More on the IRS Selling Your Financial Data

Did you know that in large tax preparer franchises, that anyone in the organization has unrestricted access to your tax records? They do. Are you aware that many tax professionals outsource your tax preparation to contractors overseas? They do. It’s also a fact that smaller companies do not have the electronic capabilities to complete your returns and must use outside computer facilities.

In other words, your income tax data is all over the place just like your name and other private information. Read about it in William Perez’ article in About.com: “IRS Issues Proposed Regulations to Safeguard Taxpayer’s Privacy.” Perez mentions even more participants in the laying open of your financial life, which are banks, loan companies, and investment firms, that partner with the tax pros.

So now they want to open the door to marketing your financial data in the same way they sell lists like Sharper Image, LL Bean, Coldwater Creek, Brookstone and thousands of other mailing lists on the market. And you know who’s standing in line to confiscate your name and all the goodies that go with it? Five hundred list managers and several data brokers that will compete for the right to hawk 295 million tax returns to whoever has the money to buy them.

This will provide a generous increase to the $4 billion already made from your names and private information each year. And…not one penny goes into your pocket. If that doesn’t gall you, it should. Restraint is called for now more than ever, and it can be accomplished by the passing of federal legislation that will give the individual control over their name and personal data, and paying them when it is sold.

Rep. Ed Markey of Massachusetts, a Democrat, along with some other congressional leaders, apparently opened this can of worms by voicing his concern over the outsourcing of tax preparation services to IRS Commissioner, Mark Everson. Markey now seems satisfied with Everson’s regulations allowing the sale of your financial data, which is another strike against the Democratic Party.

Please tell me. How did we end up with the dimwitted notion that it is realistic to place some of the consumer’s most private information in harm’s way, after over 100 data breaches in 2005, affecting 56 million people, at a cost of $47.5 billion? And the beat goes on in 2006 with at least 10 breaches already. I’ll tell you how. The current trend by the GOP to shove as much action toward the business community that it can, protect the banking industry and the consumer be damned. Read another good piece in OpEdNews.com by Douglas Drenkow: “Backed by Big Money, Congress May Gut Identity Theft Laws.”

Two of the largest tax preparers have been involved in legal action over how they handle personal data. H&R Block is being sued by New York State Attorney General Eliot Spitzer for fraudulently marketing retirement savings plans to its customers that caused heavy financial losses. See the Reuters article on MSNBC.com, “New York charges H&R Block with fraud.” The company admits another breach in Kansas City, in an Associated Press piece, “H&R Block acknowledges privacy breach,” again, on MSNBC.com. Get this: they put the recipients Social Security number on the mail out label for software that was being sent.

As an example of general ethics, another biggie in the tax preparation business, Jackson Hewitt, had a manager of one of its locations in Michigan sentenced to 18 months in prison, followed by three years of supervised release, and ordered to pay $231,053 in restitution. Also in Michigan, a second JH manager sent up for 30 months plus three years supervision, and had to pay $229,805. Each was convicted of conspiracy to defraud the IRS by inflating the refunds of clients. You can read about this on the IRS site: “Tax Return Preparer Fraud.”

The consumer does have to give their consent for tax preparers to sell their financial data. A move that I, as a list expert in the junk mail industry for over 35 years, would consider insane. Haven’t we already lost too much control over our personal data? The public hearing on this issue is being held April 4. All I can say is I wish I could be there.