[Congressional Record Volume 143, Number 44 (Tuesday, April 15, 1997)]
[Senate]
[Pages S3180-S3190]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
TAXPAYER PRIVACY PROTECTION ACT
The PRESIDING OFFICER. The clerk will report.
The assistant legislative clerk read as follows:
A bill (S. 522) to amend the Internal Revenue Code of 1986
to impose civil and criminal penalties for the unauthorized
access of tax returns and tax return information by Federal
employees and other persons, and for other purposes.
The Senate proceeded to consider the bill.
Amendment No. 45
(Purpose: To amend the Internal Revenue Code of 1986 to prevent the
unauthorized inspection of tax returns or tax return information)
Mr. LOTT. Mr. President, I send an amendment to the desk.
The PRESIDING OFFICER. The clerk will report.
The bill clerk read as follows:
The Senator from Mississippi [Mr. Lott], for Mr. Coverdell,
for himself, Mr. Glenn, Mr. Roth, and Mr. Moynihan proposes
an amendment numbered 45.
Mr. COVERDELL. Mr. President, I ask unanimous consent that reading of
the amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Taxpayer Browsing Protection
Act''.
SEC. 2. PENALTY FOR UNAUTHORIZED INSPECTION OF TAX RETURNS OR
TAX RETURN INFORMATION.
(a) In General.--Part I of subchapter A of Chapter 75 of
the Internal Revenue Code of 1985 (relating to crimes, other
offenses, and forfeitures) is amended by adding after section
7213 the following new section:
``SEC. 7213A. UNAUTHORIZED INSPECTION OF RETURNS OR RETURN
INFORMATION.
``(a) Prohibitions.--
``(1) Federal employees and other persons.--It shall be
unlawful for--
``(A) any officer or employee of the United States, or
``(B) any person described in section 6103(n) or an officer
or employee of any such person,
willfully to inspect, except as authorized in this title, any
return or return information.
``(2) State and other employees.--It shall be unlawful for
any person (not described in paragraph (1)) willfully to
inspect, except as authorized in this title, any return or
return information acquired by such person or another person
under provision of section 6103 referred to in section
7213(a)(2).
``(b) Penalty.--
``(1) In general.--Any violation of subsection (a) shall be
punishable upon conviction by a fine in any amount not
exceeding $1,000, or imprisonment of not more than 1 year, or
both, together with the costs of prosecution.
``(2) Federal officers or employees.--An officer or
employee of the United States who is convicted of any
violation of subsection (a) shall, in addition to any other
punishment, be dismissed from office or discharged from
employment.
``(c) Definitions.--For purposes of this section, the terms
`inspect', `return', and `return information' have the
respective meanings given such terms by section 6103(b).''
(b) Technical Amendments.--
(1) Paragraph (2) of section 7213(a) of such Code is
amended by inserting ``(5),'' after ``(m)(2), (4),''.
(2) The table of sections for part I of subchapter A of
chapter 75 of such Code is amended by inserting after the
item relating to section 7213 the following new item:
``Sec. 7213A. Unauthorized inspection of returns or return
information.''
(c) Effective Date.--The amendment made by this section
shall apply to violations occurring on and after the date of
the enactment of this Act.
SEC. 3. CIVIL DAMAGES FOR UNAUTHORIZED INSPECTION OF RETURNS
AND RETURN INFORMATION; NOTIFICATION OF
UNLAWFUL INSPECTION OR DISCLOSURE.
``(a) Civil Damages for Unauthorized Inspection.--
Subsection (a) of section 7431 of the Internal Revenue Code
of 1986 is amended--
(1) by striking ``Disclosure'' in the headings for
paragraphs (1) and (2) and inserting ``Inspection or
disclosure'', and
(2) by striking ``discloses'' in paragraphs (1) and (2) and
inserting ``inspects or discloses''.
(b) Notification of Unlawful Inspection or Disclosure.--
Section 7431 of such Code is amended by redesignating
subsections (e) and (f) as subsections (f) and (g),
respectively, and by inserting after subsection (d) the
following new subsection:
``(e) Notification of Unlawful Inspection and Disclosure.--
If any person is criminally charged by indictment or
information with inspection or disclosure of a taxpayer's
return or return information in violation of--
``(1) paragraph (1) or (2) of section 7213(a),
``(2) section 7213A(a), or
``(3) subparagraph (B) of section 1030(a)(2) of title 18,
United States Code,
the Secretary shall notify such taxpayer as soon as
practicable of such inspection or disclosure.''
(c) No Damages for Inspection Requested by Taxpayer.--
Subsection (b) of section 7431 of such Code is amended to
read as follows:
``(b) Exceptions.--No liability shall arise under this
section with respect to any inspection or disclosure--
``(1) which results from a good faith, but erroneous,
interpretation of section 6103, or
``(2) which is requested by the taxpayer.''
(d) Conforming Amendments.--
(1) Subsections (c)(1)(A), (c)(1)(B)(i), and (d) of section
7431 of such Code are each amended by inserting ``inspection
or'' before ``disclosure''.
(2) Clause (ii) of section 7431(c)(1)(B) of such Code is
amended by striking ``willful disclosure or a disclosure''
and inserting ``willful inspection or disclosure or an
inspection or disclosure''.
(3) Subsection (f) of section 7431 of such Code, as
redesignated by subsection (b), is amended to read as
follows:
``(f) Definitions.--For purposes of this section, the terms
`inspect', `inspection', `return', and `return information'
have the respective meanings given such terms by section
6103(b).''
(4) The section heading for section 7431 of such Code is
amended by inserting ``INSPECTION OR'' before ``DISCLOSURE''.
(5) The table of sections for subchapter B of chapter 76 of
such Code is amended by inserting ``inspection or'' before
``disclosure'' in the item relating to section 7431.
(6) Paragraph (2) of section 7431(g) of such Code, as
redesignated by subsection (b), is amended by striking ``any
use'' and inserting ``any inspection or use''.
(e) Effective Date.--The amendments made by this section
shall apply to inspections and disclosures occurring on and
after the date of the enactment of this Act.
SEC. 4.
(a) In General.--Section 1306(c)(1) of the National Flood
Insurance Act of 1968 (42 U.S.C. 4013(c)(1)) is amended by
striking ``30'' and inserting ``15''.
(b) Effective Date.--The amendment made by subsection (a)
shall be construed to have taken effect on January 1, 1997,
and shall expire June 30, 1997.
Mr. COVERDELL. Mr. President, as I understand the situation at the
moment, we now have until 4:05, when the unanimous consent called for
the vote. Time would be equally divided?
The PRESIDING OFFICER. The Senator from Georgia is correct.
Mr. COVERDELL. Is that about 20 minutes on each side?
The PRESIDING OFFICER. There will be 17\1/2\ minutes for each side.
Mr. COVERDELL. Mr. President, first, let me thank all the Senators
who have played a significant role in this legislation that we are
about to vote on, certainly Senators Glenn of Ohio and Roth of Delaware
and others, who have committed themselves to ending the practice on the
part of the IRS of snooping through the personal tax files of American
citizens.
Recently, the GAO issued its report on IRS system security, on April
8, which was initiated at the request of Senator Glenn. The General
Accounting Office concluded that the IRS has failed to effectively deal
with file snooping. It says:
Further, although the IRS has taken some action to detect
browsing--
That word means looking at the personal tax files of American
taxpayers.
it is still not effectively addressing this area of
continuing concern because (1) it does not know the full
extent of browsing and (2) it is consistently addressing
cases of browsing.
The GAO found that the IRS still does not know the full extent of
file snooping, it says:
Because the IRS does not monitor the activities of all
employees authorized to access taxpayer data . . ., IRS has
no assurance that employees are not--[snooping, they use the
word browsing] taxpayer data, and no analytical basis on
which to estimate the extent of the browsing problem or any
damage being done.
The Internal Revenue Service stated a zero tolerance policy, with
regard to file snooping. In 1993, Commissioner Margaret Richardson
stated:
Any access of taxpayer information with no legitimate
business reason to do so is unauthorized and improper and
will not be tolerated.
She said:
We will discipline those who abuse taxpayer trust up to and
including removal or prosecution.
[[Page S3181]]
Recent reports have documented up to 800, last year alone, files were
violated, hundreds of employees have been involved--and there have been
23 suspensions. This statement that was made to the American people has
not been fulfilled. That is why this legislation is here today.
Since the IRS Commissioner made this statement, the IRS has found
1,515 additional confirmed cases of file snooping. But, as I said, only
23 resulted in job termination and only 23 percent resulted in any
disciplinary action at all. Since 1991, there have been 3,345 confirmed
cases of file snooping by IRS employees.
This is reprehensible activity. These are very, very personal records
and are expected to be maintained in just that way. I think the irony
of this is that whenever you get at odds with IRS, you get audited.
Some would say audited is a kind word. Some people feel they have been
bludgeoned. But the IRS has been engaged in activity that is
reprehensible and it is time for them to be audited.
This measure, coauthored by myself, Senator Glenn, Senator Roth and
others, is the beginning of an audit of IRS. It is symbolic that we
pass this legislation today but it is important to note that the IRS
Accountability Act comes right behind this, the IRS Accountability Act,
which will deal not only with file snooping, but with random audits,
balancing the ledger between the taxpayer and this agency, and putting
IRS agents under the same laws as the rest of American citizens.
