Washington DC - An appeals court on Tuesday upheld a lower court ruling barring the federal tax collection agency from sharing taxpayer information with immigration authorities.

The 3-0 decision is a blow to the Trump administration's efforts to gather data that could help Immigration and Customs Enforcement (ICE) identify undocumented migrants for deportation.

Taxpayer information collected by the Internal Revenue Service (IRS), such as home addresses, earnings, and family details, is closely protected under federal law.

"The Watergate scandal exposed executive branch abuses of US taxpayers' information to harass the Administration's enemies," Judge Cornelia Pillard said in a 32-page opinion.

Donald Trump South Park takes shady swipe at Trump with surprise name change

Congress, following the 1970s Watergate scandal, put "stringent conditions" on IRS sharing of taxpayer information with other federal agencies, Pillard noted.

ICE last year requested more than 1.2 million records from the IRS, and the tax agency released the addresses of some 47,000 taxpayers before being halted by federal courts.

Nandan Joshi, an attorney with Public Citizen, an advocacy group that was among those who filed suit against the administration, welcomed the ruling.

"The DC Circuit correctly recognized that noncitizens have the same privacy rights in their tax returns that federal law extends to all taxpayers," Joshi said in a statement.

"The Trump administration's desire to hoover up personal information to support its immigration enforcement agenda does not justify its failure to follow the law."

The IRS allows millions of undocumented migrants to pay taxes, a move seen as boosting both their immigration cases and the financial health of massive federal programs such as Social Security.

President Donald Trump campaigned on a promise to expel millions of undocumented migrants and has taken several actions since returning to the White House aimed at speeding up deportations and reducing border crossings.