The IRS Is Sharing Taxpayer Data. Here's What International Tax Clients Need to Know.
Section 6103 protections are being tested. Here is what happened, where it stands, and what to do about it.
The IRS Is Sharing Taxpayer Data. Here's What International Tax Clients Need to Know.
By Tajma Qorri, International Tax Advisor | Qorri Tax Service LLC
Published February 26, 2026
This one's personal for me. I work with foreign-owned businesses, ITIN filers, and clients who hold assets overseas every single day. So when I started reading about the IRS handing over confidential taxpayer data to immigration enforcement, I'll be honest, it stopped me cold.
If you have a foreign-owned U.S. entity, file with an ITIN, or hold foreign financial accounts, keep reading. This affects you directly.
Over the past few weeks, we've watched a series of events unfold that challenge something I've always told my clients they could count on: that the information on your tax return stays between you and the IRS. Courts, federal agencies, and Congress are all tangled up in this. And for international taxpayers specifically, the consequences could be serious.
Let me walk you through what actually happened, where things stand right now, and what I think you should be doing about it.
So What Actually Happened?
Back in April 2025, the Department of Homeland Security cut a deal with the IRS to share taxpayer data. DHS wanted names and addresses for 1.28 million people they believed were in the country without legal status. The IRS turned over records on about 47,000 of them.
Here's where it gets ugly.
On February 12, 2026, the IRS filed a sworn declaration in court admitting that it had shared confidential taxpayer information on thousands of people who weren't even supposed to be part of the request. Dottie Romo, the agency's chief risk officer, confirmed that data went out the door even when DHS couldn't provide enough information to properly identify who they were asking about.
Think about that for a second. The IRS sent private tax records to immigration enforcement and couldn't even verify whose records they were sending.
It gets worse. The IRS privacy department, the team that's supposed to be the guardrail on exactly this kind of thing, was mostly left out of the process. The IT team handling the data transfer had been taken over by officials from the U.S. DOGE Service, which is the administration's efficiency office. So the people actually responsible for protecting your data weren't the ones in charge of moving it.
Where Do Things Stand Right Now?
Two federal judges have stepped in and blocked the arrangement. Both ruled that it violates Section 6103 of the Internal Revenue Code, which is the statute that protects the confidentiality of your tax return information.
On February 24, 2026, a Court of Appeals in Washington, D.C. declined to issue an injunction against the government. But legal experts are clear that this doesn't undo the two existing court orders. Those blocks are still in place.
The government has appealed. This fight isn't over.
Why Section 6103 Should Matter to You
If you've never heard of Section 6103, here's the short version: it's the law that says the IRS can't share your tax return information with anyone except under very narrow circumstances, like specific criminal investigations or national security situations.
For decades, this protection was solid enough that even people without legal immigration status felt safe filing tax returns. The government essentially said: pay your taxes, we won't use that information against you. That promise is what kept millions of people in the system and contributing to the tax base.
Judge Indira Talwani, who blocked the data-sharing agreement, said it plainly in her ruling. She wrote that arrangements like this one "erode that foundation and undermine the public interest in a functioning tax system."
She's right. And for those of us who work in international tax, we're seeing the real-world effects of that erosion already.
What This Means If You're an International Taxpayer
I want to break this down for the specific people I work with, because the implications are different depending on your situation.
If you file with an ITIN, you were directly targeted. The data-sharing agreement went after ITIN filers specifically. Two courts blocked it, but the fact that it was attempted, and that data was shared improperly before the courts intervened, that's a problem. If you're an ITIN filer reading this, I want you to know: the law is still on your side. But you need to be paying attention.
If you own or manage a foreign-owned U.S. entity, think about what you're already reporting. Forms 5472, 5471, 8865, these filings contain detailed ownership information, transaction data, and financial records. You're handing all of that to the IRS voluntarily because the law requires it. The question of who else in the federal government can see that information used to feel theoretical. It doesn't feel theoretical anymore.
FBAR and FATCA enforcement is ramping up at the same time. While this data-sharing fight plays out in court, the IRS is also tightening the screws on foreign account reporting. International banks are sharing more data with the U.S. Treasury than ever before. One report I read described the IRS as having "unprecedented visibility" into foreign holdings. That's more information flowing into the system, with more open questions about where it goes from there.
Trust matters, and it's eroding. If people stop filing tax returns because they're scared of what happens with their data, compliance drops across the board. That doesn't just affect individuals. It affects businesses with foreign partners, foreign investors, and international employees. If the people you work with are hesitant to engage with the U.S. tax system, that creates real operational problems.
And Then There's the AI Problem
This isn't just a government issue. The private sector is raising its own set of data privacy questions for tax filers.
Intuit, the company behind TurboTax, just launched what they're calling "Intuit Intelligence" along with a Business Tax Agent inside QuickBooks. H&R Block and other major platforms have rolled out similar AI features this year. All of them have updated their terms of service to address how your data gets used to train AI models.
If you're preparing complex international returns through any of these platforms, you should take the time to read those updated terms carefully. When you upload financial data for a controlled foreign corporation or a treaty-based filing position, where does that information actually go? Who has access to it? And what's it being used for beyond your return?
For simple domestic returns, maybe this isn't a big deal. But for the kind of work I do with clients, cross-border structures, multi-entity filings, sensitive ownership data, these are questions worth asking.
What I'd Recommend Doing Right Now
If you're a foreign national or an ITIN filer: Keep filing. I know the headlines are scary, but the courts have blocked the data-sharing arrangement and filing your return is still required by law. Work with a tax advisor who actually understands what's happening in the courts right now. And keep copies of everything you file.
If you own or manage a foreign-owned U.S. entity: Take a hard look at your compliance. Make sure your Forms 5472, 5471, 8858, and 8865 are accurate and up to date. Confirm that your FBAR and FATCA filings are current. And have a conversation with your tax advisor about what data you're reporting and who, realistically, might be able to access it.
If you're a CPA or tax professional: Follow the Section 6103 litigation closely. The appeals are active and the outcome will shape how data moves within the federal government for years to come. Talk to your international clients proactively, don't wait for them to come to you with concerns. And if international tax compliance isn't your area, bring in someone who lives in this space. Your clients will thank you for it.
Where I Stand on This
I've spent over 10 years helping clients navigate international tax compliance. I tell every one of them that the U.S. tax system, for all its complexity, operates on a basic bargain: you share your financial information honestly, and the government uses it to administer the tax code. Nothing more.
When that bargain breaks down, whether it's through improper data sharing, AI systems trained on taxpayer information, or enforcement priorities that shift without warning, it's the people I work with who feel it first. Foreign nationals trying to do business here. Small companies with overseas ownership. Families with assets in two countries.
The law still protects you. But the boundaries are being tested in ways we haven't seen before. This isn't the time to hope everything works out. It's the time to make sure your compliance is tight, your records are clean, and you've got someone in your corner who understands what's at stake.
Tajma Qorri is the founder of Qorri Tax Service LLC, a boutique international tax advisory firm based in the Chicago area. She specializes in cross-border tax compliance, including Forms 5471, 5472, 8858, 8865, GILTI, FDII, and foreign tax credit planning. For a consultation, visit qorritax.com.