Recently, the Wall Street Journal, on April 3, 1997, printed an
article about IRS activities. I will quote it here. According to a
Federal jury here, this gentleman:
. . . took unauthorized looks at returns of a political
opponent, [this is an IRS employee] a family adversary, and
two associates in the white-supremacist movement whom, the
government says, he suspected of being informers. The jury
convicted [this gentleman] in December 1995 on 13 counts of
wire and computer fraud, and he spent 6 months of 1996 in
jail.
Some IRS browsers apparently are merely nosy. Geoffrey Coughlin, a
Houston account analyst, last year pleaded guilty to looking at more
than 150 unauthorized files, including those of friends and relatives,
ex-girlfriends, politicians, and sports stars.
This is another case. Robert M. Patterson, an IRS examiner in
Memphis, TN, scanned agency computers for tax records of people named
Dolly Parton, Wynonna Judd, Karen Carpenter, Garth Brooks, Elizabeth
Taylor--well, it is pretty clear, to understand the drift here.
This legislation, Coverdell-Glenn-Roth, makes it a Federal
misdemeanor, $1,000 fine, a year imprisonment under the Federal
sentencing guidelines. A convicted offender would pay costs of
prosecution and be dismissed from position where applicable. It covers
Federal employees and officers, and State and other employees who have
access to tax records.
Taxpayers whose files have been accessed and are disclosed without
proper authorization can seek civil action; such civil action against
the United States, when the offender is a Federal employee, and against
the individual offender when not a Federal employee. It requires
taxpayer notification if we certify that their files have been
improperly accessed or disclosed and they would be notified when the
offender is charged formally.
There are several Senators who want to speak on this measure. I
notice the Senator from Ohio has arrived, the coauthor of the proposal.
I am going to yield to the Chairman of the Finance Committee, Senator
Roth, who has done outstanding work on this proposal.
Mr. President, how much time do we have remaining?
The PRESIDING OFFICER. The Senator from Georgia has 9 minutes
remaining.
Mr. COVERDELL. I yield 5 minutes to the chairman of the Finance
Committee.
The PRESIDING OFFICER. The Senator from Delaware is recognized for 5
minutes.
Mr. ROTH. Mr. President, students of history may remember Henry
Stimson. He served America as Secretary of War and Secretary of State
in the first half of the 20th century. While in office, Stimson tried
to close down American counterintelligence sources. His reason, you may
recall, was that ``gentlemen do not read each other's mail.''
Today, Mr. President, Henry Stimson would not only be concerned about
counterintelligence operations but about the Internal Revenue Service
as well. Recent reports disclose that among the abuses and misuses of
power and access at the IRS is the ability of IRS employees to snoop in
the files of unwitting taxpayers.
While it's not the mail that these snoops are reading, it is
something just as sensitive. I don't know of anyone who wants his or
her detailed financial information perused without reason. The millions
of Americans who comply with the law and file tax returns each year,
should be able to do so without fear or hesitation that someone--for
purposes of curiosity, revenge, or even a more avaricious motive--is
snooping through their private information.
If Government has one responsibility to these men and women it
certainly must be to ensure their privacy. Current law does prohibit
the disclosure of confidential taxpayer information. However, the
Internal Revenue Code does not specifically prohibit IRS employees from
unauthorized inspection or snooping of confidential taxpayer
information.
I can think of no better day to call for change that today, April 15,
when once again those millions of trusting Americans are rushing their
returns off to the IRS.
You may remember, Mr. President, that last year, Congress amended
title 18 of the United States Code to make it a crime to use a computer
to snoop information of any Federal department or agency, including the
IRS. However, last year's legislation did not apply to unauthorized
inspection of paper documents.
The bill we introduce today will correct that. It will require that
tax return information be kept confidential by the IRS and it's
employees. It will ensure that IRS employees do not snoop confidential
taxpayer information.
This bill will create a criminal penalty in the Internal Revenue Code
of up to 1 year in prison and/or a fine of up to $1,000, plus the cost
of prosecution for unauthorized willful browsing of confidential
taxpayer information. The bill will also require the abusing employee
to be fired.
The bill will allow civil damages for snooping, and, if an IRS
employee is indicted for unlawful inspection or disclosure of a
taxpayer's confidential information, the bill will require that the IRS
notify the taxpayer.
Mr. President, this bill will provide additional protections and some
peace of mind for taxpayers. I want to thank Senator Coverdell and
Senator Glenn for their efforts to protect taxpayers by making it a
crime for IRS employees to snoop taxpayer data.
Mr. MOYNIHAN. Mr. President, I rise as an original cosponsor of this
legislation to associate myself with the remarks of the distinguished
chairman of the Committee on Finance. Unauthorized browsing of
confidential tax information undermines the confidence of taxpayers,
and such behavior ought to be subject to criminal penalties--which it
will be under this bill.
This legislation is a product of the bipartisan efforts of the
Senator from Ohio, Mr. Glenn, the Senator from Georgia, Mr. Coverdell,
the chairman of the Finance Committee, Senator Roth, and the Senator
from New York, among others. I join my chairman in urging its prompt
enactment.
The PRESIDING OFFICER. Who yields time?
Mr. GLENN addressed the Chair.
The PRESIDING OFFICER. The Senator from Ohio is recognized.
Mr. GLENN. We each have 17 minutes, is that correct?
The PRESIDING OFFICER. Seventeen and one-half minutes.
Mr. GLENN. I yield myself such time as I shall use.
Mr. President, today is April 15. We do not need to tell everybody
that. It is tax day for most Americans. On this day, honest hard-
working citizens voluntarily--voluntarily--share their most personal
and sensitive financial information with their Government.
All Americans should have unbridled faith that their tax returns will
remain absolutely, unequivocally confidential and zealously
safeguarded. That is the hallmark of our taxpaying system, and if this
trust is breached, it shakes the whole foundation of our very
Government, because it means our people are losing faith in their
Government.
[[Page S3182]]
That is why I am proud to be standing here today as one of the
authors, one of the sponsors, the Democratic sponsor of legislation to
outlaw what I have come to term as ``computer voyeurism.'' That is the
unauthorized inspection of your tax information by those not entitled
to see it, not the people legitimately working on your tax account.
In 1993 and 1994, as chairman of the Governmental Affairs Committee,
I held hearings which first exposed this insidious practice. We came
across it almost by happenstance.
In 1990, I was pleased to work with my distinguished colleague who
just spoke, Senator Roth, then ranking member of the committee, to pass
into law the Chief Financial Officers Act. That measure required major
Government agencies to do something for the first time which our own
private businesses take for granted. That is, producing annual
auditable financial statements so we know how much money is being
spent, where it is being spent, and how it is being spent.
I figured that of all the Government agencies which should be able to
balance its books and come up with a good auditable statement, it would
be the IRS; it should be able to account for all the revenue taken in,
and the IRS would be the agency we would look at first. In fact, before
the CFO Act, we had no idea of the differences between what revenues
the IRS reported it was collecting and what was actually on the books.
Little did I know then how wrong I really was.
For 4 years running now, the IRS has not been able to pass its own
audit. The General Accounting Office, which we asked to go in and help
audit the IRS, still cannot even render an opinion on the reliability
of the IRS's own books due, in part, to missing records,
unsubstantiated amounts, and unreliable information. If we have that
situation in the IRS, you can imagine what the situation is in some of
the other agencies of Government.
The IRS, I guess if we put it in our own household terms, it would be
records in a shoe box under the bed. If your return was being audited
and you could not come up with the documents, you would be called on
the carpet for that. You would not get too much sympathy. But all that
is another story, one of which the Governmental Affairs Committee has
held numerous oversight hearings on.
But it was through these initial GAO CFO audits we first discovered
the problems IRS was having in preventing and detecting employees who
get their kicks, apparently, out of surfing through other people's tax
returns, ones they are not supposed to be working on or looking at.
Our hearings revealed that in the years 1989 to 1994, more than 1,300
IRS employees were investigated on suspicion of snooping through
private taxpayer files. Those probes resulted in disciplinary action
against 420 workers, primarily in the Southeast region where the
investigation was concentrated.
My investigation found that some IRS employees had been browsing
through the financial records of family members, ex-spouses, coworkers,
neighbors, friends and enemies, and celebrities in particular.
They also had submitted fraudulent tax returns and then used their
computer access to monitor the IRS review of those returns.
They used the computer to issue fraudulent refunds to family and to
friends and, in fact, one employee was reported to have altered about
200 accounts and received kickbacks from inflated refund checks.
We, in Congress, at that time were absolutely stunned at these
revelations and did not believe it could happen, but it did. But it did
not light a candle to the firestorm across the country from outraged--
appropriately outraged--American taxpayers because we got a wave of
indignation. Taxpayers were shocked to know that the most personal
information they voluntarily, and in good faith, provide to the
Government could, in effect, become an open book for others' private
entertainment.
Even worse was the pitifully low number of employees fired for
committing these awful actions. It turned out that no criminal
penalties existed for these kinds of browsing offenses.
