Bush’s IRS Wants to Make Your Tax Returns Public

A new article from the Philadelphia Inquirer has blown open the startling plans of the IRS to allow tax preparers for the first time to sell the tax returns of their customers.

The proposal came in a painfully technical tax regulation, which until now had attracted only a dozen public comments since it was announced in December. The proposal calls itself “not a significant regulatory action.” But the proposal is indeed significant, both for tax privacy and more broadly.

Until now, tax preparers could not sell tax returns to outside parties. Period. If they got taxpayer consent, they could use it for marketing, but only within their own corporate family.

The new proposal allows the tax preparers — from your local accountant to giants such as H&R Block — to get your signature and then give or sell the full tax return to data brokers, to your boss, to anyone. And there are absolutely no restrictions about what recipients do with the returns. The rule lets recipients post the full return to the Internet if they want.

Here are three reasons (you can think of others) why this proposal is wrong:

– First, taxpayer “consent” here is fake. Sometimes my wife and I have used tax prep services. Once the final papers are ready, they come to us with little sticky tabs next to each signature line. It’s usually about April 14th and late at night, and we sign where they tell us. Under the new proposal, they just add one sticky tab, and taxpayers have now “consented” to having their tax returns sold to anyone.

– Second, the proposal is all risk and no reward for consumers. The risk is of identity theft and more – unknown people can get your full tax return. The reward to consumers is zero.

– Third, this proposal shows once again that the administration doesn’t “get” privacy. Warrantless wiretaps, “total information awareness,” and now sale of your tax returns. There is still no White House official whose job is to screen proposals and protect privacy (a role I played in the Clinton Administration). There should be.

– Peter Swire