WASHINGTON, DC – U.S. Representatives Pete Stark, Jim McDermott, Jay Inslee, and Melissa Bean today introduced the Taxpayer Privacy Act. Representatives Stark and McDermott are senior members of the Committee on Ways and Means with jurisdiction over U.S. tax policy. The bill prevents the sale and distribution of confidential taxpayer information and prohibits tax preparers from sending returns overseas to be processed.

“In the information age, the government should do more rather than less to safeguard taxpayer privacy and prevent identity theft,” said Representative Stark. “Allowing tax preparers to coerce Americans into signing away their privacy rights would open two Pandora’s boxes, one for criminals and the other for salespeople. The Taxpayer Privacy Act would ensure that private information remains just that – private.”

Existing rules limit the use of tax return information to “affiliate groups,” such as other divisions of tax firms’ holding corporations. But on December 8, 2005, the IRS in the Federal Register proposed the elimination of the affiliation requirement. The new rule would allow tax preparers to sell or distribute the sensitive personal information contained in tax returns – including name, address, Social Security number, employer, income, and charitable donations – to any and all interested third parties.

Representative Jim McDermott said, “Just in time for tax season the Bush Administration wants to reward its corporate friends who prepare tax returns with a new revenue stream -- the American people. The President wants to let tax preparers share and sell the private, confidential information contained in a tax return. How's that for a refund? The President will put profits ahead of privacy unless this bill is enacted.”

Many tax firms currently outsource preparation to contractors overseas. But the IRS cannot safeguard the privacy of sensitive information once it's been sent abroad. Outsourcing therefore invites the unauthorized sale and distribution of Americans’ private information on the international black market.

“Today the IRS is considering a rule to weaken privacy protections for taxpayers, when it should be finding new ways to safeguard sensitive data in this era of security breaches and identity theft,” added Representative Inslee, who sent a letter to the IRS and held a roundtable discussion in Seattle with concerned taxpayers, accountants and privacy advocates last month. “If the agency won't stand up for consumers, Congress will.”