Mr. President, above the entrance to the main IRS building in DC are
inscribed the famous words uttered by Oliver Wendell Holmes:
Taxes are what we pay for a civilized society.
Unfortunately, what American citizens have been subjected to in this
case is downright uncivilized behavior.
At our hearings, the Commissioner of Internal Revenue pledged to
implement a ``zero tolerance'' policy. Warnings of possible prosecution
for unauthorized use of the system began appearing whenever workers
logged on to the main taxpayer account database. Explicit memos went
out to all employees warning them against such unauthorized activities.
Finally, a new automated detection program, called EARL--electronic
audit research log--was installed on the primary computer system to
monitor employee use and alert managers to possible misuse.
To evaluate the effectiveness of these actions, particularly the new
computer detection system, I asked GAO to conduct a review. I also
asked the inspector general at the Department of Treasury to perform an
inspection.
In the meantime, we worked with the Treasury Department, the
Department of Justice and the IRS to come up with a legislative
solution for closing the legal loophole that let browsers off the hook
from criminal punishment.
That effort culminated in the legislation, the Taxpayer Browsing
Protection Act, which I introduced in 1995 during the 104th Congress
and as S. 523 for the 105th Congress.
The goal was simple: to make willful browsers subject to a criminal
misdemeanor penalty of up to $1,000 and a year in jail, and if any IRS
employees are convicted of such an offense, they would be fired
immediately. Zero tolerance should mean what it says--absolutely,
positively no tolerance.
That legislation was incorporated into this amendment and was the
basis for the bill as is currently being considered in the House.
We were not able to pass my bill in the last Congress--we did come
close to trying to move it in the Senate--the issue has gotten more
exposure now due to two recent court cases.
Just last year, in Tennessee, a jury acquitted a former IRS employee
who had been charged with 70 counts of improperly peeking at the tax
returns of celebrities such as Elizabeth Taylor, Dolly Parton, Wynonna
Judd, Michael Jordan, Lucille Ball, Tom Cruise, President Clinton, and
Elvis Presley, just to name some of them.
More recently, just a few weeks ago, a Federal appeals court in
Boston reversed the conviction of a former employee who had been found
guilty of several counts of wire and computer fraud by improperly
accessing the IRS taxpayer database. It is reported that he had browsed
through several files, including those of a local politician who had
beaten him in an election, and a woman he once had dated. The
Government had alleged that this worker was a member of a white
supremacist group and was collecting data on people he thought could be
Government informers.
In both of these cases, though there was unauthorized snooping,
because there was no subsequent disclosure to third parties, no
criminal penalties could be meted out. As the First U.S. Circuit Court
of Appeals held:
Unauthorized browsing of taxpayer files, although certainly
inappropriate conduct, cannot, without more, sustain a felony
conviction.
Sounds ridiculous, but that is what the court ruled. That was their
interpretation of the fine print of the law. I doubt these kinds of
decisions give great comfort to honest law-abiding citizens.
I should note that last year, Congress passed the Economic Espionage
Act of 1996. My good friend, Senator Leahy, played a major part in this
effort. This law does provide title 18 criminal penalties for anyone
intentionally accessing a computer without authorization, or exceeding
authorized access, and obtaining any information from any Department or
agency of the United States. This section may be helpful in prosecuting
future cases, since it would apply to tax information stored in
computers.
This provision is not enough in our efforts to deter and punish
browsing, for, according to the IRS, it does not apply to the
unauthorized access or inspection of paper tax returns, return
[[Page S3183]]
information in other forms, such as documents or magnetic media, such
as tapes.
That is why we, all taxpayers, need the protections originally
espoused in the bill and incorporated in this amendment to specifically
fill this gap and ensure unauthorized browsing or inspection of any tax
information in any form is subject to criminal penalties, and that is
what this does. It will also provide those criminal sanctions within
the Internal Revenue Code so that the confidentiality scheme governing
tax information and the related law enforcement mechanisms are
preserved in the same section.
While I do feel the recent court decisions have spurred us on, I also
believe the new findings contained in a GAO report I released last
weekend entitled ``IRS Security Systems: Tax Processing Operations and
Data Still at Risk Due to Serious Weaknesses,'' have brought this
problem to the forefront.
This report is the evaluation I asked GAO to undertake in 1994 in
response to the actions implemented by the IRS to prevent browsing and
enforce its zero tolerance policy. It was released by GAO earlier this
year; however, because some of the specific details could potentially
jeopardize IRS security, the report was designated for ``Limited
Official Use'' with restricted access.
I have been involved in this important issue for a long time and
because I believe the public has a right to know, I requested that GAO
issue a redacted version of the report suitable for public release. I
thank GAO for their hard work in this matter and also the IRS for their
cooperation in making this possible.
The findings of GAO's report are disturbing. Even more important,
their conclusions are reaffirmed by the IRS in a comprehensive internal
report of their own compiled last fall.
In addition, I should add, they are buttressed to some extent by a
review I asked the Treasury Inspector General to conduct on IRS
computer security controls and the Service's progress in addressing the
shortcomings. That report, too, is ``Limited Official Use.'' But I can
tell you, while there have been some positive actions taken to
proactively confront this problem, we are nowhere near any satisfactory
resolution.
The bottom line is although the IRS efforts in this area are well-
intentioned, unfortunately they have come too late and fall far short
of the commitment and determination sorely needed to tackle this
problem head on.
The findings of GAO's report are disturbing. Just as important, their
conclusions are affirmed by the IRS in a comprehensive internal report
of their own compiled last fall.
GAO found that serious weaknesses in IRS's information security makes
taxpayer data vulnerable to authorized use, to modification, or to
destruction. According to GAO, the IRS also has no effective means for
measuring the extent of the browsing problem, the damage being done by
browsing, or the progress being made to deter browsing.
Finally, and this is something I am having GAO look at further, we do
not know to what extent the detection and control systems exist in
other IRS databases, besides ``IDRS,'' the primary taxpayers' account
system looked at here. That may be open for further problems.
I was struck by the candor in the IRS's own internal report on the
``EARL'' detection system. That report found its progress in management
programs to prevent and detect browsing ``painfully slow,'' as they
determined. Quite distressing to me, the IRS internal report indicated
that some employees felt IRS management does not aggressively pursue
browsing violations. Some workers, when confronted about their snooping
activities, saw nothing wrong and believed it would be of no
consequence to them even if they were caught. Hard to believe.
Mr. President, we have to fix that. When you have over 1,500
investigations of browsing cases since my last hearings 2 years ago,
and only 23 workers fired, something just is not right. That does not
sound like zero tolerance to me.
I have a more detailed summary of the major findings contained in
both the GAO and internal IRS report which I ask unanimous consent to
have printed at the end of my statement.
The PRESIDING OFFICER. Without objection, it is so ordered.
(See exhibit 1.)
Mr. GLENN. I also point out the effectiveness of controls used to
safeguard IRS systems, facilities, and taxpayer data. GAO found serious
weaknesses in these efforts, especially in the areas of physical and
logical security.
For example, the facilities visited by GAO could not account for over
6,400 units of magnetic storage media such as tapes and cartridges
which might contain taxpayer data. Now, IRS responded last week they
have located 5,700 of the units, but that means that 700 are still
unaccounted for. That begs the question: Where are they? Are they
deemed lost? And can they be misused? Each of the units can store tax
information on thousands of Americans. We need to know where they are.
Moreover, GAO only visited selected facilities. I just wonder if the
IRS is able to track all of its inventory at the other major sites not
visited by GAO. We would like to know what the results are there, too.
GAO also found that printouts containing taxpayer data were left
unprotected and unattended in open areas of two facilities, where they
could be compromised. I do not want to say much more on this portion of
the report than I have already said, except that these matters and the
others referred to by GAO must be dealt with swiftly and effectively.
I am glad to have brought this matter to the Senate's attention and
am pleased to have the support of colleagues. I commend the efforts of
Senator Coverdell in this area. He has added very significant
provisions to some of the original language. I think we have an
excellent bill. I want to congratulate him for taking the initiative in
bringing this up.
The first of the sections that Senator Coverdell brought would
require that a taxpayer be notified by the Secretary of the Treasury
when a criminal indictment or charge is brought against an IRS employee
for unlawful inspection of that taxpayer's return or return
information. This is something I remember Senator Pryor, our former
colleague, bringing up before the Commissioner at one of our earlier
hearings.
The second new section will provide taxpayers with a civil remedy in
such unauthorized inspections as similarly provided under current law
for unlawful disclosures. This provision clarifies that civil liability
will not be a remedy in cases where the inspection is requested by the
taxpayer or in any instance which results from an accidental review of
a return or return information.
I want to be clear about that last point in reference to the
legislation at hand. I do not want to compromise IRS employees' ability
to do what they are supposed to be doing, especially in the areas of
return processing, examination, and inspection. Under this bill, IRS
employees will continue to be able to inspect tax returns or return
information as authorized by the Internal Revenue Code or tax
administration purposes without penalties. Only intentional, willful,
unauthorized inspections will be subject to prosecution, where you knew
or should have known it was wrong.
As the report by the House Ways and Means Committee states:
``Accidental or inadvertent inspection that may occur--such as, for
example, by making an error in typing in a TIN [Taxpayer Identification
Number]--would not be subject to damages because it would not meet this
standard.''
