Under
new rules proposed by the Internal Revenue Service (IRS) in December
2005, tax preparers would be permitted to share the contents of a
consumers’ entire tax return with an unaffiliated business, provided
the consumer signed a consent form. “It is appalling that the IRS would
propose weakening the law to allow consumers tax returns to be sold to
the highest bidder,” said Beth McConnell, director of the Pennsylvania
Public Interest Research Group Education Fund (PennPIRG Education
Fund). “The IRS should drop this proposal, and keep tax returns
private.”
Under
current law, tax preparers are prohibited from sharing information in a
consumers’ tax return with an unaffiliated third party. But under the
new proposal, any tax preparer including H&R Block, Jackson Hewitt
or a private accountant could sell the contents of a consumer’s tax
return to an outside corporation. “A consumer needs to have a trusting
relationship with the tax preparer she’s hired to tell her to sign form
after form. Slipping a form in the shuffle that would allow the sale of
her return is a violation of that trust,” said McConnell.
The
proposed rule requires expressed written permission from the consumer
to allow information to be sold, but McConnell argued that’s not good
enough. “Consumers will not realize they’ve signed the form, will not
understand what they’re signing, or will feel pressured into signing
away their rights to privacy.” she continued. The IRS proposal does not
contain any clear prohibition against tax preparers offering consumers
incentives for signing the permission form, such as a discount on their
tax service.
Consumers’
personal information has become a billion dollar business, with data
brokers like Choicepoint and others collecting and selling consumers’
personal information to marketers. A rash of breaches of security at
major corporations, including Choicepoint, MasterCard and dozens of
others over the last year has affected hundreds of millions of
Americans and put them at risk of identity theft. “If this proposed
rule is adopted, you can bet data brokers like Choicepoint will be
among the first in line to purchase consumers’ tax returns,” said
McConnell. “And identity thieves will see this information as one-stop
shopping to make it easier for them to commit fraud.”
The
IRS proposal also makes it easier for tax preparers to market their own
services, such as rip-off Refund Anticipation Loans, to their own
customers.
The
IRS ended its formal public comment period on these proposed rules on
March 8, 2006, but will be hearing testimony from those who already
submitted comments on April 4, 2006 in Washington D.C. PennPIRG
Education Fund’s McConnell is scheduled to testify at that hearing to
urge the IRS to drop this proposed rule, and to argue for better
consumer privacy protections.
PennPIRG
Education Fund works to educate consumers about policies that affect
their health, safety and finances, and promotes solutions to protect
the public.
