Posted on 03/21/2006 5:51:29 AM PST by grjr21
The IRS is quietly moving to loosen the once-inviolable privacy of federal income-tax returns. If it succeeds, accountants and other tax-return preparers will be able to sell information from individual returns - or even entire returns - to marketers and data brokers.
The change is raising alarm among consumer and privacy-rights advocates. It was included in a set of proposed rules that the Treasury Department and the IRS published in the Dec. 8 Federal Register, where the official notice labeled them "not a significant regulatory action."
IRS officials portray the changes as housecleaning to update outmoded regulations adopted before it began accepting returns electronically. The proposed rules, which would become effective 30 days after a final version is published, would require a tax preparer to obtain written consent before selling tax information.
Critics call the changes a dangerous breach in personal and financial privacy. They say the requirement for signed consent would prove meaningless for many taxpayers, especially those hurriedly reviewing stacks of documents before a filing deadline.
"The normal interaction is that the taxpayer just signs what the tax preparer puts in front of them," said Jean Ann Fox of the Consumer Federation of America, one of several groups fighting the changes. "They think, 'This person is a tax professional, and I'm going to rely on them.' "
Criticism also came from U.S. Sen. Barack Obama (D., Ill.). In a letter last Tuesday to IRS Commissioner Mark Everson, Obama warned that once in the hands of third parties, tax information could be resold and handled under even looser rules than the IRS sets, increasing consumers' vulnerability to identity theft and other risks.
"There is no more sensitive information than a taxpayer's return, and the IRS's proposal to allow these returns to be sold to third-party marketers and database brokers is deeply troubling," Obama wrote.
The IRS first announced the proposal in a news release the day before the official notice was published, headlined: "IRS Issues Proposed Regulations to Safeguard Taxpayer Information."
The announcement did not mention potential sales of tax information. It said the proposed rules were guided by the principle "that tax return preparers may not disclose or use tax return information for purposes other than tax return preparation without the knowing, informed and voluntary consent of the taxpayer."
IRS spokesman William M. Cressman defended the proposal in similar terms.
"The heart of this proposed regulation is about the right of taxpayers to control their tax return information. The idea is to emphasize taxpayer consent and set clear boundaries on how tax return preparers can use or disclose tax return information," Cressman said in an e-mail response to questions.
Cressman said he was unable to explain "why this issue has come up at this time other than our effort to update regulations that date back to the 1970s and predate the electronic era."
Not all the changes have drawn opposition.
Beth A. McConnell, director of the Pennsylvania Public Interest Research Group (PennPIRG), said she welcomed a requirement that a taxpayer would need to consent to overseas processing of any portion of a tax return.
"That's a positive development, but I don't think it's worth giving up our tax returns' privacy for," said McConnell, who plans to testify on behalf of the U.S. Public Interest Research Group at an April 4 IRS hearing in Washington on the rule changes.
McConnell accused the IRS of using the new limit on overseas processing to dress up changes that would chiefly benefit tax preparers, marketers and data brokers.
"That's a disturbing trend among Washington officials lately," McConnell said. "They'll offer a modest consumer protection in one area in exchange for dramatic weakening of consumer protections in another area, and then try to convince the public that it's all in our interests."
Critics of the proposal said it could do more than open up sales of tax information to data brokers and marketers, because it could undermine taxpayer confidence in the entire tax system.
"Privacy protections for tax information are especially critical given the largely voluntary nature of the U.S. tax system," said Chi Chi Wu, a tax-law specialist at Boston's National Consumer Law Center.
Wu and other critics said they were uncertain who or what was behind the proposed changes in IRS privacy rules, which currently prohibit tax preparers from selling returns to third parties for marketing purposes, and require written consent if they want to use it for marketing by companies under their own corporate umbrella.
Officials at H&R Block and Jackson-Hewitt, two of the nation's largest tax-preparation firms, did not respond to requests for comment. Cressman said the IRS had so far received only about a dozen comments on the proposal.
"I think this just flew under the radar screen for so many people," McConnell said.