These are good provisions and I welcome their inclusion. I also want
to thank my distinguished colleague, Senator Roth, who sat with us as
ranking member of the Governmental Affairs Committee during our
hearings last year during consideration of the Taxpayer Bill of Rights
2, pledged his commitment and support for bringing this legislation to
the floor.
Let me say a word about the men and women who work at the IRS. The
vast majority of the people who work at the IRS are just as fine a
people as there are in this room or anywhere else in this country. They
are dedicated. They are trying to do a good job. I do not want to
unduly scare anyone that this is commonplace or that their privacy has
been violated. You have a few bad apples over there, but I am sure most
of the people over there want to turn in themselves because most of the
people
[[Page S3184]]
of the IRS, including the Commissioner, are proud of the work they are
doing.
The Commissioner has done a good job in many areas. I have been
complimentary of her. Her plan to deal with the IRS is a good one. The
way of getting it downhill to the centers and the different regions and
having it done there did not occur the way it should have, with what I
thought was a very good plan. I do not want to condemn all the IRS over
there. Normally, the people look down on the tax man every April 15. We
know that. It is not popular to pay taxes. The people working there are
doing a great service for this country, and we want to weed out those
few bad apples that may be over there.
I have visited some of the sites and I know what some of the IRS
employees are up against. It is not an easy job. They are, by and
large, a dedicated bunch, committed to their job and laboring under
difficult conditions with very outmoded systems. Unfortunately, in this
day and age, they must also fear for their own personal safety.
However, even just a single incidence of this behavior is one too many
and cannot be tolerated.
The IRS has a moral and legal obligation to uphold when Americans
provide the Government with their most personal and private
information. The IRS must have the complete trust and confidence of
taxpayers. That means we cannot tolerate any of this browsing or
mishandling of accounts. The American people expect and demand nothing
less.
I thank you, and I reserve the balance of my time.
Major Findings From GAO Report, Supplemented With Excerpts From the
IRS' Earl Executive Steering Committee Report
the irs system designed to detect browsing (earl) is limited
The main monitoring system, EARL, is supposed to be able to
detect patterns of potential abuse by IRS employees in the
IRS' primary database (IDRS). GAO found that the EARL system
is ineffective because it can't distinguish between
legitimate work activity and illegal browsing. Only through
time-consuming manual reviews, which, according to internal
IRS documents can sometimes take up to 40 hours, can actual
instances, of snooping be positively identified.
Moreover, EARL only monitors the main taxpayer database.
There are several other systems used by employees to create,
access, or modify data which, apparently, go unsupervised.
This is something I have asked the GAO to look into further.
According to GAO, ``because IRS does not monitor the
activities of all employees authorized to access taxpayer
data . . . IRS has no assurance that these employees are not
browsing taxpayer data and no analytical basis on which to
estimate the extent of the browsing problem or any damage
being done.''
In fact, according, to the IRS' EARL report:
``The current system of reports does not provide accurate
and meaningful data about what the abuse detection programs
are producing, the quality of the outputs, the efficiency of
our abuse detection research efforts, or the level of
functional management follow through and discipline. This
impedes our ability to respond to critics and congressional
oversight inquiries about our abuse detection efforts.''
irs progress in reducing and disciplining browsing cases is unclear
IRS' management information systems do not provide
sufficient information to describe known browsing incidents
precisely or to evaluate their severity consistently.
The systems used by the IRS cannot report on the total
number of unauthorized browsing incidents. Nor do they
contain sufficient information to determine, for each case
investigated, how many taxpayer accounts were inappropriately
accessed or how many times each account was accessed.
Consequently, for known incidents of browsing, IRS cannot
efficiently determine how many and how often taxpayers'
accounts were inappropriately accessed. Without such
information, IRS cannot measure whether it is making progress
from year to year in reducing browsing.
Internal IRS figures show a fluctuation in the number of
browsing cases closed in the last few years: 521 cases in
FY'91; 787 in FY'92; 522 in FY'93; 646 in FY'94, and; 869 in
FY'95.
More distressing, however, is the fact that in spite of the
Commissioner's announced ``Zero Tolerance'' policy, the
percentages of cases resulting in discipline has remained
constant from year to year. Figures for FY'91-FY'95 show that
the percentage of browsing cases resulting in the IRS' three
most severe categories of penalties (disciplinary action,
separation, resignation/retirement) has ranged between 23-32
percent, with an average of 29 percent.
The IRS' internal report also confirms this: ``A review of
disciplinary actions for IDRS abuse over the last four years
showed that only 25% of the cases result in some
discipline.''
That report also indicated that almost one-third of the
cases detected were situations where an employee accessed
their own account, which, according to the report, is
``generally attributable to trainee error.''
Incidents of Browsing are Reviewed and Referred Inconsistently
IRS processing facilities do not consistently review and
refer potential browsing cases. They had different policies
and procedures for identifying potential violations and
referring them to the appropriate unit within IRS for
investigation and action. Further, IRS management had not
developed procedures to assure that potential browsing cases
were consistently reviewed and referred to management
officials throughout the agency.
The IRS internal report identifies this as a problem area,
too:
``Although the EARL system has been under development since
1993, the service has not yet maximized its ability to
identify IDRS browsing. The process is labor intensive and
there is little accountability for effectively using EARL and
handling the cases it identifies. There is little consistency
in the detection procedures from one center to the next or in
how discipline is applied on abuse cases throughout the
nation.''
Penalties for Browsing are Inconsistent Across IRS
Despite IRS policy to ensure that browsing penalties are
handled consistently across the agency, it appears that there
are disparities in how similar cases are decided among
different offices, or even sometimes within the same office.
Examples of inconsistent discipline included:
Temporary employees who attempted to access their own
accounts were given letters of reprimand, although
historically, IRS terminated temporary employees for this
type of infraction.
One employee who attempted to access his own account was
given a written warning, while other employees in similar
situations, from the same division, were not counseled at
all.
The IRS' EARL internal report also demonstrated widespread
deviations on how browsing penalties were imposed. That
report showed that for FY'95, for example, the percentage of
browsing cases resulting in employee counseling ranged from a
low of 0 percent at one facility to 77 percent at another.
Similarly, the report showed that the percentage of cases
resulting in removal ranged from 0 percent at one facility to
7 percent at another. For punishments other than counseling
or removal (e.g., suspension), the range was between 10
percent and 86 percent.
More incredible to me--and quite distressing--is the
extremely low percentage of employees caught browsing each
year who are fired for their offense, according to the IRS'
own figures. Would you believe that, for all of the browsing
cases detected and closed each year, the highest number of
employees fired in one year has been 12. Between FY'91-FY'95,
only 43 employees were fired after browsing investigations.
That is generally 1% of the total number of cases brought
each year. Even if you include the category of resignation
and retirement, the highest percentage of employees
terminated through separation or resignation/retirement in
any one year has been 6%.
Punishments Assessed for Browsing Not Consistently Publicized to Deter
Violations
GAO found that IRS facilities did not consistently
publicize the penalties assessed in browsing cases to deter
such behavior. For example, one facility never reported
disciplinary actions. By contrast, another facility used its
monthly newsletter to report disciplinary actions for
browsing, including citing a management official who had
accessed a relative's account.
By inconsistently and incompletely reporting on penalties
assessed for employee browsing, IRS is missing an opportunity
to more effectively deter such action.
Mr. COVERDELL. Mr. President, how much time remains?
The PRESIDING OFFICER. The Senator from Georgia has 4 minutes and 23
seconds, plus the 5 minutes.
Mr. COVERDELL. Mr. President, first let me thank my good colleague
from Ohio, Senator Glenn, for the extended effort and work, some of
which he outlined in his statement, over a period of years to get at
this problem. I appreciate his kind remarks in regard to my efforts.
Mr. President, the fact that we have come to a situation where it has
been certified by the General Accounting Office and others that
employees of the Internal Revenue Service have been reviewing personal
records in an unauthorized way must be stopped. The purpose of this
legislation is to do just that.
Senator Glenn also complimented the many loyal employees who work at
the Internal Revenue Service, and that should be done. We would be
remiss not to do so.
Mr. President, there is a reason that half the American people are
offended
[[Page S3185]]
by this agency. The belligerence, the intimidation is well-documented,
time and time again, and it is time that aura of having a standard or
status that is higher than the taxpayer themselves come to an end.
As I said, on this Senator's part, this legislation is but a
beginning of the kind of accountability that I think needs to be put in
place with regard to the relationship between the Internal Revenue
Service and the American people.
Somebody said today, in all the flurry of meetings, trying to resolve
the differences here, that in no case should the average American
citizen be frightened by an arm of their Government in the day-to-day
function and relationship between people and their Government. The
people should not be intimidated. They should not be fearful of this
relationship.
I will leave the individual unnamed, but not long ago I was in a
commercial establishment and I was visiting with probably a 70-year-
old-plus woman in Atlanta. I was completing the transaction, and she
said she wondered if she might be in touch with me. I said, ``Of
course.'' I was about to leave, so I was trying to give her my card. I
said, ``Here is somebody you can call to give me the details,'' and she
leaned over between her computer and her cash register and motioned me
to come over and began whispering to me about a problem that involved
her and the IRS--a 70-year-old woman, a hard worker for years and
years. She was scared to death. She was whispering to me because she
was frightened. That has left a mark on me. It has happened to me more
than once.
