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IRS plans to allow preparers to sell data
Philadelphia Inquirer ^ | Tue, Mar. 21, 2006 | By Jeff Gelles

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.


TOPICS: Business/Economy; Front Page News; Government; News/Current Events
KEYWORDS: govwatch; irs; libertarians; privacy; tax
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1 posted on 03/21/2006 5:51:31 AM PST by grjr21
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To: grjr21

Oh H3LL no... WTF are they thinking?


2 posted on 03/21/2006 5:56:49 AM PST by Dead Corpse (I believe that all government is evil, and that trying to improve it is largely a waste of time.)
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To: grjr21
"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.

This just in; Hell hath frozen over. I actually agree with the moonbat.
3 posted on 03/21/2006 5:57:09 AM PST by Renderofveils (Qur’an 8:39 “So, fight them until all opposition ends and the only religion is Islam.”)
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To: grjr21

This is outrageous. I would boycott any firm that sells my personal information. Of course, it's difficult to avoid it these days.


4 posted on 03/21/2006 5:57:24 AM PST by TommyDale
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To: grjr21; pigdog; ancient_geezer
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.

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.

5 posted on 03/21/2006 5:58:00 AM PST by Paul C. Jesup
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To: ancient_geezer

ping... Just another reason to enact the FairTax.


6 posted on 03/21/2006 5:58:26 AM PST by ovrtaxt (Join the FR folding team!! http://vspx27.stanford.edu/cgi-bin/main.py?qtype=teampage&teamnum=36120)
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To: grjr21
"Sen. Barack Obama (D.,Ill) wrote......"

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

7 posted on 03/21/2006 6:00:45 AM PST by MinuteGal (Sail the Bounding Main to the Balmy, Palmy Caribbean on FReeps Ahoy 4. Register Now!)
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To: grjr21

Holy identity theft, Batman, which IRS nimrod came up with this scheme?


8 posted on 03/21/2006 6:00:48 AM PST by NonValueAdded ("If I were a Cuban, I'd certainly be on a raft," Isane Aparicio Busto)
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To: MinuteGal
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!

It's all those Rat wiretaps in the Libertarian HQ. ;)
9 posted on 03/21/2006 6:02:42 AM PST by Renderofveils (Qur’an 8:39 “So, fight them until all opposition ends and the only religion is Islam.”)
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To: NonValueAdded
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.

10 posted on 03/21/2006 6:03:49 AM PST by Paul C. Jesup
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To: Dead Corpse

What are they Drinking to come up with this?!


11 posted on 03/21/2006 6:04:18 AM PST by TXBSAFH (Proud Dad of Twins, What Does Not Kill You Makes You Stronger!!!!!!)
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To: grjr21
Fine, let's start with every IRS and government employee. Then we move to having them piss in a cup. Then we move to having them removed from said government payrolls.


12 posted on 03/21/2006 6:12:54 AM PST by unixfox (AMERICA - 20 Million ILLEGALS Can't Be Wrong!)
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To: grjr21

Free market on the march - privatization of someone else private information.


13 posted on 03/21/2006 6:14:44 AM PST by A. Pole (Russian proverb: "All are not cooks that walk with long knives")
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To: grjr21
Next to the USSC, the IRS and BATF are the most dangerous institutions in this "Republic" to freedom.

FMCDH(BITS)

14 posted on 03/21/2006 6:15:32 AM PST by nothingnew (I fear for my Republic due to marxist influence in our government. Open eyes/see)
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To: Paul C. Jesup
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?

People also need to read the article. A preparer can't sell your information "without the knowing, informed and voluntary consent of the taxpayer." If you don't want your information sold, don't consent.

In looking at this closer, this is actually a tightening of regulations. It appears the problem was preparers were outsourcing (possibly to foreign countries) their processing of returns and who knows what would happen to your information at that point. This regulation would require informed consent by the individual before their return could be outsourced.

From what I can tell, this regulation is a good thing.
15 posted on 03/21/2006 6:17:59 AM PST by Your Nightmare
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To: Your Nightmare
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.

16 posted on 03/21/2006 6:21:16 AM PST by Paul C. Jesup
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To: grjr21
"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.

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.

17 posted on 03/21/2006 6:26:48 AM PST by The Electrician ("Government is the only enterprise in the world which expands in size when its failures increase.")
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To: grjr21
This is the press release the article mentions:

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?

18 posted on 03/21/2006 6:28:28 AM PST by Your Nightmare
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To: Paul C. Jesup
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?"
19 posted on 03/21/2006 6:30:56 AM PST by Your Nightmare
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To: grjr21

Pile this onto the mountain of reasons that tax reform is immediately necessary and that the IRS should be abolished.


20 posted on 03/21/2006 6:31:50 AM PST by thoughtomator (Symmetry Inspector #7)
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