Although the formal comment period ended March 8, Cressman said late comments "may receive consideration if they are sent to the IRS promptly." Consumer advocates are urging taxpayers who oppose the changes to contact the agency and Washington lawmakers.
Where to Write
It's too late to comment electronically, but the IRS may still consider written comments. Mail them to:
CC:PA:LPD:PR (REG-137243-02)
Room 5203
Internal Revenue Service, Box 7604
Ben Franklin Station, Washington, D.C. 20044.
Oh H3LL no... WTF are they thinking?
This is outrageous. I would boycott any firm that sells my personal information. Of course, it's difficult to avoid it these days.
Pigdog and ancient_geezer, you might want to take a look at the this. The IRS may finally be signing it's own death warrant with this, because the only excuse for the past several decades worth fo abuse and corruption by the IRS towars U.S. citizens has been the tax returns are private and held secret.
Remove that excuse and all bets are off.
ping... Just another reason to enact the FairTax.
Why is it the Dems always get out in front with the statements on issues that strike a chord with the public. Watch, listen and read.....the Dems ALWAYS do!
The Pubs are listless, unorganized, detached and tone deaf as usual. This is only one example.
Leni
Holy identity theft, Batman, which IRS nimrod came up with this scheme?
We should let the IRS go through with this. The IRS is hanging itself by doing so.
See post 5 of this thread for further explaination.
What are they Drinking to come up with this?!
Free market on the march - privatization of someone else private information.
FMCDH(BITS)
The IRS may finally be signing it's own death warrant with this, because the only excuse for the past several decades worth fo abuse and corruption by the IRS towars U.S. citizens has been the tax returns are private and held secret.I don't understand. What's to stop someone from releasing your tax return information?
It's illegal without the person's writen permission. This is one the things that got President Nixon in so much trouble.
What I find deeply troubling is that Obama evidently sees nothing wrong with a jack-booted IRS invading the financial privacy of every American, corruptly exercising unlimited, unchecked power, and confiscating peoples' wealth through bureaucratic malice and indifference.
Oh, and I'm still waiting for Obama to demand the release of the full Barrett Independent Counsel report that will name the names of the Clinton administration IRS officials who tampered with the Cisneros investigation.
IRS Issues Proposed Regulations to Safeguard Taxpayer Information
IR-2005-139, Dec. 7, 2005
WASHINGTON — The Internal Revenue Service today issued proposed guidance on the disclosure or use of tax return information by tax return preparers. A key principle underlying the proposed guidance is that tax return preparers may not disclose or use tax return information for purposes other than tax return preparation without the knowing, informed and voluntary consent of the taxpayer.
The pre-existing regulations under Internal Revenue Code section 7216 were drafted in the early 1970s, prior to the advent of many of the business practices and technology uses that define the electronic preparation and transmission of tax returns by preparers.
The proposed regulations broaden the definitions of tax return preparer and tax return information, revise the manner and form of obtaining taxpayer consent to use or disclose tax return information and add a requirement to obtain taxpayer consent before preparers send tax return information offshore.
"Safeguarding of tax return information is critical," said IRS Commissioner Mark W. Everson. "It';s vital we update the preparation rules for the 21st century. Americans ought to know when their tax returns are being outsourced and prepared abroad. In particular, I want to thank Massachusetts Rep. Ed Markey and others for drawing our attention to this important issue."
The new regulations also take into account the presence and wide-spread use of computers in tax preparation. If a tax return preparer hires contractors who will need access to tax return information to repair computers or data files, the tax return preparer must notify those contractors that they will also be subject to restrictions on their use or disclosure of tax return information.
The proposed regulations are open to public comment for 90 days after their date of publication. A public hearing on the proposed regulations has been scheduled for April 4, 2006 at 10 a.m.
[ source ]
Why would anyone have a problem with any of this?
It's illegal without the person's writen permission. This is one the things that got President Nixon in so much trouble.Sorry, I meant to say "What's to keep someone from releasing their own tax return?"
Pile this onto the mountain of reasons that tax reform is immediately necessary and that the IRS should be abolished.
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