Is Your Tax Return Information For Sale?
Posted April 8, 2006 10:05 AM
UDub law prof Anita Ramasastry discusses a proposed change in the law regarding the sale of taxpayers' information by their tax preparers to virtually any third party. The IRS contends that this sale is already legal, but consumer advocates disagree.
The IRS recently proposed a new rule that, if it becomes effective, may relax what taxpayers may believe is a presumption of privacy for federal income-tax returns. The rule would allow accountants and other tax-return preparers to sell information from individual returns -- to marketers and data brokers, which will ostensibly be able to offer us new products and services as a result.
The IRS and Treasury Department published the proposed rule in the December 8 Federal Register, among a set of rules labeled as "not a significant regulatory action." But some consumer and privacy-rights advocates consider the rule very significant indeed - for reasons I will explain in this column. IRS officials portray the proposed changes as house-cleaning measures needed to update old regulations that were long overdue. But in reality, they are much more than that.