Gibbons Blasts IRS Proposal to Allow Sale of Tax Returns to Private Data Brokers

Gibbons Blasts IRS Proposal to Allow Sale of Tax Returns to Private Data Brokers

3/22/2006

WASHINGTON, DC -- Today, Congressman Jim Gibbons (R-Nev.) called on the Internal Revenue Service (IRS) to immediately reconsider proposed rule changes that would allow for the sale of private taxpayer information. In a letter addressed to IRS Commissioner Mark Everson, Gibbons denounced the policy change that would permit accountants and tax advisors to sell entire tax returns to third party vendors.

"The IRS must reconsider its proposal to allow for the sale of private taxpayer information. It's bad enough that most Americans are forced to hire professionals to file their taxes as a result of the cumbersome and confusing tax code," said Gibbons. "This policy change is alarming, and my concern is that the sale of information will increase the taxpayer's vulnerability to privacy violations and identity theft."

Although the rule change will require written consent from the taxpayer, there is concern that most taxpayers will unknowingly agree to release their information due to the overwhelming number of documents that must be reviewed and signed when filing taxes.

"There are numerous concerns associated with this policy change, such as disbursement of the purchased information and the limits on its continued distribution," added Gibbons. "Taxpayers entrust their advisors with private information including social security numbers, bank account numbers, and other private financial information. We cannot allow for this information to fall into the wrong hands, which could potentially destroy the financial security of millions of Americans."

In an effort to bring more attention to the ramifications of the proposed IRS policy change, Congressman Gibbons also drafted a letter to House Ways and Means Committee Chairman Bill Thomas (R-Calif.) requesting oversight hearings on this matter. Gibbons is also looking into legislative options to address the many concerns associated with the proposal.

Text of letter sent by Congressman Jim Gibbons to Mark Everson, Commissioner of the Internal Revenue Service (IRS)

Dear Commissioner Everson:

It has come to my attention that the Internal Revenue Service (IRS) has proposed a rule change that would allow tax preparers to sell entire tax returns to third parties. Those parties could then use this information for marketing purposes or even sell the returns to other entities. This action would seriously threaten the privacy rights of all taxpaying Americans, who file their returns with the assumption that they are completely confidential.

Because of the increasing complexity of our federal tax code, taxpayers are forced to use private sector tax consultants to assist them in their tax preparation. These consultants are entrusted with very personal information about each of their clients, including social security numbers, dates of birth, income and education information, and even bank account numbers. It is incomprehensible to think that a tax consultant could take a document with all of the above information included in it and sell it to a private vendor. At that point, there are virtually no safeguards to protect this information and keep it from getting into the wrong hands. American citizens do not deserve to have the most intimate details of their lives sold to the highest bidder. With all of the recent occurrences of identity theft, database hacking, and credit card abuse, the federal government must not take any steps to make it easier for criminals to prey on our citizens.

The IRS must reconsider and rescind this proposed rule change. While the change would require that a customer give their written consent to allow the sharing of their information, I am concerned that some customers may not realize what they are agreeing to when completing their tax return. We must make the tax preparation process as easy to navigate as possible and this new proposal adds another layer of worry to an already cumbersome process.

I will be calling on the House Ways and Means Committee to conduct immediate oversight hearings on this issue. We cannot allow our citizens to be preyed upon just to improve the bottom dollar of marketing firms. Nevadans and all Americans need to know that their privacy will be protected and I will work with my colleagues to ensure that is the case.

Again, I call for you to immediately reconsider and revoke this proposed rule change. Thank you for your attention to this matter and I look forward to hearing from you soon.

http://wwwc.house.gov/gibbons/display-pr.asp?id=1831