Critics of IRS tax-return proposal urge changes

One of the nation's largest purveyors of tax-preparation software on Tuesday urged the Internal Revenue Service to enact rules that would ban the sale or rental of tax-return information.

"The rule must clearly prohibit the sale or rental of tax-return information by a tax preparer to third parties," Intuit Chief Privacy Officer Barbara Lawler wrote. "This is a critical public policy principle that must be embodied by the final rule."

Lawler was one of several representatives from the public and private sectors who weighed in during an IRS hearing. The discussion centered on the IRS' December 2005 proposal to modernize rules governing tax preparers' use of their customers' annual tax filings. The IRS has said it needs to update the rules because they were enacted more than 30 years ago, predating electronic filing and the modern Internet.

The proposal has drawn fire from lawmakers, editorial writers at major newspapers, companies such as Intuit, consumer-protection groups and the National Association of Attorneys General. They charge that the rule would undermine consumers' confidential relationship with their tax preparers. They added that it would damage privacy rights.

The proposal would let tax preparers sell customer tax returns to unaffiliated third parties with customers' consent. The plan would update rules by covering electronic forms of consent. An IRS spokeswoman said the agency has no planned timeframe for enacting the changes.

The IRS said on its Web site that the new rule would "tighten existing requirements regarding the customer consent a return preparer must obtain" to disclose data.

But a Congressional Research Service analysis published last week found that the IRS' proposal would "permit broader disclosure." Among other things, the analysis said the new rule would not limit the selling or sharing of customer information to affiliated companies.

"Not every taxpayer might understand the real impact of providing their consent," Beth McConnell, director of Pennsylvania's Public Interest Research Group, said on Tuesday.

She noted that preparers could sell the information to unregulated entities such as data brokers like ChoicePoint.

"Taxpaying information is a window into your financial soul," she said. "Marketers would love access to this information. I don't think consumers should have to make a choice. The assumption should be the information should be private."

Other groups, such as the American Institute of Certified Public Accountants, said in written comments that consumer groups' concerns are overblown.

Lawmakers in the House and the Senate have written letters expressing their concern to IRS Commissioner Mark Everson. They also have introduced legislation that would ban the selling or sharing of people's tax information.

Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
Close [ x ] More from GovExec

Thank you for subscribing to newsletters from
We think these reports might interest you:

  • Sponsored by Brocade

    Best of 2016 Federal Forum eBook

    Earlier this summer, Federal and tech industry leaders convened to talk security, machine learning, network modernization, DevOps, and much more at the 2016 Federal Forum. This eBook includes a useful summary highlighting the best content shared at the 2016 Federal Forum to help agencies modernize their network infrastructure.

  • Sponsored by CDW-G

    GBC Flash Poll Series: Merger & Acquisitions

    Download this GBC Flash Poll to learn more about federal perspectives on the impact of industry consolidation.

  • Sponsored by One Identity

    One Nation Under Guard: Securing User Identities Across State and Local Government

    In 2016, the government can expect even more sophisticated threats on the horizon, making it all the more imperative that agencies enforce proper identity and access management (IAM) practices. In order to better measure the current state of IAM at the state and local level, Government Business Council (GBC) conducted an in-depth research study of state and local employees.

  • Sponsored by Aquilent

    The Next Federal Evolution of Cloud

    This GBC report explains the evolution of cloud computing in federal government, and provides an outlook for the future of the cloud in government IT.

  • Sponsored by Aquilent

    A DevOps Roadmap for the Federal Government

    This GBC Report discusses how DevOps is steadily gaining traction among some of government's leading IT developers and agencies.

  • Sponsored by LTC Partners, administrators of the Federal Long Term Care Insurance Program

    Approaching the Brink of Federal Retirement

    Approximately 10,000 baby boomers are reaching retirement age per day, and a growing number of federal employees are preparing themselves for the next chapter of their lives. Learn how to tackle the challenges that today's workforce faces in laying the groundwork for a smooth and secure retirement.

  • Sponsored by Hewlett Packard Enterprise

    Cyber Defense 101: Arming the Next Generation of Government Employees

    Read this issue brief to learn about the sector's most potent challenges in the new cyber landscape and how government organizations are building a robust, threat-aware infrastructure

  • Sponsored by Aquilent

    GBC Issue Brief: Cultivating Digital Services in the Federal Landscape

    Read this GBC issue brief to learn more about the current state of digital services in the government, and how key players are pushing enhancements towards a user-centric approach.

  • Sponsored by CDW-G

    Joint Enterprise Licensing Agreements

    Read this eBook to learn how defense agencies can achieve savings and efficiencies with an Enterprise Software Agreement.

  • Sponsored by Cloudera

    Government Forum Content Library

    Get all the essential resources needed for effective technology strategies in the federal landscape.


When you download a report, your information may be shared with the underwriters of that document.