Tags: tax | identity theft | police | fraud

Your Private Tax Information to Be Shared with All 50 States

Monday, 01 Apr 2013 07:42 AM

By Denis Kleinfeld

"The unexamined life is not worth living." — Socrates

Starting March 29, 2013, that is a problem American taxpayers will no longer have.

Presumably with the blessing of Congress, the IRS will be sharing your tax information with local law enforcement officials in all 50 states.

Federal tax privacy law generally prohibits the IRS from sharing tax information with other parts of the government. After all, who would readily file the most intimate details of their financial life with the IRS if all sorts of federal bureaucrats, as well as state and local police, would have easy access to it?

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Disclosure of tax information is a big deal. The IRS is a stickler on the most minute detail when any tax professional is representing a taxpayer before the IRS.

IRS personnel won't even talk with the taxpayer's tax professional unless Form 2848 Power of Attorney, is exactly correct.

Restricted sharing of tax information within the federal government includes, subject to strict guidelines, the House Ways and Means Committee, the Senate Finance Committee, certain other Congressional committees approved by a resolution and the Joint Committee on Tax.

Why does the IRS want to use state and local police in tax enforcement?

The government needs help since tax losses due to identity theft are mounting in the billions of dollars annually. And there does not appear to be any end in sight.

A release by the government says that this program "is an effective way for law enforcement to work with the IRS to pursue identity thieves and protect taxpayers."

It strikes me as an odd way of thinking. Normally we think of identity thieves as taking our identity to get our bank accounts and use our credit cards.

Here the thieves have found a way to use the government’s own system to get money paid to them, fraudulently to be sure, from the government.

True identity fraud is rampant and the government is a bystander. But when it is the government's purse getting picked then suddenly the bureaucrats are eager to "protect taxpayers."

Apparently, stopping the filing of fraudulent returns is not possible under the current income tax system. Basically, the government's tax bank cannot be protected so it is a matter of chasing the thieves after they have made off with the money.

Under this method, once a taxpayer's identity and refund has been stolen and law enforcement has evidence of the tax-related crime, then the taxpayer would sign a waiver of privacy and the tax return information would be provided.

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No doubt, the White House's Privacy and Civil Liberties Oversight Board may yet get a Chairman of the Board appointed and hire staff to look into this trampling of civil liberties and obvious expansion of leakage of private taxpayer information.

In the meantime, Congress is looking out for the taxpayers. Why, Sen. Bill Nelson, D-Fla., chairman of the Senate Special Committee on Aging, is going to hold a hearing on tax-related identity theft.

That certainly will help make life worth living.

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