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Home   /   Capitol Connection   /   Capitol Connection 03/23/2006

 
IRS proposes to allow selling of personal tax returns

I am appalled that the Internal Revenue Service has proposed new regulations that would allow commercial tax preparers to share, and even sell, confidential taxpayer information to third party marketers and database brokers.

Under the proposal, commercial tax preparers would be able to sell and use tax return information by obtaining the consumer’s signature on a consent form, which would be included in the enormous stack of documents given to consumers for signature at the end of the tax preparation process. There is a need for stronger measures to ensure that consumers actually have a chance to understand what they are giving up when they agree to have their tax reports shared or sold to database brokers.

Furthermore, tax information in the hands of a third party would not be subject to strict privacy laws, increasing consumers' vulnerability to identity theft and other risks. Given the recent highly-publicized instances of data security breaches by information brokers, credit card processors, financial institutions, and merchants, I am astounded that the IRS has proposed changes that might enable data brokering of the information contained in an individual’s tax returns. A breach involving tax information would seriously erode public confidence in the security and privacy of sensitive tax information.

There is no more sensitive information than a taxpayer's return, and the IRS's proposal to allow these returns to be sold to third-party marketers and database brokers is deeply troubling. Tax returns provide information regarding income levels, chartable contributions, health payments, business interests, and other personal information that in the wrong hands could lead to identity theft.

Privacy protections for personal tax information are critical given the largely voluntary nature of the U.S. tax system. Our tax system depends on taxpayers providing detailed personal financial information to the federal government to ensure accurate payment of taxes. This proposal would erode that trust.

To read the proposed IRS regulations, please visit the following link:

http://www.irs.gov/pub/irs-regs/13724302.pdf



IRS Return Free proposal

I have become a cosponsor of the Tax Return Choice Act of 2006, which will prohibit the IRS from implementing a "return-free” tax filing system. In a “Return Free” tax model, a government tax agency, such as the Internal Revenue Service, automatically prepares the income tax returns of those taxpayers with the simplest returns. Having already received the W-2 forms from the taxpayer’s employer – which are now used to audit and verify returns – the agency uses government computers to calculate what it believes the taxpayer’s payment or refund should be.

The agency then sends a written determination and a bill to the taxpayer. The taxpayer can accept the government’s calculations, make adjustments, or ignore the determination and complete and submit a separate return. Return Free advocates and tax bureaucrats argue that this is a convenience for the taxpayer.

There are several major reasons why this “taxpayer service” is flawed, dangerous to taxpayers, and should not be a component of federal tax reform. Return Free would make the same agency that collects taxes, writes tax regulations, collects revenues, performs audits, and enforces compliance to now also become the tax preparer. As a result, the tax collector’s interest in maximizing revenue completely overrides the citizen’s interest in minimizing his or her tax liability.

For many taxpayers targeted by Return Free, getting an official “bill” from the Internal Revenue Service can be extremely intimidating, particularly for seniors, low-income and non-English speaking citizens. In some cases, taxpayers who might have additional deductions not reflected on their Return Free tax statement may feel compelled to pay the official government determination without question. In other cases, taxpayers who earned non-wage income may accept the government-prepared bill out of fear of challenging it, and mistakenly underpay and open themselves up to later investigation for tax evasion.

While Return Free will undoubtedly be advertised as a convenient timesaver, taxpayers will still have to independently determine and prepare their own taxes to verify that the Return Free bill is correct and avoid being held liable for filing a false, inaccurate or incomplete tax return. Because the sole responsibility and liability for accuracy and completeness is on the individual, Return Free does not result in a reduction of burden or the substitution of government compliance work for that expected of the citizen.



Summer Internships in Washington

I am looking for students to serve as summer interns in my Washington, DC office who have completed at least their second year of college, have a keen interest in government, and are willing to work long hours.

The Summer Intern Program is divided into two six-week sessions. The first session will begin Tuesday, May 30, 2006 and will end Friday, July 7, 2006; the second session will begin Monday, July 10, 2006 and conclude Friday, August 18, 2006. The program provides a $200 per-week stipend, and although no housing is provided, we do have information on housing in the area.

Please send a resume with cover letter, a brief (1-2 pages) writing sample, and 2 letters of recommendation to the attention of Michael Calvo of my Washington staff by Friday, March 31, 2006. You may also email this information to Michael at michael.calvo@mail.house.gov or mail your information to the following address:

339 Cannon House Office Building
Washington, DC 20515

Internships are also available during the school year. If you have an interest in serving during this time, please send the same information that is requested above and what period of time you would be available.