Home Media Center News Releases

Washington, D.C.—The Internal Revenue Service’s (IRS) proposed regulations regarding the use by private tax preparers of offshore contractors addresses only part of the potential movement of taxpayers’ private information to persons outside of the United States, the head of the union representing IRS employees said today.

In fact, if the IRS moves forward with its plan to use private sector debt collectors, there is no legal prohibition against these companies using offshore contractors and no requirement that impacted taxpayers be made aware of this, should it occur.

President Colleen M. Kelley of the National Treasury Employees Union (NTEU) noted that discrepancy in the wake of an IRS announcement that it is issuing proposed new guidance requiring that tax preparers inform taxpayers if they are going to outsource the preparation of their return to an offshore contractor.

“I welcome the agency’s attention to the need to safeguard taxpayer information in the hands of tax preparers in this way,” President Kelley said. “But I believe the IRS should show the same sense of urgency when it comes to handling tax returns the IRS makes available to private companies as a result of government contracting out efforts.”

According to the IRS, its proposal would broaden the definitions of tax preparer and tax return information, revise the manner and form of obtaining taxpayer consent to use or disclose tax return information and add a requirement to obtain taxpayer consent before preparers send tax return information offshore.

Unlike IRS contractors, tax preparers obtain the information voluntarily from taxpayers seeking their assistance. When the IRS contracts out tax work, as it is planning to do with tax debt collections, taxpayers have no say in who has access to their private information.

The dangers inherent in putting private taxpayer data, including names and Social Security numbers, into the hands of private sector debt collectors has been one of the fundamental arguments NTEU has raised about an IRS plan to contract out the collection of tax debts.

The IRS plan is to pay private sector debt collectors a bounty of up to 25 percent of the money they collect. NTEU, which has been leading the fight against the wholesale movement of federal work to private companies, continues to argue that the IRS debt collection plan is neither the most effective nor efficient way to accomplish the task.

“We have said all along that, given the resources, IRS employees will do a much better job for taxpayers than private contractors,” the NTEU leader said, “and without the added concerns over the loss of control of taxpayer information.”

Clearly, she added, “the agency action in proposing new guidance for handling this information by tax preparers is evidence of its understanding of the risks involved to taxpayers and their personal information. The IRS should apply that same logic to the tax debt privatization program.”

As the largest independent federal union, NTEU represents 150,000 employees in 30 agencies and departments, including some 94,000 in the IRS.