Is Your Tax Return Information For Sale?

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The IRS recently proposed a new rule that, if it becomes effective, may relax what taxpayers may believe is a presumption of privacy for federal income-tax returns. The rule would allow accountants and other tax-return preparers to sell information from individual returns -- to marketers and data brokers, which will ostensibly be able to offer us new products and services as a result.

The IRS and Treasury Department published the proposed rule in the December 8 Federal Register, among a set of rules labeled as "not a significant regulatory action." But some consumer and privacy-rights advocates consider the rule very significant indeed - for reasons I will explain in this column. IRS officials portray the proposed changes as house-cleaning measures needed to update old regulations that were long overdue. But in reality, they are much more than that.

The proposed regulations -- which would amend Section 7216 of the Internal Revenue Code -- will become effective 30 days after a final version is published, if not amended in response to comments. A hearing on the proposed rules is scheduled for April 8.

Consumer and privacy-rights advocates are likely to attend the April 8 hearing and/or submit comments beforehand, to voice their worries and seek changes to the proposed rule. As I will explain, they are right to worry: It is time for taxpayers and Congress to reexamine if and when it is appropriate for tax return data to be sold on the free market.

http://writ.news.findlaw.com/ramasastry/20060403.html

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1. only if you use a third party AND authorize release

i think we should still oppose this, because ultimately it gives third parties the right to charge more to people who want to protect their privacy, and i don't think that's right.

but the issue is far less scary than, say, the irs directly releasing this information.