Congress Should not Abuse Taxpayer Privacy

Floor Speech

Mr. VAN HOLLEN. Mr. Speaker, I rise today in complete support of the unanimous consent agreement to strike the FY `05 omnibus spending bill provision that would allow congressional staff and appropriators access to individual tax returns. But I must point out that Congress has made a similar mistake by dropping from the same bill a House amendment advocated by Representative CAPITO and me, that would have prevented 2.6 million tax returns a year to be turned over to private contractors for the purposes of tax collection. While Congress is attempting to correct what is clearly a bad idea to allow congressional staff and Members of Congress to peruse individual tax returns, taxpayers are also vulnerable to potential abuses of tax return disclosure through private debt collection agents.

Prior to the 2004 election, Congress enacted H.R. 4520, the corporate tax bill that will give the IRS private tax collection authority. The enacted language allows the IRS to use private collection agencies to collect tax debt. This means that up to 2.6 million tax returns--which are currently only scrutinized by federal government employees--will now be open to at least 10 private collection agencies within the first 6 months, and an untold number of private debt collection staff.

While IRS employees are explicitly forbidden from being evaluated on the basis of revenue collected, the private collection scheme would actually link contractor pay to the amount of revenue collection. This policy encourages contractors to use aggressive collection techniques to boost their remuneration. Furthermore, the IRS is currently liable for damages to a taxpayer resulting from the misuse of confidential information by an IRS employee, but taxpayers will not be able to recover damages from the federal government where contractors are guilty of malfeasance.

What's more worrisome is the IRS' inability to oversee the work of these private debt collectors. A 1996 pilot program for private collection was so unsuccessful that a similar pilot program planned for 1997 was cancelled outright. The contractors used in the pilot programs regularly broke the Fair Debt Collection Practices Act, did not protect the security of personal taxpayer information, and even then failed to bring in a net increase in revenue.

The IRS has said that it has learned from the 1996 project and is better equipped to address the problems raised. However, even recent evidence is to the contrary. An eye-opening report by the Treasury Inspector General for Tax Administration (TIGTA Audit #200320010) shows how IRS contractors put taxpayers' data at risk. The TIGTA audit found that the ``lack of oversight of contractors resulted in serious security vulnerabilities.'' The report, found that, ``contractors blatantly circumvented IRS policies and procedures even when security personnel identified inappropriate practices.''

The objective of the review was ``to determine whether the Internal Revenue Service (IRS) has adequately protected Federal Government equipment and data from misuse by contractors.'' The review found: ``The involvement of non-IRS employees in critical IRS functions increases the risk of misuse or unauthorized disclosure of taxpayer data, and could lead to loss of equipment or sensitive taxpayer data through theft or sabotage.''

Under the current conditions of rampant identity theft and deteriorating privacy here in the U.S., the federal government ought to be strengthening and protecting taxpayer privacy where it can. A first step is to eliminate the egregious provision placed in the Omnibus Bill. But a second, and more critical step, is to abolish the IRS' plan to place 2.6 million tax returns in front of private collection agencies and their staffs. This proposal sets a dangerous precedent down a path of contractor abuse and taxpayer distrust.

I urge my colleagues to join me in the 109th Congress in working with the IRS to find a more effective means of collecting delinquent tax debt collection and avoid this risky scheme altogether.

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