Texas Attorney General Ken Paxton announced this week that he has successfully put an end to a legal battle with the Internal Revenue Service.

According to a news release from the attorney general, the dispute arose from an Enforcement Announcement issued by the IRS in May 2023. The new policy required that contractors for child support enforcement agencies no longer be given access to confidential tax data to safeguard against “unauthorized use or disclosure of information” of a child under state protection.

Paxton filed a complaint claiming that the shift would greatly impede the administration of Title IV-D child support programs, which are run by states using federal tax money, by restricting the use of contractor support services. He also suggested that the IRS violated the Administrative Procedure Act by making a “sudden policy change” without first soliciting input from state authorities.

An earlier news release from the Office of the Attorney General noted that contractor services had supported the collection of nearly $4.5 billion for 1.5 million child support cases across Texas in fiscal year 2022. Overall, the OAG estimated that the IRS’s policy change could result in the state losing roughly $300 million in child support collections per year.

Following rigorous legal proceedings and negotiations, Paxton presented a comprehensive plan to address the IRS’s privacy concerns through technological upgrades already in progress.

In response, the IRS issued a letter stating it had decided not to pursue any action against Texas, acknowledging the strides made in rectifying the perceived issues, per the recent OAG release. Consequently, OAG filed a notice of voluntary dismissal, effectively concluding the lawsuit.

Paxton expressed satisfaction with the outcome, emphasizing the importance of early intervention in safeguarding Texas’ child support program from unwarranted disruptions.

“Because we intervened early, Texas’s child support program will not be derailed by the Biden Administration’s unlawful agency action,” Paxton said.

“We reached a positive outcome, but I will not hesitate to resume this litigation if IRS policy changes put Texas children at risk once again.”