Union fights proposed tax regs

A union leader is calling proposed Internal Revenue Service guidance on tax preparers’ use of tax information an outrageous assault on taxpayer privacy. But IRS officials say the proposal would strengthen taxpayer protections.

The guidance, proposed last December, would bar tax return preparers from releasing tax information without taxpayers’ consent, according to the IRS.

Existing regulations were drafted in the 1970s, before today’s business practices and technology, the IRS said in a Dec. 7, 2005, press release. Last year, more than half of all taxpayers filed their taxes online.

The proposed regulations would broaden the definitions of tax return preparer and tax return information, revise the manner and form of obtaining taxpayer consent to give out information, and add a requirement to obtain taxpayer consent before preparers send the information offshore.

“Safeguarding of tax return information is critical,” IRS Commissioner Mark Everson said. “It’s vital we update the preparation rules for the 21st century. Americans ought to know when their tax returns are being outsourced and prepared abroad.”

The proposed rule would require a tax preparer to obtain written consent from a taxpayer before selling tax information or the entire return, or before processing a tax return overseas, according to the National Treasury Employees Union.

Union President Colleen Kelley said the safeguard the IRS is advancing — that tax preparers will need taxpayer consent for such a sale — “truly is meaningless.”

“The IRS is turning its back on the reality of an epidemic of identity theft in this country,” she said.

The proposed regulations do not state that tax preparers can sell taxpayers’ return information, the IRS said. The regulations would require tax preparers’ use or disclosure of tax return information to be subject to the taxpayers’ informed consent.

Kelley warned that if the IRS makes it easier to get private and sensitive taxpayer information, “the agency runs the risk of seriously eroding taxpayer confidence in our voluntary tax system.”

A public hearing on the proposed regulations is scheduled for April 4 at 10 a.m.

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