All too often the citizens that contact me with regard to problems
with the IRS are of very modest means and they cannot defend
themselves. They cannot protect themselves. They are frightened to
death.
I hope what we jointly, in this bipartisan effort, are doing is but,
as I said, a first step. We are ending a reprehensible practice that
has occurred on the part of some at the IRS, but there is much work to
be done as we begin a congressional audit of the Internal Revenue
Service.
I am prepared to yield back my time and relinquish the floor for
final comments from the Senator from Ohio.
The PRESIDING OFFICER. The Senator from Ohio is recognized.
Mr. GLENN. I thank my distinguished colleague from Georgia. I know we
are approaching the time when we are supposed to have a vote.
The American people have to have the utmost confidentiality in the
IRS. We have to have somebody collect the taxes that does everybody in
this country good, that builds roads, the airways, does everything, so
those who say we are mad at the IRS and we will do away with it, if
they will just think what they are saying, what we need is to have zero
tolerance for browsers and misuse of the system. That is what this
addresses today. Our legislation will get the snoops out of the IRS.
Our legislation says if you are going to snoop, you are going to jail.
It is that simple.
If you are going to snoop, you are going to pay also. You are also
going to lose your job. I think browsing angers me just like being
violated personally, almost. Everybody has to feel that way because you
trust your Government. We say we are giving this information willingly,
honestly, and then they are misusing it. They are browsing, and the
information may not remain confidential. We don't know what is going to
happen to it. The American people deserve better than that.
I deplore those who are guilty of engaging in IRS-bashing. And it
always seems to build to a crescendo on April 15. I repeat that most
IRS employees are just as honest as anybody in this room or anybody in
America. They are dedicated workers. They want to clean out this
snooping and they want to see this problem go away just like all the
rest of us do, so that more Americans don't lose faith in our voluntary
tax system.
Mr. President, I ask unanimous consent to add John Kerry of
Massachusetts and Senator Kohl of Wisconsin to the bill as cosponsors.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. LEAHY. Mr. President, last Congress we passed legislation I had
written to provide criminal penalties for unauthorized snooping in
computers. I understand that the Republican leadership is bringing up
an extension of that legislation today. I am happy to see them bring it
up, but I also point out to the American people that we have already
passed some very strong legislation on this.
In fact, in terms of privacy protection legislation, we could have
passed additional, strong legislation last year to provide protection
and criminal sanctions against misuse of personal medical information,
except that the Republican leadership objected to it. That medical
records confidentiality legislation was we put together in a bipartisan
fashion with Senator Bennett of Utah, myself, and others, based on work
a number of us have been doing for years, but we were blocked when it
was going to pass last year. I hope that the Republican leadership
willingness to extend protections against government snooping into
private financial records will signal a new attitude and willingness to
address the crisis that is looming with respect to the confidentiality
of health care information, as well.
I think we have to ask, why is it suddenly so important to take up
this IRS bill today without consideration by the Senate Judiciary
Committee or any Senate Committee. Aha, what is today? April 15. This
is, as more and more things around here are, a staged event for
partisan political purposes. This is tax day, to be sure. But,
unfortunately, the Republican majority is looking for something to do
and something to distract from the fact that it is not doing what it is
supposed to do today.
Along with all Americans we have to file our income taxes today,
April 15. The Republican leadership of the House and Senate, however,
is supposed to pass a budget by April 15. I suspect that there are tens
of millions of Americans who are getting their taxes filed by today.
When they go down to file their taxes, having stayed up late and worked
it out, they should ask the leadership in the House and Senate if that
Republican leadership has done what the law requires them to do--to
have a budget by April 15. Guess what? Has one been passed? No. Has one
even been debated? No. There is a law that says that, by April 15, we
must pass it, but today will come and go and the Senate will miss its
statutory deadline.
Now, I ask my friends throughout this country, Republican, Democrat,
and Independent, if you don't follow the law that says you have to file
and pay your taxes by April 15, what is going to happen? Aha, you might
suddenly become a guest of the State, in a very secure place--bars on
the windows, bars on the doors.
What happens to the leadership of the House and the Senate if they
don't obey the law and have a budget passed by April 15? They will be
on the floor in the House and the Senate with a distraction.
So while I support the extension of the law we introduced in 1995 and
passed last year in order to cover the paper records of the IRS, I
remain concerned that the Senate is not making the progress that we
need to make on the Federal budget, on the chemical weapons treaty, and
on confirming Federal judges. We have confirmed two Federal judges in 4
months. There are 100 vacancies. Talk about zero population growth. At
this rate, at the end of the Congress there will 150 vacancies.
Then there's campaign finance reform. Remember campaign finance
reform? Has anybody heard of it since the handshake in New Hampshire.
Ha, ha and ho, ho. The Republican leadership could bring up campaign
finance reform this afternoon if they wanted to. You are not going to
see it.
I understand that the House plans to use the Constitution as a
political prop again today. I guess I should at least be grateful that
the Senate has avoided that temptation--for today.
All I suggest, Mr. President, is that the American people are
required to follow the law and file their taxes today. The U.S. Senate
and the House of Representatives are required to have a budget by
today--and we are waiting.
Privacy is a precious right of every American. When our own
Government workers abuse their access to personal information and
compromise our privacy, it is doubly wrong.
While I was happy that we are taking this matter up today and to
support it, I comment briefly on the manner in
[[Page S3186]]
which this matter is proceeding. Unfortunately, the Senate of the
United States is not doing the work that needs to be done to serve the
interests of the American people. We are not confirming the Federal
judges that we all need, we are not making progress on balancing the
budget, we are not considering the chemical weapons treaty, and we are
not considering campaign finance reform legislation.
I commend Senator Glenn for his efforts in following up on his
longstanding efforts to monitor abuse of access to Internal Revenue
returns and information by Government employees.
When we file our tax returns today and the American people reveal to
the Government intimate details about their personal finances, we
rightfully expect that the Internal Revenue Service and its employees
will treat that information with confidentiality, as the law has long
contemplated. Reports that IRS employees are snooping through these
files to satisfy their own voyeuristic urges are unacceptable.
Unauthorized browsing by IRS employees has been a longstanding problem,
according to a recent GAO report, and one that has concerned a number
of us for years.
It is one of the principal circumstances that motivated me to include
within legislation that I authored last Congress criminal sanctions
against unauthorized snooping. Back in June 1995, I introduced, with
Senators Kyl and Grassley, legislation making snooping through use of
Government computers a crime. We obtained the views of the Attorney
General, the FBI Director, the Secret Service and others. The bill was
considered and reported twice by the Senate Judiciary Committee and
passed by the Senate as part of a legislative package back in October
1996. The National Information Infrastructure Protection Act, title II
of Public Law 104-294, made it a Federal crime for Government employees
to misuse their computer access to obtain private information in
Government files. Under the law, Government employees who abuse their
computer privileges to snoop through personal information about
Americans, including tax information, are subject to criminal
penalties.
Part of our purpose in passing that law was to stop the snooping by
IRS employees of private taxpayer tax returns. In 1994, at least 1,300
IRS employees were internally investigated for using Government
computers to browse through the tax returns of friends, relatives, and
neighbors. At a 1995 oversight hearing of the Department of Justice, I
asked the Attorney General whether a criminal statute making it clear
that such snooping is illegal would send a clear signal that we want
our private information provided to the Government to remain private?
Her response focused on the need for passage of the NII Protection
Act. Attorney General Reno stated:
Enactment of a new statute covering such situations is
advisable to send a clear signal about the privacy of such
sensitive information. To that end, included as part of [the
NII Protection Act] is an amendment to 18 U.S.C.
Sec. 1030(a)(2) that would make it clearly illegal for a
government employee to intentionally exceed authorized access
to a government computer and obtain information.
I have long been concerned with maintaining the privacy of our
personal information. Doing so in this age of computer networks is not
always easy but is increasingly important.
By passing the NII Protection Act we have already closed a loophole
that had existed in our laws. That loophole resulted in the dismissal
of criminal charges earlier this year against an IRS employee who went
snooping through the tax returns of individuals involved in a
Presidential campaign, a prosecutor who was investigating a family
member, a police officer and various social acquaintances. He made
these unauthorized searches in 1992, before our new law went into
effect. He was able to retrieve on his computer screen all the taxpayer
information stored in the IRS main data base in Martinsburg, WV. Since
the IRS employee did not disclose the information to anyone else and
did not use it for nefarious purposes, the wire and computer fraud
charges against him had to be dismissed. The point is that with
President Clinton having signed the NII Protection Act into law last
October 11, the law has been corrected to make such unauthorized
snooping through individual tax records by means of computers a Federal
crime.
Employees of the IRS and other Government agencies and departments
are forewarned that under the law and augmented by the NII Protection
Act last year, unauthorized browsing through computerized tax filings
is criminal and will be prosecuted.
I am hopeful that the National Information Infrastructure Protection
Act and its privacy protections will help deter illegal browsing by IRS
employees and help restore the confidence of American taxpayers that
the private financial information we are obliged to give the Government
will remain private.
