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IRS wants to allow third parties access to your return

Thursday, March 09, 2006

Warning: Once your tax return information is disclosed to a third party per your consent, we have no control over what that third party does with your tax return information. If the third party uses or discloses your tax return information for purposes other than the purposes for which you authorized the disclosure, under Federal tax law, we are not responsible for that subsequent use or disclosure, and Federal tax law may not protect you from that disclosure.
-- The consent language of the Internal Revenue Service's proposed rule to open your tax records for a buck.
[Welcome, Americablog readers. You can read more fresh Blend here.]

Damn. Every piece of your life is up for grabs.(SFGate):
The Internal Revenue Service has proposed a new rule that would llet tax preparers sell or share a client's tax-return information with third parties, as long as they got the client's consent.

Three consumer organizations on Wednesday called the proposal shocking and urged the IRS to drop it.

They fear that many taxpayers could be rushed or duped into signing the consent form when they are signing their tax returns and related documents. They could end up losing control over financial data they wouldn't want their closest friends or family to see, much less outside marketing and database firms.
The laughable defense of the IRS's desire to let H&R Block and all of those kinds of outlets collect and sell your personal information is that the current prohibitions against sharing confidential data with third parties "restrict the ability of taxpayers to control and direct the use of their own tax return information as they see fit."

Those current restriction allows tax preparers to share your information only with affiliated companies that provide investment products or advance refund loans. The new consent form opens the world of any third party access to your tax records.

The one other frightening portion of the story, almost a throwaway line, was that some U.S. companies are also currently outsourcing tax prep work without the customer's OK; India was specifically mentioned as one location your financial information could end up. The IRS, in trying to mitigate the proposed third party nonsense, boasts that the new rule prohibit the tax preparers from sending tax returns overseas without the customer's consent. Again, if someone isn't paying attention and signs that consent form, you're SOL.

Needless to say, H&R Block and Jackson Hewitt did not return requests for a comment.

Hat tip, Paul.