Cantwell Fights Sale of Private Taxpayer Data

Legislation would stop IRS plan, protect taxpayers against identity theft

WASHINGTON, DC – Tuesday, U.S. Senator Maria Cantwell (D-WA) joined U.S. Senator Barack Obama (D-IL) to support legislation mandating an end to IRS plans green-lighting the sale of private taxpayer data to third parties. The IRS proposal would erode privacy and aid identity thieves by allowing tax preparers to sell their clients’ information to data-brokers, telemarketers, and others.

“This legislation will help protect the privacy of our country’s working families and keep personal data from getting into the hands of anyone willing to pay,” said Cantwell. “With identity theft and privacy concerns on the rise, the American people need more protections, not a government sanctioned sell-off of their family and financial records.”

With few exceptions, federal law prohibits tax preparers from using financial information provided by clients for purposes other than completing tax returns. However, an IRS proposal currently under consideration would permit income-tax preparers to sell or share information from a client’s tax return with third parties. While tax preparers would have to obtain written consent before selling or sharing this data, many taxpayers who sign consent forms may not be fully aware that they are authorizing the sale of their personal information.

Obama and Cantwell’s Protecting Taxpayer Privacy Act, introduced last Friday, would prohibit tax preparers from disclosing taxpayer information to third parties in almost all cases. The only allowable disclosure of information to parties not affiliated with the tax preparer would be for law enforcement use, and for other narrow uses permitted continuously since tax regulations were updated in 1974. In addition to promoting legislation to halt this plan, Cantwell wrote a letter to IRS Commissioner Mark Everson last week urging prompt reconsideration of the proposal.