The Corner

Economy & Business

Your Tax Return Is Confidential… Until It Isn’t

The Internal Revenue Service building in Washington, D.C., May 27, 2015 (Jonathan Ernst/Reuters)

“Taxpayers have the right to expect that any information they provide to the IRS will not be disclosed unless authorized by the taxpayer or by law,” declares the Internal Revenue Service.

Unless, of course, someone within the agency chooses to leak your return to ProPublica.

The news organization publishes a vast trove of information about the country’s wealthiest taxpayers and declares this morning, “we obtained the information from an anonymous source who provided us with large amounts of information on the ultrawealthy, everything from the taxes they paid to the income they reported to the profits from their stock trades… We also believe that disclosure of specific figures about the tax returns of people like Jeff Bezos, Michael Bloomberg, Warren Buffett and Elon Musk will deepen readers’ interest and understanding of this complex and arcane subject.”

The relevant question is not whether you like Jeff Bezos, Michael Bloomberg, Warren Buffett and Elon Musk. The question is whether the IRS declaration that tax returns are confidential applies to everyone or not. This morning it’s pretty clear that the your tax return is confidential, as long as no one at the IRS thinks it is newsworthy. But if they do, you’re screwed. (It is highly unlikely that anyone outside of the IRS would have access to the tax returns of all of these figures.)

ProPublica explains today that they’ve been down this road before:

In 2012, someone at the IRS (we don’t know who or why; they used a plain brown IRS envelope) sent ProPublica copies of tax filings seeking exemption for a number of political committees, including Republican political guru Karl Rove’s Crossroads GPS. The filings were not yet supposed to be public, and the IRS indicated that it would consider our publication of them to be criminal. We explained our view of the constitutionality of that statute as applied in such circumstances and published our story, which raised concerns about whether Rove’s group had been forthcoming with the agency. We never heard about the matter from the IRS again.

The attempted prosecution of journalists for publishing disclosed information is rarely a good idea, and rarely works out; judges often correctly conclude that prosecuting someone for publishing sensitive or classified information is too much of an infringement of the First Amendment. The true problem isn’t the reporters, it is the people with access to classified, privileged, confidential or sensitive information who decide to violate their oaths and the law to leak that information, and that is the proper target for prosecutions. That said, a publication can look at leaked information and conclude they’re not going to play a supporting role in the violation of a person’s right to privacy.

ProPublica writes today, “the IRS records show that the wealthiest can — perfectly legally — pay income taxes that are only a tiny fraction of the hundreds of millions, if not billions, their fortunes grow each year.” In other words, Jeff Bezos, Michael Bloomberg, Warren Buffett and Elon Musk obeyed the law. ProPublica isn’t exposing a crime here. ProPublica explicitly states this report exposes something they deem unfair. But your gripe about the fairness of the tax code doesn’t outrank somebody else’s right to keep their tax return confidential.

The IRS also states, “taxpayers have the right to expect appropriate action will be taken against employees, return preparers, and others who wrongfully use or disclose taxpayer return information.” We will see if the IRS holds anyone accountable for this breach.

It’s probably those darned low-level employees in Cincinnati again.


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