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Washington, D.C. – Congressman Jim Renacci, Senior Ways & Means Committee Member, introduced legislation to limit re-disclosures and unauthorized uses of tax return information.  The bill is known as the “Protecting Taxpayer Confidentiality through Safeguards Act.”

With limited exception, it is universally agreed that tax returns and tax return information should be kept confidential.  However, present law does not adequately require that a recipient of such information strictly maintain its confidentiality.  As a result, taxpayer information is too frequently used for reasons beyond the reason for which it was disclosed.  In an effort to protect taxpayers and promote taxpayer compliance, general confidentiality and disclosure protections should be maintained with only the narrowest exceptions.

Background:

Tax returns and tax return information are generally confidential and cannot be disclosed unless the taxpayer provides consent.  However, once a taxpayer releases their tax return information to a third party, the recipient is not prohibited from using it for purposes beyond the purpose for which the taxpayer granted consent.  According to the IRS’s National Taxpayer Advocate, recipients can currently share the information with affiliates, publish it, or even sell it.

Considering the sensitivity of such information, recipients of taxpayer information should not be permitted to use the information beyond the intended purpose.  That is unless the taxpayer expressly grants permission.  Because situations like applying for a mortgage may require a taxpayer to grant third parties access to their tax returns information, there need to be safeguards that limit recipients from abusing this access.

H.R. 5376 would require recipients of tax return information to comply with enhanced confidentiality safeguards.  The bill would provide that parties designated by a taxpayer to receive tax return information may not use the information for any other purpose other than the limited purpose for which the authorization was granted.  Likewise, the bill prohibits third parties from disclosing the information to any other party without written consent from the taxpayer. 

 

 

The Renacci Report

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