Our job is not done, however. We need to remain vigilant to protect
the privacy of our intimate personal information in this era of
computer networks. I am particularly concerned that we are doing a
woefully inadequate job at protecting the privacy of our medical
information. For several years I have worked on legislation to provide
privacy protection to our health care information. I hope that this
year we will finally enact this much-needed and overdue legislation. If
we do not, we risk having the computerized transmissions of health care
information required by the so-called administrative simplification
provisions of the law passed last year, without the privacy protection
that the American people expect and deserve.
Mr. BAUCUS. Mr. President, the public expects some essential services
from the Government. Social security payments, highway funding,
national defense, a safety net in bad times, clean air and water, the
National Park System, and so on. These are important to the country and
the Government should provide them.
So most folks are willing to pay their fair share of taxes. Nobody
likes it, but most of us do it regularly and honestly. But we do expect
the Government to keep it fair, make it as simple as possible, and keep
it private.
And we've recently found that in their zeal to catch the few people
who don't pay their taxes, some tax collectors forget the most
fundamental truth about our tax system. Citizens have rights that must
be protected.
One of the first bills I introduced when I first came to the Senate
was a Taxpayers' Bill of Rights, to protect taxpayers in disputes with
the Internal Revenue Service. And I noted:
Oliver Wendell Holmes reasoned that ``Taxes are what we pay
for a civilized society.'' However, Justice Holmes did not
consider additional burdens imposed on taxpayers--added costs
and delays that result from inefficiencies and
inconsistencies in the administration of tax law.
That was back in 1979. And it took a while, but in 1988 we finally
passed a comprehensive Taxpayer Bill of Rights. That went a long ways
toward defining taxpayer rights and gave some protection against
arbitrary actions by the IRS.
This law made IRS give at least 30 days' notice before levying on a
taxpayers' property, so that he or she would have time to file an
appeal. It exempted more kinds of property from IRS levies, and raised
the wage total exempt from collection. It allowed taxpayers to collect
costs and attorney's fees from the Government if the IRS acted without
substantial justification. And it let taxpayers sue the Government for
damages if IRS employees acted recklessly in collecting taxes or
intentionally disregarded any provision of the Internal Revenue Code.
This helped make taxation a little more fair and accountable. But it
didn't solve all the problems. Last year, we did some more with the
Taxpayer Bill of Rights II. This created an Office of Taxpayer Advocate
within the IRS to help taxpayers resolve their problems with the IRS.
It gave taxpayers more power to take the IRS to court in order to abate
interest and eased the burden of proof for collecting attorney's fees
and costs when you challenge an IRS decision and win. And it raised the
damages a taxpayer can collect in the event an IRS agent recklessly or
intentionally disregards the Internal Revenue Code.
But as important as these laws are, we need to do a lot more to give
taxpayers confidence in the system and the people who work in it.
Today we're going to go a little further. Every once in a while we
find that some IRS employees are snooping around in tax returns that
ought to be private. That's happened twice this
[[Page S3187]]
year--first, with the revelation that President Nixon tried to pressure
his IRS Administrator to look through political opponents' returns, and
now when we hear that some IRS employees have browsed in returns for
fun. Our bill today will impose criminal penalties on anyone who does
it. And we'll make sure the taxpayer whose records have been violated
in this way can be notified so that they too can take action. Without
this high level of protection of taxpayer privacy, we undermine our
ability to make a system of voluntary taxation work.
Once this bill is signed into law, as I am confident that it will be,
we must not rest on our laurels. There is still much work to be done to
fully protect the rights of taxpayers. The administration proposes
simplification and Bill of Rights initiatives that we must review very
soon. The Commission on the Restructuring of the Internal Revenue
Service will also issue a bipartisan report that will help us address a
broad range of problems with the IRS.
That should be a top priority. We need a tax system that brings in
the revenue to pay for essential services. One that balances the
budget. But also one that is fair and reasonable, and understands that
most of us are good people who obey the law and shouldn't be picked on
all the time. It's that simple.
Mr. CAMPBELL. Mr. President, I am pleased to be a cosponsor of S.
522, legislation which would allow civil and criminal penalties to be
imposed for the unauthorized access of tax returns and return
information by employees of the Internal Revenue Service or other
Federal employees. It is altogether appropriate that this issue should
come before both the House and Senate on April 15, and I applaud the
efforts of my colleagues, Senators Coverdell and Glenn, to work
together on this bipartisan piece of legislation.
Abuse by employees of the IRS has been of concern to Members of
Congress for many years. Over the years numerous Coloradans have
written me to express their concerns with this type of abuse as well.
And with the recent release of the report by the General Accounting
Office detailing its findings on security problems at the IRS, in
addition to reports on browsing by IRS employees through private
taxpayer files, this issue has once again come to the forefront.
This morning, as chairman of the Appropriations Subcommittee on
Treasury and General Government, I held a hearing to receive testimony
on the issue of browsing. For the record, I would like to state the
witnesses included: Senator John Glenn; Larry Summers, Deputy Secretary
of the U.S. Department of the Treasury; Dr. Rona B. Stillman, Chief
Scientist for Computers and Telecommunications with the GAO; Margaret
Milner Richardson, Commissioner of the IRS; and Valerie Lau, inspector
general of the U.S. Department of the Treasury.
It became clear in all of the witnesses' testimonies this morning
that currently it is not necessarily illegal for IRS employees to
browse through taxpayer files. The law, as it exists, makes it
difficult for the IRS to take effective action against those employees
who are caught browsing taxpayer files.
Those IRS employees who do access the computerized or paper records
of celebrities, friends, or enemies most often do so just for the fun
of it. However, let me tell you--taxpayers do not find this activity
very funny. It is an invasion of privacy, and unauthorized browsing
should be punishable with civil and criminal penalties. During this
morning's hearing, Treasury officials kept referring to taxpayers as
``customers''. Well, I would like to clarify that in my State
Coloradans do not consider themselves customers. If anything, they
consider themselves victims. Unfortunately, taxpayers have become
victims of browsing, and they currently have no assurances that
browsers will be held accountable for their actions.
With that, Mr. President, I ask unanimous consent to submit a couple
of items for the record to be printed immediately following my
statement. First, I have an article from the Washington Post. In
addition, I would also like to submit a relevant section of the
Electronic Audit Research Log's Executive Steering Committee Report on
taxpayer privacy.
The PRESIDING OFFICER. Without objection, it is so ordered.
(See exhibit 1.)
Mr. CAMPBELL. Finally, I would simply like to reiterate my support
for S. 522. I would like to be able to tell my constituents that
Congress recognized the need to safeguard their personal tax records
and took action accordingly by passing this legislation and sending it
on to the President for signature.
Exhibit 1
[From the Washington Post, Apr. 9, 1997]
IRS Audit Reveals More Tax Browsing
(By Stephen Barr)
The Internal Revenue Service fired 23 employees,
disciplined 349 and counseled 472 other workers after agency
audits found that government computers were still being used
to browse through the tax records of friends, relatives and
celebrities, an IRS document released yesterday showed.
The document, covering fiscal 1994 and 1995, listed 1,515
cases where employees were accused of misusing computers.
After accounting for the firings, the disciplinary action and
the counseling, 33 percent of the cases were closed without
any action and the remaining 12 percent took retirement or
were cleared.
Yesterday's disclosure, made by Sen. John Glenn (D-Ohio),
marked the second time that IRS employees have been faulted
for peeking at tax records. A probe in 1993 and 1994 turned
up more than 1,300 employees suspected of using government
computers to browse through tax files. At the time, the IRS
promised ``zero tolerance'' for such snooping.
But the new data indicate the problem has continued and the
agency does not know how big a problem it has on its hands.
``I don't know what kind of new math they are using, but that
doesn't sound like zero tolerance to me,'' Glenn said at a
news conference, where he released excerpts of IRS documents
and a General Accounting Office (GAO) report.
Government employees face criminal penalties for misuse of
computer databases, but loopholes have thwarted prosecution
of some IRS employees who snooped in files but did not
disclose the information to others. Glenn and other
lawmakers, including House Ways and Means Committee Chairman
Bill Archer (R-Tex.), have proposed legislation this year to
tighten the laws.
David A. Mader, the IRS chief for management, said
``browsing is not widespread'' at the 102,000-employee
agency, but stressed that curious employees must understand
that even one unauthorized peek in tax files undercuts the
IRS goal of fair and confidential tax administration. The IRS
supports efforts to tighten laws, he said.
``It is challenging to change the behavior of an
organization this size,'' Mader said. Not every employee
deserves to be fired when accused of browsing, he said, but
``we ought to start with the assumption we're going to fire
them and then look at the circumstances.
The disclosure of additional IRS employee snooping comes at
a time when privacy advocates are increasingly worried about
the government's growing dependence on computers and
information technology. The GAO, for example, has issued more
than 30 reports in the last four years describing how
government systems are vulnerable to ``hackers'' and even
federal employees who want to change data, commit fraud or
disrupt an agency's operations.
