EFF to US Court of Appeals: Protect Taxpayer Privacy

EFF has filed an amicus brief in Trabajadores v. Bessent, a case concerning the Internal Revenue Service (IRS) sharing protected personal tax information with the Department of Homeland Security for the purposes of immigration enforcement. Our expertise in  privacy and data sharing makes us the ideal organization to step in and inform the judge: government actions like this have real-world consequences. The IRS’s sharing, and especially bulk sharing, of data is improper and  makes taxpayers vulnerable to inevitable mistakes. As a practical matter, the sharing of data that IRS had previously claimed was protected undermines the trust important civil institutions require in order to be effective. 

You can read the entire brief here. 

The brief makes two particular arguments. The first is that if the Tax Reform Act, the statute under which the IRS found the authority to share the data, is considered to be ambiguous, and that the statute should be interpreted in light of the legislative intent and historical background, which disfavors disclosure. The brief reads,

Given the historical context, and decades of subsequent agency promises to protect taxpayer confidentiality and taxpayer reliance on those promises, the Administration’s abrupt decision to re-interpret §6103 to allow sharing with ICE whenever a potential “criminal proceeding” can be posited, is a textbook example of an arbitrary and capricious action even if the statute can be read to be ambiguous.

The other argument we make to the court is that data scientists agree: when you try to corroborate information between two databases in which information is only partially identifiable, mistakes happen. We argue:

Those errors result from such mundane issues as outdated information, data entry errors, and taxpayers or tax preparer submission of incorrect names or addresses. If public reports are correct, and officials intend to share information regarding 700,000 or even 7 million taxpayers, the errors will multiply, leading to the mistaken targeting, detention, deportation, and potentially even physical harm to regular taxpayers.

Information silos in the government exist for a reason. Here, it was designed to protect individual privacy and prevent executive abuse that can come with unfettered access to properly-collected information.  The concern motivating Congress to pass the Tax Reform Act was the same as that behind Privacy Act of 1974 and the 1978 Right to Financial Privacy Act. These laws were part of a wave of reforms Congress considered necessary to address the misuse of tax data to spy on and harass political opponents, dissidents, civil rights activists, and anti-war protestors in the 1960s and early 1970s. Congress saw the need to ensure that data collected for one purpose should only be used for that purpose, with very narrow exceptions, or else it is prone to abuse. Yet the IRS is currently sharing information to allow ICE to enforce immigration law.

Taxation in the United States operates through a very simple agreement: the government requires taxes from people working inside the United States in order to function. In order to get people to pay their taxes, including undocumented immigrants living and working in the United States, the IRS has previously promised that the data they collect will not be used against a person for punitive reasons. This increases people to pay taxes and alleviates concerns of people people may have to avoid interacting with the government. But the IRS’s reversal has greatly harmed that trust and has potential to have far reaching and negative ramifications, including decreasing future tax revenue.

Consolidating government information so that the agencies responsible for healthcare, taxes, or financial support are linked to agencies that police, surveil, and fine people is a recipe for disaster. For that reason, EFF is proud to submit this amicus brief in Trabajadores v. Bessent in support of taxpayer privacy.