IP blocking has its own flaws. Most notable one is the chance of false positives. IP bans can be easily bypassed by restarting the router, since the ISP will give different public IP address. Also, innocent user can be affected, if the IP given by the ISP happens to be banned one.
Permanent bans are still given, for hacking, bug/feature abusing, for rule 2.9. Temporary permanent bans are also given for inappropriate in-game tag, license plates, or interior plates. In such case, the user has to make the requested changes with the proof of them in the ban appeal.