The GAO, in reviewing IRS computer security at Glenn's
request, found that five IRS centers could not account for
about 6,400 computer tapes and cartridges that might contain
taxpayer data. Since the GAO audit, however, 5,700 of the
tapes and cartridges have been found, Mader said. He said the
problem involved inventory controls and that no tapes were
lost.
In two centers, computer printouts containing taxpayer data
were left unprotected and unattended in open areas, the GAO
said.
GAO found some computer problems were so sensitive that the
congressional watchdog agency feared public disclosure could
jeopardize IRS security. As a result, Glenn received a
confidential report on those problems and the GAO-prepared
report released yesterday leaves out some matters and does
not identify the tax processing centers with lax security
practices. But the breaches of taxpayer privacy led
congressional investigators to conclude that IRS computer
systems operate with ``serious weaknesses'' that place tax
returns and tax files ``at risk to both internal and external
threats,'' GAO said.
The IRS handles more than 200 million taxpayer returns each
year at 10 primary centers. After the returns are processed,
the data are electronically transmitted to a central computer
site, where master files on each taxpayer are maintained and
updated.
To avoid compromising taxpayer information, the IRS
developed a software program to monitor the electronic trail
left by employees as they call up tax returns and files on
their computer screens. The program, the Electronic Audit
Research Log (EARL), also signals managers when an employee's
work pattern or use of command codes appears at odds with the
tasks assigned. The audit trail covered about 58,000
employees who use the IRS's main computer system. But the GAO
found EARL does not monitor IRS employees using secondary
computer systems and does not effectively distinguish between
browsing and legitimate work.
[[Page S3188]]
The IRS internal audit, in a section on disciplining
employees, said, ``Some employees, when confronted, indicate
they browsed because they do not believe it is wrong and that
their will be little or no consequence to them if they are
caught.''
The IRS document added that agency managers ``apply vastly
different levels of discipline for similar offenses,''
sending ``an inconsistent message to the workforce.'' Glenn
called for swift passage of his bill to end loopholes in the
law that allow some federal workers to escape prosecution for
browsing through records.
He cited a federal appeals court decision in February that
overturned a guilty verdict against a Ku Klux Klansman
employed by the IRS in Boston who browsed through tax records
of suspected white supremacists, a family adversary and a
political opponent.
Last year, a former IRS employee was acquitted of criminal
charges after peeking at the records of Elizabeth Taylor,
Lucille Ball, Tom Cruise, Elvis Presley and other
celebrities.
In both cases, there was little or no testimony to prove
that the IRS workers passed information to others or used the
information in a criminal way.
Congress expanded criminal penalties last year to deter the
use of computer data without proper authorization, but the
provision does not apply to paper tax returns or magnetic
tapes.
____
EARL Executive Steering Committee Report
Attached are excerpts from a lengthy internal IRS audit on
the state of taxpayer privacy at the agency. Following are
highlights, including the executive summary of the report.
Left out are discussions of computer codes and other
primarily technical information.
DISPOSITION OF CASES--MISCONDUCT ALLEGATIONS INVOLVING MISUSE OF IDRS
[Population approximately 56,500]
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY 1991 FY 1992 FY 1993 FY 1994 FY 1995
---------------------------------------------------------------------------------------------------
Actions Percent Actions Percent Actions Percent Actions Percent Actions Percent
--------------------------------------------------------------------------------------------------------------------------------------------------------
Clearance........................................... 5 1 75 10 10 2 50 8 58 7
Closed Without Action............................... 174 33 245 31 146 28 204 32 291 33
Counseling.......................................... 221 42 202 26 205 39 190 29 282 32
Disciplinary Action................................. 100 19 242 31 140 27 163 25 186 21
Separation.......................................... 7 1 7 1 6 1 12 2 11 1
Resignation/Retirement.............................. 14 3 16 2 15 3 27 4 41 5
---------------------------------------------------------------------------------------------------
Total......................................... 521 ........ 787 ........ 522 ........ 646 ........ 869 ........
Disciplinary Action/as a percent of IDRS users...... 0.21% ........ 0.45% ........ 0.28% ........ 0.35% ........ 0.41% ........
--------------------------------------------------------------------------------------------------------------------------------------------------------
Mr. HAGEL. Mr. President, we are engaged in an important debate--a
debate about privacy, liberty, and the role of Government in our lives.
The American people want less Government, less regulation and less
taxes. They want less hassle and more respect from their Government.
I am proud to be an original cosponsor of the Taxpayer Privacy
Protection Act, which was introduced by my distinguished colleague from
Georgia, Senator Coverdell. The Senate will vote on this important
legislation later today, and I urge all of my colleagues to support it.
As the April 15 income tax deadline approaches each year, Americans
rush to file their returns while wading through a paper storm of tax
forms that even some tax lawyers have trouble understanding. During tax
season, animus for the IRS reaches its peak as taxpayers are reminded
what an intrusive, overbearing bureaucracy the Internal Revenue Service
has become.
Nobody likes taxes, and nobody likes tax collectors. They are
necessary evils. But if we must have them, then we need to do all we
can to ease the burden they impose on our citizens and to make the
system user-friendly and respectful of our people.
The IRS system today is neither user-friendly nor respectful. Today
we have an IRS that is out of control from top management all the way
down to its field offices, and the American taxpayers are paying the
price for that disarray--a price in inefficiency, inconvenience,
intrusiveness, and even harassment.
The American people deserve better. It is bad enough that taxpayers
have to pay for an agency that wastes their money and time. But it is
simply unacceptable that the IRS has tolerated some of its employees
snooping through confidential taxpayer information.
The headlines of our newspapers have been littered with accounts of
IRS employees reading taxpayers' confidential files without authority
and without cause. During fiscal years 1994 and 1995, there were 1,515
cases of IRS employees browsing through confidential taxpayer computer
records, according to a recent General Accounting Office report. These
employees violated the privacy of hundreds of taxpayers when they
snooped through the tax returns of friends, family member or
celebrities without authorization and without justification.
Yet, of those 1,515 cases of snooping, only 844 resulted in employees
being fired, disciplined, or counseled.
Let me emphasize that, Mr. President--only 844 of the 1,515 snoops
had action taken against them. That means almost 700 known cases of
snooping went unpunished.
This is not acceptable. Unauthorized snooping is wrong and
intolerable. That is why the laws need to be changed.
The Taxpayer Privacy Protection Act imposes civil and criminal
penalties against IRS employees who snoop through tax returns and
related information without authority. It puts real power in the hands
of taxpayers who are the victims of IRS snooping--it lets them bring
suit against the IRS employee who is responsible. Under this
legislation, IRS employees can be fired, fined, and jailed if they are
found guilty of snooping.
This bill is an important step toward protecting Americans from an
out of control IRS. It is an important step toward holding IRS
employees accountable for their actions. It is a small but important
step toward making our tax system respectful, trustworthy, and sound.
It should become law--now.
Mr. FAIRCLOTH. Mr. President, as a cosponsor of S. 522, The Taxpayer
Browsing Protection Act, I urge my colleagues to support this important
measure to stop IRS employees from electronically browsing through
taxpayer files.
Mr. President, today is not a day when most Americans feel much
sympathy for the IRS. For many Americans finishing up their tax
returns, the last several days have been painful ones, with families
struggling to understand and fill out complex forms, writing checks to
the IRS and wondering where all the money they send to Washington
actually goes.
And it doesn't help to see recent news accounts of the $4 billion of
the taxpayers money has been wasted by the IRS in an effort to
modernize its computer system--without success. That's nearly enough
money to pay for our troops in Bosnia, and for continued disaster
relief to areas of the country damaged by floods and storms, including
areas of North Carolina still suffering from the effects of Hurricane
Fran.
And so, Mr. President, today is not a good day for the American
people to be told of yet another outrage at the IRS. As many as 211
million Americans who file tax returns this year will pay over $1.6
trillion in taxes. That is outrage enough. Quite frankly, the American
people are overtaxed, and I hope that we can provide them some tax
relief this year.
As complicated and burdensome as our Tax Code has become, the vast
majority of taxpayers fill out their tax forms honestly and completely.
In fact, our entire system of tax collection depends on the voluntary
compliance of the American people. Much of the information contained in
these tax returns is extremely private and sensitive. Taxpayers have a
right to expect that this information will be treated with the greatest
of care.
For that reason, I was deeply troubled by the results of the recent
investigation of the Internal Revenue Service by the General Accounting
Office
[[Page S3189]]
which has prompted this hearing. The GAO has uncovered at least 1,515
cases where IRS employees have used Government computers to browse
through the private tax files of Americans--without authorization.
According to the GAO, this is not the first time that IRS employees
have been caught peeking in on private tax files. In 1993 and 1994, the
GAO discovered that more than 1,300 IRS employees had used Government
computers to electronically browse through tax records. At that time,
the Commissioner of the IRS announced a new zero tolerance policy for
such behavior.
Unfortunately, zero tolerance has been more like zero improvement.
According to the GAO, little has changed since this problem was first
identified in 1993. IRS employees are still snooping into tax files
without proper authorization. The system put in place by the IRS to fix
the problem and detect unauthorized browsing--the Electronic Audit
Research Log, or EARL--can't even tell the difference between browsing
and legitimate work.
