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IRS to Allow Tax Preparers to Sell Your Tax Returns &
Financial Privacy!
by Mike Banks Valentine
Published on this site: March 29th, 2006 - See
more articles from this month
Philadelphia Inquirer of March 21 reports IRS plans to allow
Tax preparers to sell your tax return data to marketers.
http://www.philly.com/mld/inquirer/business/14147002.htm
The IRS is considering a rules change that would allow
our most trusted financial advisors to sell entire tax returns
of consumers to marketers and data brokers! This would not
only be a serious ethical violation and breach of trust by
tax preparers, but may entirely undermine taxpayers trust in our
tax systems in the US.
This rules change is apparently proposed at the behest of
Congressman Ed Markey of Illinois who raised privacy concerns
when it was discovered that some tax preparers were outsourcing
tax preparation online to India and other countries without privacy protections. It was supposedly to
prevent the loss of financial information to identity thieves.
How ironic that the rule change was proposed as a privacy
protection, when it allows outright sale of tax returns to
marketers and data brokers.
While so-called notification and consent by taxpayers is required
to allow this sale of information - can you imagine anyone
questioning their accountant about why he is asking them to
sign papers following tax return preparation? Most of us put full trust in our tax preparers, accountants and financial
advisors when asked to sign documents. (I don't condone this,
it's just the way we operate - every person should read every
document and fully understand them before signing.)
If tax professionals suffer even a momentary flash of reduced
ethical and moral standards during that brief signing - they
may choose not to disclose what we are signing and count on
us to either ask pointedly about the documents or that we
read large sheafs of prepared paperwork to find out that we
are about to sign away our financial privacy along with signing
our tax returns.
By now we should all be painfully aware of the endless stream
of data breaches, hacks, and dozens of cases of ineptitude
by data brokers and handlers of private personal financial
information.
This issue has somehow escaped much public notice since it
was first proposed by the IRS on December 7, 2005. Here is
the official government notice of the proposed IRS Rule Change
allowing the sale of tax return data by tax preparers
(38 page PDF file).
http://www.irs.gov/pub/irs-regs/13724302.pdf
The Philadelphia Inquirer offered an address to protest the
rules change. It's too late to comment electronically, but
the IRS may still consider written comments by mail if you
write to:
CC:PA:LPD:PR (REG-137243-02)
Room 5203
Internal Revenue Service, Box 7604
Ben Franklin Station, Washington, D.C. 20044.
This is so patently offensive that it is difficult to comprehend.
I want to know who convinced the IRS rulemakers to slip this
proposal in so quietly. Did Congressman Markey have a hand
in the rule language or was that a back room deal with data
brokers?
Could it be that it was a lobbyist for beancounters who make
their living by doing taxes for median income families? It
certainly isn't likely to have been Ernst & Young looking
for extra little profit centers they might exploit in their
corporate client tax filings.
Who would profit most from this? The data brokers and credit
reporting agencies - just follow the money. Who wants access
to broad swaths of taxpayer information? Those who don't currently
have it yet - marketers, and dozens of subsidiary data brokers
who currently don't have access to income (and spending) data
of Americans directly from tax forms.
Imagine rich new income streams data brokers would have to
sell information to marketers about our buying habits, airline
preferences, hotel choices, internet service providers, travel
information, cell phone providers - all right there on our itemized deductions list.
A joint press release has been distributed by three separate
consumer orgainizations calling for removal of launguage in
the proposed rules that would allow for sale of information
in taxpayer tax returns to third parties for purposes of selling "Subsidiary Services" to taxpayers. That
broad language is the focus of concern.
http://snipurl.com/IRS_Privacy
(Consumer Federation PDF)
Since many of us are on the current "Do Not Call"
list and out of reach of telemarketing annoyance, you can
bet your junkmail volume would increase dramatically after
your spending habits are so well documented to marketing firms
- right off of your tax forms, which they legally purchased!
If this were the only concern - it would be enough to rattle
most Americans trust in our government. But it isn't the end
of the story - we lose control over our financial data and
risk identity theft on a grand scale once the information
is in the hands of marketers. Just stop what you are doing and
go write a letter to the IRS at the address above to demand
that they stop this sellout to data brokers and marketers.
Mike Banks Valentine blogs on privacy issues at:
http://PrivacyNotes.com/privacy_blog/
You can subscribe to the RSS feed by entering My Yahoo or
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