Sen. Mike Crapo: IRS data breach – trust makes this tax system work. Here's what happens if that is lost

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FBI begins probe into IRS document leak

Fox News' David Spunt has the details on 'Special Report'

Nearly every American engages in what the Internal Revenue Service (IRS) calls "voluntary tax compliance," which is to say they make disclosures, file returns and pay taxes without being directly compelled to do so.

Voluntary compliance is a bedrock of our tax system, and is dependent on taxpayer trust that laws are equitable, equally applied, administered fairly, and administered without penalty for timely compliance.

Voluntary compliance also relies on taxpayers trusting the IRS to safeguard vigilantly the immensely personal information that tax laws require payers to disclose, including family status, business relationships, debts, medical or disability status, and a slew of other personal data.   

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Americans deserve and expect data privacy. As a baseline, the law treats personal tax data as strictly confidential, and requires active and assiduous confidentiality protections at the IRS and from any of its agents or partners with access to the data.  

Various data safeguards are in place. However, none seem to have precluded "troves of never-before-seen" taxpayer information from ending up in the hands of media outlet ProPublica, which on June 8 published protected taxpayer data in a highly partisan, sensationalized and misleading article targeting people by name. 

We still don’t know the scale of this potential breach, which could include the data of virtually all Americans.

Curiously, the media disclosure arrived mere hours before a Senate Finance Committee hearing with the IRS commissioner, which discussed the administration’s proposals for massive mandatory IRS funding to, in part, gather more data on taxpayers and target some for extra scrutiny.

President Biden's budget includes a proposal to require disclosure to the IRS of even more sensitive information on almost every American taxpayer. This big-data, big brother monitoring of Americans would require financial institutions to report information about flows into or out of all taxpayers’ savings, checking and other accounts with a value of more than a mere $600, effectively turning financial institutions into full-time, quasi-IRS agents. 

I support efforts to crack down on those who evade paying taxes owed under the law. However, forcing financial institutions to provide the IRS more private financial information on Americans across the income spectrum – information of questionable utility for tax administration – seems misguided at best.   

Privacy breaches are harmful and this violation does immense damage to taxpayer trust in the IRS.

While authorities are investigating what happened with the apparent IRS data breach, three equally troubling possibilities exist: 

*One or more IRS employees committed felonies by providing legally protected private taxpayer information to outsiders;

*IRS information security systems or procedures are severely compromised; 

*The ProPublica story is false and the alleged information is manufactured.  

All of these possibilities are deeply concerning, as they indicate that either taxpayer information is not safe with the IRS, or political operatives are manufacturing defamatory false stories. 

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This "extremely serious" and "brazen" breach must be fully and impartially investigated, and any person found to have accessed or released protected IRS tax information without necessary approvals should face severe penalties and prosecution. Institutional outcomes, which could include IRS reforms, depend upon the facts unearthed by investigations. My Senate Republican colleagues and I have called on various authorities to conduct prompt, thorough investigations.

Privacy breaches are harmful and this violation does immense damage to taxpayer trust in the IRS, as well as our voluntary compliance-based system. I strongly support Americans’ right to privacy, and for years have championed efforts to give Americans more control over their personal data and what is collected by both the government and the private sector. 

Taxpayers across the income spectrum are rightly concerned about IRS data leaks. Leaks of personal data mean they cannot trust that their data will be safe. 

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Before considering additional mandatory IRS funding, including enforcement efforts to collect big data on Americans’ bank accounts, Congress and the American people need assurances that existing data at the IRS is adequately safeguarded and secure, and that anyone breaching trust and breaking the law will be prosecuted. 

Without such assurances, trust in the IRS and our tax system will continue to erode.

CLICK HERE TO READ MORE BY SEN. MIKE CRAPO