To make matters worse, an IRS internal audit found that many
employees who were caught browsing did not believe that snooping in
taxpayers' files is wrong, and perhaps even more troubling, they
thought there would be little or no consequence to them if they were
caught.
I am concerned that we can't count on the senior management of the
IRS to supervise their employees. In fact, I am concerned about the
supervisors themselves, and I wonder who is watching them. I find news
accounts that the IRS may be conducting politically motivated audits of
selected nonprofit organizations deeply troubling.
Mr. President, the IRS has demonstrated that it cannot adequately
supervise its own employees to protect the privacy of the American
people. Stronger measures are clearly needed. That is why I am a
cosponsor of of S. 522, The Taxpayer Browsing Protection Act offered by
my good friend, Senator Coverdell. I join my colleagues in support of
the measure.
Mr. President, due to a prior family commitment, I was unavoidably
detained and missed the vote on S. 522. Had I been present I would have
voted ``aye.''
Mr. COVERDELL. Mr. President, I ask for yeas and nays on final
passage.
The PRESIDING OFFICER. Is there a sufficient second?
There is a sufficient second.
Mr. COVERDELL. Mr. President, I urge adoption of the amendment.
The PRESIDING OFFICER. The question is on agreeing to amendment No.
45.
The amendment (No. 45) was agreed to.
The PRESIDING OFFICER. The question is on the engrossment and third
reading of the bill.
The bill was ordered to be engrossed for a third reading, was read
the third time.
The PRESIDING OFFICER. The question now occurs on passage of the
bill.
The yeas and nays have been ordered. The clerk will call the roll.
The legislative clerk called the roll.
Mr. NICKLES. I announce that the Senator from North Carolina [Mr.
Faircloth] and the Senator from Oregon [Mr. Gordon Smith] are
necessarily absent.
Mr. FORD. I announce that the Senator from West Virginia [Mr.
Rockefeller] is necessarily absent.
The PRESIDING OFFICER. Are there any other Senators in the Chamber
desiring to vote?
The result was announced--yeas 97, nays 0, as follows:
[Rollcall Vote No. 43 Leg.]
YEAS--97
Abraham
Akaka
Allard
Ashcroft
Baucus
Bennett
Biden
Bingaman
Bond
Boxer
Breaux
Brownback
Bryan
Bumpers
Burns
Byrd
Campbell
Chafee
Cleland
Coats
Cochran
Collins
Conrad
Coverdell
Craig
D'Amato
Daschle
DeWine
Dodd
Domenici
Dorgan
Durbin
Enzi
Feingold
Feinstein
Ford
Frist
Glenn
Gorton
Graham
Gramm
Grams
Grassley
Gregg
Hagel
Harkin
Hatch
Helms
Hollings
Hutchinson
Hutchison
Inhofe
Inouye
Jeffords
Johnson
Kempthorne
Kennedy
Kerrey
Kerry
Kohl
Kyl
Landrieu
Lautenberg
Leahy
Levin
Lieberman
Lott
Lugar
Mack
McCain
McConnell
Mikulski
Moseley-Braun
Moynihan
Murkowski
Murray
Nickles
Reed
Reid
Robb
Roberts
Roth
Santorum
Sarbanes
Sessions
Shelby
Smith (NH)
Snowe
Specter
Stevens
Thomas
Thompson
Thurmond
Torricelli
Warner
Wellstone
Wyden
NOT VOTING--3
Faircloth
Rockefeller
Smith (OR)
The bill (S. 522), as amended, was passed, as follows
S. 522
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Taxpayer Browsing Protection
Act''.
SEC. 2. PENALTY FOR UNAUTHORIZED INSPECTION OF TAX RETURNS OR
TAX RETURN INFORMATION.
(a) In General.--Part I of subchapter A of chapter 75 of
the Internal Revenue Code of 1986 (relating to crimes, other
offenses, and forfeitures) is amended by adding after section
7213 the following new section:
``SEC. 7213A. UNAUTHORIZED INSPECTION OF RETURNS OR RETURN
INFORMATION.
``(a) Prohibitions.--
``(1) Federal employees and other persons.--It shall be
unlawful for--
``(A) any officer or employee of the United States, or
``(B) any person described in section 6103(n) or an officer
or employee of any such person,
willfully to inspect, except as authorized in this title, any
return or return information.
``(2) State and other employees.--It shall be unlawful for
any person (not described in paragraph (1)) willfully to
inspect, except as authorized in this title, any return or
return information acquired by such person or another person
under a provision of section 6103 referred to in section
7213(a)(2).
``(b) Penalty.--
``(1) In general.--Any violation of subsection (a) shall
be punishable upon conviction by a fine in any amount not
exceeding $1,000, or imprisonment of not more than 1 year, or
both, together with the costs of prosecution.
``(2) Federal officers or employees.--An officer or
employee of the United States who is convicted of any
violation of subsection (a) shall, in addition to any other
punishment, be dismissed from office or discharged from
employment.
``(c) Definitions.--For purposes of this section, the terms
`inspect', `return', and `return information' have the
respective meanings given such terms by section 6103(b).''.
(b) Technical Amendments.--
(1) Paragraph (2) of section 7213(a) of such Code is
amended by inserting ``(5),'' after ``(m)(2), (4),''.
(2) The table of sections for part I of subchapter A of
chapter 75 of such Code is amended by inserting after the
item relating to section 7213 the following new item:
``Sec. 7213A. Unauthorized inspection of returns or return
information.''.
(c) Effective Date.--The amendments made by this section
shall apply to violations occurring on and after the date of
the enactment of this Act.
SEC. 3. CIVIL DAMAGES FOR UNAUTHORIZED INSPECTION OF RETURNS
AND RETURN INFORMATION; NOTIFICATION OF
UNLAWFUL INSPECTION OR DISCLOSURE.
(a) Civil Damages for Unauthorized Inspection.--Subsection
(a) of section 7431 of the Internal Revenue Code of 1986 is
amended--
(1) by striking ``Disclosure'' in the headings for
paragraphs (1) and (2) and inserting ``Inspection or
disclosure'', and
(2) by striking ``discloses'' in paragraphs (1) and (2) and
inserting ``inspects or discloses''.
(b) Notification of Unlawful Inspection or Disclosure.--
Section 7431 of such Code is amended by redesignating
subsections (e) and (f) as subsections (f) and (g),
respectively, and by inserting after subsection (d) the
following new subsection:
``(e) Notification of Unlawful Inspection and Disclosure.--
If any person is criminally charged by indictment or
information with inspection or disclosure of a taxpayer's
return or return information in violation of--
``(1) paragraph (1) or (2) of section 7213(a),
``(2) section 7213A(a), or
``(3) subparagraph (B) of section 1030(a)(2) of title 18,
United States Code,
the Secretary shall notify such taxpayer as soon as
practicable of such inspection or disclosure.''.
(c) No Damages for Inspection Requested by Taxpayer.--
Subsection (b) of section 7431 of such Code is amended to
read as follows:
``(b) Exceptions.--No liability shall arise under this
section with respect to any inspection or disclosure--
``(1) which results from a good faith, but erroneous,
interpretation of section 6103, or
``(2) which is requested by the taxpayer.''.
(d) Conforming Amendments.--
(1) Subsections (c)(1)(A), (c)(1)(B)(i), and (d) of section
7431 of such Code are each amended by inserting ``inspection
or'' before ``disclosure''.
(2) Clause (ii) of section 7431(c)(1)(B) of such Code is
amended by striking ``willful disclosure or a disclosure''
and inserting
[[Page S3190]]
``willful inspection or disclosure or an inspection or
disclosure''.
(3) Subsection (f) of section 7431 of such Code, as
redesignated by subsection (b), is amended to read as
follows:
``(f) Definitions.--For purposes of this section, the terms
`inspect', `inspection', `return', and `return information'
have the respective meanings given such terms by section
6103(b).''.
(4) The section heading for section 7431 of such Code is
amended by inserting ``INSPECTION OR'' before ``DISCLOSURE''.
(5) The table of sections for subchapter B of chapter 76 of
such Code is amended by inserting ``inspection or'' before
``disclosure'' in the item relating to section 7431.
(6) Paragraph (2) of section 7431(g) of such Code, as
redesignated by subsection (b), is amended by striking ``any
use'' and inserting ``any inspection or use''.
(e) Effective Date.--The amendments made by this section
shall apply to inspections and disclosures occurring on and
after the date of the enactment of this Act.
SEC. 4. NATIONAL FLOOD INSURANCE ACT OF 1968.
(a) In General.--Section 1306(c)(1) of the National Flood
Insurance Act of 1968 (42 U.S.C. 4013(c)(1)) is amended by
striking ``30'' and inserting ``15''.
(b) Effective Date.--The amendment made by subsection (a)
shall be construed to have taken effect on January 1, 1997,
and shall expire June 30, 1997.
Mr. GLENN. Mr. President, I move to reconsider the vote by which the
bill, as amended, was passed.
Mr. COVERDELL. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
Mr. LOTT. Mr. President, I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. LOTT. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. LOTT. Mr. President, I would like to announce officially--as most
Senators know, but in case they missed it--that that was the last
recorded vote for the day. We are discussing some other issues that we
hope to get agreement on today and tomorrow. We will keep the Members
informed on that.
____________________