From: "Rich Gauszka" 

Are they out of their freakin minds?
 http://www.philly.com/mld/inquirer/business/14147002.htm
The IRS is quietly moving to loosen the once-inviolable privacy of federal
income-tax returns. If it succeeds, accountants and other tax-return
preparers will be able to sell information from individual returns - or
even entire returns - to marketers and data brokers.

The change is raising alarm among consumer and privacy-rights advocates. It
was included in a set of proposed rules that the Treasury Department and
the IRS published in the Dec. 8 Federal Register, where the official notice
labeled them "not a significant regulatory action."

IRS officials portray the changes as housecleaning to update outmoded
regulations adopted before it began accepting returns electronically. The
proposed rules, which would become effective 30 days after a final version
is published, would require a tax preparer to obtain written consent before
selling tax information.

Critics call the changes a dangerous breach in personal and financial
privacy. They say the requirement for signed consent would prove
meaningless for many taxpayers, especially those hurriedly reviewing stacks
of documents before a filing deadline.

"The normal interaction is that the taxpayer just signs what the tax
preparer puts in front of them," said Jean Ann Fox of the Consumer
Federation of America, one of several groups fighting the changes.
"They think, 'This person is a tax professional, and I'm going to rely
on them.' "

Criticism also came from U.S. Sen. Barack Obama (D., Ill.). In a letter
last Tuesday to IRS Commissioner Mark Everson, Obama warned that once in
the hands of third parties, tax information could be resold and handled
under even looser rules than the IRS sets, increasing consumers'
vulnerability to identity theft and other risks.

"There is no more sensitive information than a taxpayer's return, and
the IRS's proposal to allow these returns to be sold to third-party
marketers and database brokers is deeply troubling," Obama wrote.

The IRS first announced the proposal in a news release the day before the
official notice was published, headlined: "IRS Issues Proposed
Regulations to Safeguard Taxpayer Information."

The announcement did not mention potential sales of tax information. It
said the proposed rules were guided by the principle "that tax return
preparers may not disclose or use tax return information for purposes other
than tax return preparation without the knowing, informed and voluntary
consent of the taxpayer."

IRS spokesman William M. Cressman defended the proposal in similar terms.

"The heart of this proposed regulation is about the right of taxpayers
to control their tax return information. The idea is to emphasize taxpayer
consent and set clear boundaries on how tax return preparers can use or
disclose tax return information," Cressman said in an e-mail response
to questions.

Cressman said he was unable to explain "why this issue has come up at
this time other than our effort to update regulations that date back to the
1970s and predate the electronic era."



Not all the changes have drawn opposition.

Beth A. McConnell, director of the Pennsylvania Public Interest Research
Group (PennPIRG), said she welcomed a requirement that a taxpayer would
need to consent to overseas processing of any portion of a tax return.

"That's a positive development, but I don't think it's worth giving up
our tax returns' privacy for," said McConnell, who plans to testify on
behalf of the U.S. Public Interest Research Group at an April 4 IRS hearing
in Washington on the rule changes.

McConnell accused the IRS of using the new limit on overseas processing to
dress up changes that would chiefly benefit tax preparers, marketers and
data brokers.

"That's a disturbing trend among Washington officials lately,"
McConnell said. "They'll offer a modest consumer protection in one
area in exchange for dramatic weakening of consumer protections in another
area, and then try to convince the public that it's all in our
interests."

Critics of the proposal said it could do more than open up sales of tax
information to data brokers and marketers, because it could undermine
taxpayer confidence in the entire tax system.

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