In
the past few weeks, there’s been a lot of talk about increasing IRS enforcement
to bring in more money to the government.
That’d
be fine if we could trust the IRS to keep taxpayer information safe and
actually use it to enforce the tax code.
Unfortunately,
that notion is waffling on pretty shaky ground at the moment.
In
June, the non-profit journalism webpage ProPublica began publishing stories
that appear to contain confidential taxpayer information that might have come
from the IRS.
Unfortunately,
attention has focused more on the private tax affairs of the victims of these
actions than on the apparently illegal actions taken to produce the data that
forms the basis of these stories.
The
confidentiality of taxpayer information is sacrosanct.
Why?
Because a federal income tax return contains some of the most sensitive
information there is about our fellow Americans.
A
tax return is essentially a blueprint for how families and individuals live
their lives.
Aside
from detailing where and how taxpayers support themselves and earn money, tax
returns potentially detail what charities, including religious institutions, a
taxpayer supports. They can also detail where and how they take care of their
children, their medical status and lots of other deeply personal information.
In
part to promote tax compliance, Congress decided that, in exchange for
collecting the sensitive information needed to enforce the Internal Revenue
Code, the IRS must treat this information carefully and protect it from
unauthorized access and disclosure.
Significant
criminal and civil penalties apply to any violation of those terms.
Nevertheless,
the ProPublica stories, published in a series titled “The Secret IRS Files, Inside
the Tax Records of the .001%” are plainly derived from confidential taxpayer
information.
The
folks in charge of enforcing the tax code quickly recognized the problem here.
That
very morning, IRS Commissioner Rettig was testifying before the Senate Finance
Committee, and said he appreciated the confidential nature of the information
collected by the IRS and how important it is that people are able to trust the
IRS with that information.
Commissioner
Rettig isn’t the only Treasury official to express concern.
When
asked about this apparent abuse of taxpayer information at a Finance Committee
hearing on the President’s fiscal year 2022 budget request held on June 16,
Treasury Secretary Yellen said she agreed the situation was serious and that
the matter has been referred to the Justice Department.
The
week before, appearing before a different Senate committee, Attorney General
Garland also said this was a serious matter and that people are entitled to
privacy regarding their tax information.
I
agree with Commissioner Rettig, Secretary Yellen and Attorney General Garland
that the apparent leak of confidential information is a very serious issue.
For
one thing, we don’t know exactly where the information came from. Was it a
leak? A hack? We don’t know.
We
also don’t know the full scope of information at risk.
According
to ProPublica, it has “obtained a vast trove of Internal Revenue Service data
on the tax returns of thousands of the nation’s wealthiest people, covering
more than 15 years.”
Let
me say that again. ProPublica claims that is has thousands of tax returns.
Americans
know the risk of having their private information unsecure and in the wind. They
know the risks, for example, of fraud and identity theft.
According
to the most recent IRS Electronic Tax Administration Advisory Committee Annual
Report to Congress, issued in June of 2021, 185,000 identity theft affidavits
were filed with the IRS in 2020.
The
report also notes that due to pandemic relief, higher levels of identity theft
are expected during the 2021 filing season.
Sure,
in this case, ProPublica has decided that the wealthiest individuals are the
ones worth targeting. But again, we don’t know the full scope of information
that is at risk.
Maybe
you’re not the owner of a sports team, or the head of a multinational company
or haven’t built a vehicle in which you have recently travelled into outer
space. The unauthorized access and disclosure of taxpayer information should
concern all taxpayers.
If
someone can expose the most private and sensitive information of the nation’s
wealthiest citizens, they can do it to anyone.
Regardless
of what anyone thinks about the known victims of this disclosure, no one should
be absolutely confident that their information hasn’t been compromised.
As
soon as the apparent disclosure of taxpayer information was known, I pressed
authorities in the executive branch to take action. I questioned Commissioner
Rettig about it during a Finance Committee hearing that very day.
Three
days later, I sent a letter
with Leader McConnell and Finance Ranking Member Crapo to Attorney General
Garland and FBI Director Christopher Wray asking them to take action in this
matter.
In
part the letter reads, “Find those responsible for these disclosures and ensure
they are punished as directed by law. Unless you do, ordinary Americans will
fall victim to these politicized and criminal disclosures, and trust in the IRS
and our tax system will continue to erode.”
On
the same day, I joined every other Republican on the Finance Committee on a letter
to the Treasury Inspector General for Tax Administration asking for an
immediate investigation.
Following
Treasury Secretary Yellen’s June 16 appearance before the Finance Committee, I also
submitted several questions to her in writing. My questions ask about the scope
of the leak or hack and whether or not anyone with advanced knowledge of the
first ProPublica piece had reached out to Treasury or the IRS.
On
June 16, I sent a letter
to Attorney General Garland and FBI Director Wray with other Judiciary
Committee Republicans seeking a briefing and confirmation that the FBI or
Department of Justice is investigating.
I
have not received a single response to any of my written inquiries.
There
appears to be a massive flaw somewhere in our system of tax administration. Our
job is to determine exactly what the situation is, how it happened, and how we
can fix it.
Unfortunately,
it appears some are using the apparent illegal disclosure of taxpayer
information and the violation of taxpayer rights to advance a partisan agenda.
It’s
important to note that the ProPublica pieces aren’t talking about tax evasion,
but generally tax avoidance, which is the legal minimization of taxes owed.
On
June 24, ProPublica published a story about Roth IRAs using the information of
a wealthy tech investor. The purpose of this story was to show that this
investor “and other ultra-wealthy investors have used them to amass vast
untaxed fortunes.”
The
next day on June 25, ProPublica published a story highlighting a senior Democratic
Senator’s legislation intended to crackdown on large Roth IRA accounts; the
same type of accounts criticized in the previous day’s article.
A
different ProPublica story seemed intended to wield private taxpayer
information to affect the outcome of an election.
On
June 16, ProPublica published a story containing taxpayer information of a
candidate in the Democrat primary to be the next District Attorney of Manhattan.
Given
how concerned many of my colleagues have been about potential election
interference, I’m shocked that this story completely missed their attention.
If
a candidate’s confidential, legally protected information is somehow disclosed
less than a week before an election, especially when we don’t know the ultimate
source of the confidential information or how it was obtained, shouldn’t that
raise some red flags?
Or
does it only matter depending on who the candidate is?
Finally,
I want to address ProPublica’s role in this situation.
Although
they may be well intentioned, in my opinion they’re facilitating an abuse of
power by publishing stolen, confidential information of individual citizens who
are by all appearances complying with their legal obligations.
They
think they are informing the public of information they need to know. They are
really telling the public that their tax-return information may not be private.
That
could have serious consequences for the proper administration of our tax laws.
Plainly,
this isn’t about tax cheats who broke the law. It’s about certain people not paying
what ProPublica thinks they should pay, regardless of the law.
It’s
about promoting changes to the tax law that ProPublica, and certain members of
this body, would support.
The
identities of the specific taxpayers that we know have had their information
violated isn’t an excuse.
The
notion that taxpayer information – every taxpayer’s information – should be
protected is not a view only held by this senator.
I’ve
quoted the Treasury Secretary and the Attorney General as holding that view.
The
use of this information to advance partisan objectives and apparently to
influence an election should concern all of us.
We
need to get to the bottom of what happened. We need to know what taxpayer
information is at risk, how many taxpayers have been compromised and then
determine what we can do going forward.
I
implore Secretary Yellen and Attorney General Garland to respond to my
questions and letters so we can get on with our important work.
