[Congressional Record Volume 150, Number 137 (Monday, December 6, 2004)]
[Extensions of Remarks]
[Page E2150]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




               CONGRESS SHOULD NOT ABUSE TAXPAYER PRIVACY

                                 ______
                                 

                         HON. CHRIS VAN HOLLEN

                              of maryland

                    in the house of representatives

                        Monday, December 6, 2004

  Mr. VAN HOLLEN. Mr. Speaker, I rise today in complete support of the 
unanimous consent agreement to strike the FY `05 omnibus spending bill 
provision that would allow congressional staff and appropriators access 
to individual tax returns. But I must point out that Congress has made 
a similar mistake by dropping from the same bill a House amendment 
advocated by Representative Capito and me, that would have prevented 
2.6 million tax returns a year to be turned over to private contractors 
for the purposes of tax collection. While Congress is attempting to 
correct what is clearly a bad idea to allow congressional staff and 
Members of Congress to peruse individual tax returns, taxpayers are 
also vulnerable to potential abuses of tax return disclosure through 
private debt collection agents.
  Prior to the 2004 election, Congress enacted H.R. 4520, the corporate 
tax bill that will give the IRS private tax collection authority. The 
enacted language allows the IRS to use private collection agencies to 
collect tax debt. This means that up to 2.6 million tax returns--which 
are currently only scrutinized by federal government employees--will 
now be open to at least 10 private collection agencies within the first 
6 months, and an untold number of private debt collection staff.
  While IRS employees are explicitly forbidden from being evaluated on 
the basis of revenue collected, the private collection scheme would 
actually link contractor pay to the amount of revenue collection. This 
policy encourages contractors to use aggressive collection techniques 
to boost their remuneration. Furthermore, the IRS is currently liable 
for damages to a taxpayer resulting from the misuse of confidential 
information by an IRS employee, but taxpayers will not be able to 
recover damages from the federal government where contractors are 
guilty of malfeasance.
  What's more worrisome is the IRS' inability to oversee the work of 
these private debt collectors. A 1996 pilot program for private 
collection was so unsuccessful that a similar pilot program planned for 
1997 was cancelled outright. The contractors used in the pilot programs 
regularly broke the Fair Debt Collection Practices Act, did not protect 
the security of personal taxpayer information, and even then failed to 
bring in a net increase in revenue.
  The IRS has said that it has learned from the 1996 project and is 
better equipped to address the problems raised. However, even recent 
evidence is to the contrary. An eye-opening report by the Treasury 
Inspector General for Tax Administration (TIGTA Audit #200320010) shows 
how IRS contractors put taxpayers' data at risk. The TIGTA audit found 
that the ``lack of oversight of contractors resulted in serious 
security vulnerabilities.'' The report, found that, ``contractors 
blatantly circumvented IRS policies and procedures even when security 
personnel identified inappropriate practices.''
  The objective of the review was ``to determine whether the Internal 
Revenue Service (IRS) has adequately protected Federal Government 
equipment and data from misuse by contractors.'' The review found: 
``The involvement of non-IRS employees in critical IRS functions 
increases the risk of misuse or unauthorized disclosure of taxpayer 
data, and could lead to loss of equipment or sensitive taxpayer data 
through theft or sabotage.''
  Under the current conditions of rampant identity theft and 
deteriorating privacy here in the U.S., the federal government ought to 
be strengthening and protecting taxpayer privacy where it can. A first 
step is to eliminate the egregious provision placed in the Omnibus 
Bill. But a second, and more critical step, is to abolish the IRS' plan 
to place 2.6 million tax returns in front of private collection 
agencies and their staffs. This proposal sets a dangerous precedent 
down a path of contractor abuse and taxpayer distrust.
  I urge my colleagues to join me in the 109th Congress in working with 
the IRS to find a more effective means of collecting delinquent tax 
debt collection and avoid this risky scheme altogether.

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