Jay Inslee: Washington's 1st Congressional District
Issues
Protecting Your Privacy
Lawmakers pressure IRS to protect taxpayer privacy
4 April 2006
Members of Congress made clear they don't favor an Internal Revenue Service (IRS) plan that would allow the sale or distribution of sensitive financial and personal information on tax filings to marketers and data-collection companies.
"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," said U.S. Rep. Jay Inslee (D-Wash.), a critic of the federal agency's proposed rule change. "If the agency won't stand up for consumers, Congress will."
Inslee, who sent a letter to the IRS and held a roundtable discussion in Seattle with concerned taxpayers, accountants and privacy advocates last month, filed legislation with two senior members of the House Committee on Ways and Means, U.S. Reps. Pete Stark (D-Calif.) and Jim McDermott (D-Wash.), and another from the House Committee on Financial Services, U.S. Rep. Melissa Bean (D-Ill.), that would preempt the change of privacy rules and prohibit tax preparers from processing returns overseas, where consumer protections are weak or non-existent.
Additionally, a bipartisan coalition of over 20 lawmakers, led by Inslee, sent a letter today requesting the IRS to explain how their proposed rule shift is consistent with existing laws that restrict the disclosure of information gleaned from tax returns. They also urged an extension of the public comment period on the controversial rule.
In December, the IRS quietly slipped the rule-change proposal in the Federal Register and characterized it as an effort to update regulations on obtaining consent to disclose information in tax filings. The day before its publication, the IRS posted a news release on its Web site titled, "IRS Issues Proposed Regulations to Safeguard Taxpayer Information."
Companies that offer tax-preparation services now can share data with their corporate affiliates, such as banks, if a taxpayer provides written consent. But the new rule vastly would expand information sharing.
The IRS held a hearing on the rule today at 10 a.m. EDT in Washington, D.C.