10th ICTR and an Update on Litigation
Dear Friends,
I hope this newsletter finds you well in these challenging times. There’s been a lot going on. But before I share with you some recent activity in the courts, a word about the 10th International Conference on Taxpayer Rights.
It’s hard to believe that the 10th International Conference on Taxpayer Rights is just a month away – from June 4 to 6, 2025! We are really looking forward to seeing old and new friends at the conference. The theme of the conference – Taxpayer Rights, Trust, & the Rule of Law – could not be more relevant. And as much as we’d love to see everyone in person, we understand if you are concerned about coming to the US at this time. That’s why we are also live-streaming the entire conference and why we will post the videos to a non-public website so folks who have registered and are in different time zones can watch them on the same day. So please consider registering for the “virtual” conference.
As you know, there has been a lot of upheaval and controversy surrounding the US Internal Revenue Service lately, with forced terminations, reductions in force (RIFs), and so-voluntary deferred retirements. The President has just proposed a Fiscal Year 2026 budget for the IRS that sets funding at 2002 levels (yes, you read that correctly – levels of funding harking back to almost a quarter of a century ago). This after the IRS had finally been granted an unprecedented amount of funding – almost $80 billion over 10 years – in the Inflation Reduction Act, with much of that funding now clawed back by Congress in the last two years.
The draconian cuts to IRS staffing – projected between 25 to 50 percent – have devastating consequences to the quality of taxpayer service and effective tax compliance initiatives. But even more disturbing are the efforts of the “Department of Government Efficiency” or DOGE to gut the fundamental taxpayer right of confidentiality of return information, codified at 26 USC 6103. According to reports, both internal and external, DOGE is planning to create a massive API platform holding all taxpayer data that can be shared, via a template, with any federal agency that requests it.
Now, for years, I have been advocating for the IRS to create a 360 degree view of taxpayer information. My rationale for this was based on the fact that the IRS has over 60 case management systems in which data and information about taxpayers is stored. Only select pieces of that information are stored in the Master Files that are the authoritative record of the taxpayers’ accounts. Creating a repository of all taxpayer information would not only improve taxpayer service by making more information available to taxpayers in taxpayer online accounts but also to customer service representatives assisting taxpayers over the phone or in-person. And a 360 degree view would improve audit selection and the choice of collection actions or alternatives. Whereas today the IRS might select a taxpayer for audit based on limited information and end up with a no-change audit, thereby wasting resources, a 360 degree view might result in providing the one piece of information that would lead the IRS to audit a different taxpayer.
But all that activity is inside the IRS and relevant to tax administration. This is squarely within the confines of IRC 6103, which says, point blank, tax returns and return information is confidential unless Congress, via IRC 6103, says otherwise. Congress has authorized the disclosure of return information to IRS officers and employees in furtherance of their tax administration duties (IRC 6103(h)(1)).
Congress has also created specific exceptions for disclosure of tax returns or return information in very limited situations. But nowhere has Congress authorized massive sharing of data just because some federal agency thinks it has the need for this information. In fact, Congress clawed back control over tax return confidentiality in 1976 after it was disclosed that the President had authorized the Department of Agriculture to obtain the tax returns of the farmers of America. This caused such an uproar that Congress not only held hearings about this perceived abuse of the right to privacy but also enacted sweeping change to the entire structure of return confidentiality.
That structure is now under deep threat, along with the entire edifice of tax administration. With that in mind, on February 17, 2025, the Center for Taxpayer Rights joined other plaintiffs in suing the Internal Revenue Service, et al, in federal district court to stop the erosion of 6103 protections. We have also joined 24 other plaintiffs in a suit against the federal government, including the Department of Treasury, to stop the unlawful firings of government employees. And finally, we have filed an amicus brief in a lawsuit against the Departments of Homeland Security and Treasury and the IRS to top the sharing of return information between DHS and the IRS, on the grounds such sharing will erode taxpayer compliance.
These are just holding actions. In my next post I will discuss what the Center for Taxpayer Rights is planning in order to help rebuild the IRS.
In the meantime, I hope you will consider donating to the Center as we work to support and protect taxpayer rights, in the US and internationally. And please join us for the 10th International Conference on Taxpayer Rights – either in-person or virtually. We have much to discuss and learn from one another!
All the best,
Nina
Nina Olson
Executive Director
Center for Taxpayer Rights