IRS Should Not Violate Taxpayer Privacy

Would you be shocked if the IRS allowed your private personal financial information such as your social security number, bank balance, home mortgage information, or other financial investments to be sold to the highest bidder? Get ready to be shocked.

If new proposed IRS regulations go into effect, accountants and tax preparers will be able to sell your tax returns and financial information to private marketers and data brokers who could then share them with anyone.

This disturbing practice could become a reality for millions of American households if these proposed IRS regulations are not blocked. That is why I have introduced H.R. 5063, the Taxpayer Privacy Protection Act of 2006, because protecting your personal financial information is vitally important.

It is deeply troubling that the IRS is threatening to expose taxpayers to unregulated third party groups under this proposed rule, who could then sell personal information. In my view, it is dangerous for outside groups, governed by even looser rules than the IRS, to be given incentive to profit from your personal information. This should be absolutely prohibited in the interest of protecting consumer privacy.

Current IRS rules require tax preparers to obtain written consent of the taxpayer to pass information to affiliated financial groups, but prohibit any third party group from buying it. The new rule also requires written consent, but would allow anyone to buy the information. The fundamental problem with this is that many taxpayers do not fully read the forms they are signing and could easily sign away their private financial information unknowingly on one of the pages earmarked for their signature.

Therefore, it is highly likely that personal information could be shared with anyone even though the taxpayer never intended so.

In today’s electronic information age, there is no guarantee that once taxpayer financial information becomes loose on the market, it would not be used for questionable or even illegal purposes such as identity theft. Given several highly publicized examples of data security breaches by financial institutions and credit card companies, Americans have every right to be concerned about the risks they would face under the proposed rule change.