The Internal Revenue Service released a revenue ruling that updates the rules for the tax return disclosure restrictions for government employees in light of the Taxpayer First Act.
The revenue ruling provides some examples of hypothetical situations involving federal government employees, state government employees, attorneys and the parents of a five-year-old film star. “Situation 6: G is the father of 5-year-old film star H. H’s mother signs H’s return as parent for a minor child and dies shortly thereafter. G is the guardian of H’s estate under applicable state law. G receives notice that H’s return is under examination by the IRS. G does not have a copy of H’s return, so G obtains the return and return information from the IRS. When subsequently asked by a news reporter how much income H reported on the return, G replies ‘three million dollars.’”
The IRS notes that generally, Section 6103 provides that tax returns and tax return information are confidential and may not be disclosed except as expressly authorized by the Tax Code. Specifically, it prohibits the disclosure by officers or employees of the federal government, of any state, or of local government agencies, or by certain other specified persons, of returns and return information obtained in connection with their service.
Notably, it does not try to address what to do with disclosing the tax return information of a former president of the United States.
However, the guidance points out, “There is no evidence that Congress intended to limit the redisclosure of return information received by government employees under section 6103(e) and (k)(6) merely because they happen to be government employees. On the contrary, there are compelling reasons for those government employees to be subject to the same rules as other recipients. For example, a private sector employer may take disciplinary action against employees who do not properly fulfill their tax obligations. If redisclosure of return information is not permitted because the employer happens to be the federal government, the federal employees who failed to fulfill their tax obligations would be in a significantly better position than their private sector counterparts. This inappropriate result only occurs if section 6103(a) is read to apply to individuals merely because they happen to be government employees. Accordingly, persons are not barred because of their status as government employees from redisclosing returns and return information received pursuant to section 6103(e) or (k)(6).”
The Taxpayer First Act puts some restrictions on who outside the IRS can access tax return information. The IRS is not supposed to be able to divulge information on a tax return to any local, state or federal agency or its contractors, unless they have specific measures in place to safeguard the information.
