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FOR IMMEDIATE RELEASE
March 23, 2006
AG McKenna Opposes Proposed IRS Rule; Says Selling Tax Returns Raises Risk of Identity Theft


SEATTLE – Attorney General Rob McKenna spoke in opposition today of the IRS’s proposed new rule that would allow tax-return preparers to sell information from individual returns to third parties.

McKenna joined U.S. Rep. Jay Inslee, D-Mountlake Terrace, and members of the Washington Society of Certified Public Accountants, the Evergreen Freedom Foundation and WashPIRG during a bipartisan roundtable event in Seattle with constituents.

“I’m very concerned that the rule proposed by the IRS turns current taxpayer privacy protections on their head,” McKenna said. “The proposal would replace the current regulation, which strictly limits disclosure of tax return information even with the taxpayer’s formal consent, with a much more permissive consent procedure under which a tax preparer could include multiple uses and disclosures in forms.

“Consumers need to be aware that sensitive tax return information in the hands of a dishonest person can result in identity theft, financial crimes or even physical harm to consumers,” he continued.

McKenna said that the proposal would allow information that most consumers consider strictly private to be exchanged. This includes Social Security numbers, addresses, medical expenses, information about dependents, income, stock ownerships, bank account numbers and other information found on tax forms.

Inslee, who wrote a letter this week to the IRS, said, “Americans taxpayers deserve an opportunity to weigh in on a plan that would put their most personal and private information up for sale to marketers.”

“We understand the IRS intends to prevent unauthorized access to this sensitive information by requiring the taxpayer’s prior written consent,” McKenna said. “However, it’s difficult to imagine a consumer giving meaningful consent while being inundated with papers and forms in the midst of the complicated business of filing a tax return. Furthermore, I’m concerned about what happens to that information after the initial consent has been granted, when the information is sold and possibly re-sold to even more distant third parties.

“The IRS should either amend its proposed rule to create more protections for sensitive, private information – rather than fewer ones – or simply leave the existing rule alone,” McKenna said.

A hearing on the rule is set for April 4 in Washington, D.C.

“Citizens still have an opportunity to voice their concerns to the IRS before changes are final,” said Bob Williams, Evergreen Freedom Foundation president, “but act quickly.”

While the formal comment period for the proposed rule change ended, IRS said comments may be directed to: Dillon Taylor at the Office of the Associate Chief Counsel, 202-622-7752, 202-622-4940 or dillon.j.taylor@irscounsel.treas.gov.

The Washington State Attorney General’s Office is a leader on identity theft and privacy issues. McKenna convened Washington’s first statewide Identity Theft Summit last fall, then testified on behalf of legislation that would have amended the state’s credit report security freeze law to protect more consumers. McKenna also solicited additional funds from the Legislature for the Consumer Protection Division, part of which were used to hire two new attorneys and a computer forensics investigator to fight identity theft and high-tech fraud.

Click here for a Q&A document that provides a comparison between the current IRS rule and the proposed revisions.

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Media contacts:

Kristin Alexander, Public Information Officer, (206) 464-6432, kalexander@atg.wa.gov
Janelle Guthrie, Media Relations Director, (360) 586-0725, janelleg@atg.wa.gov

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