filing status.

Action items: confirm your 2026 residency status, file on time (or extend), update your IRS address if needed, and review FBAR/Form 8938 obligations using IRS guidance at irs.gov/individuals/international-taxpayers and Publication 519.

⚠️ Disclaimer: This article is for informational purposes only and does not constitute tax, legal, or financial advice. Tax situations vary based on individual circumstances. Consult a qualified tax professional or CPA for guidance specific to your situation.