The IRS is planning to share tax return information with accountants and tax preparers. Under the new proposal, once you sign an authorization form, the third party preparer is free to sell the data contained in the filings to corporate marketers. That data includes everything from income figures to bank accounts, Social Security numbers, and other private information.
Nothing good can come out of this plan. Without regulations for how the data is used, identity theft will likely skyrocket. There is also nothing that would restrict tax preparers from offering people incentives to authorize the release of their personal data. With the mountains of paperwork being filled out at tax time, it would be easy enough for tax preparers to toss another form in there and get taxpayers to sign.
Interestingly, one of the companies that has opposed this change, H&R Block, has its own legal woes, facing a lawsuit charging that the firm violated fifteen separate state and federal laws when it marketed and sold Refund Anticipation Loans. But, Murray Walton, vice president and compliance officer at H&R Block, told the officials, "we find the idea of selling tax return information repugnant." It seems H&R Block is trying to rehabilitate its image.
Barack Obama (D-IL) and Maria Cantwell (D-WA) are working to keep tax payers' information private and have introduced the Protecting Taxpayer Privacy Act which would prohibit tax preparers from disclosing taxpayer information to third parties. Republicans and Democrats alike are backing the Privacy Act. Hopefully this rare act of bipartisan support will help prevent the IRS from pushing its new policy.