Confidentiality of tax return information.

June 19, 1999

On June 14, 1999, Tax Executives Institute sent the following letter to Robert Rubin, U.S. Secretary of the Treasury, and Janet Reno, the Attorney General of the United States, in connection with an order of the United States District Court for the District of Puerto Rico concerning the release of tax return information to an unrelated taxpayer (Copies of the letters were provided to the Commissioner of Internal Revenue, the Chief Counsel, and the Solicitor General.) The letter, which was signed by TEI President Lester Ezrati of Hewlett-Packard Company, was prepared under the aegis of the Institute's IRS Administrative Affairs Committee, whose chair is Stephen W. Boocock of Allegheny Teledyne, Inc.

It has come to Tax Executives Institute's attention that the United States District Court for the District of Puerto Rico has ordered the Internal Revenue Service to produce tax return information of unrelated third parties to plaintiffs involved in a tax refund suit. The court's order has arguably placed responsible parties at the IRS on the horns of the dilemma -- they either commit a felony or risk being found in contempt of court.

Equally important, the court's order threatens to undermine the promise of confidentiality that undergirds the tax system. TEI believes that a negotiated settlement of this dispute is both possible and desirable, and we urge the Department of Justice (with the assistance of the Treasury Department and IRS) to take all appropriate actions to modify the court's order and prevent the release of third-party tax return information, while ensuring that the underlying issue involved in the refund litigation can be fairly adjudicated. Unless steps are taken to vindicate the privacy interests of taxpayers, irreparable harm will be done to the self-assessment tax system.

Background

Tax Executives Institute is the preeminent association of business tax executives in North America. The Institute's 5,000 members represent 2,800 of the leading corporations in the United States and Canada. TEI represents a cross-section of the business community, and is dedicated to the development and effective implementation of sound policy, to promoting the uniform and equitable enforcement of the tax laws, and to reducing the cost and burden of administration and compliance to the benefit of taxpayers and government alike.

For more than 50 years, TEI has worked with representatives of the Internal Revenue Service, Congress, and...