Is Tax Information Private and Confidential?

Tax is a private issue, no doubt, since it involves disclosure of income. Moreover, tax information is confidential under US federal law. As always with the IRS, tax returns are treated with strict confidentiality. In fact, this is something that your tax professional and accountant must adhere to as well.

According to tax lawyers, the IRS does not disclose your tax information to anyone unless it has your consent. In the event of any breach by the IRS or your tax professional, you have the right to file a civil lawsuit for damages.

The IRS or your tax professional needs to ask your permission to share information with any third-party, and you have the right to deny them permission as well. In addition, your tax professional does not have the right to disclose any information to the IRS without your prior permission. The IRS will also need your consent to release information to your tax professional. To permit the IRS to disclose information you will need to use Form 8821 (Tax Information Authorization) or Form 2848 (Power of Attorney) and your tax attorney knows all about these forms. 

Form 2848

This form ought to be used if you want your tax professional, family member, or any other reliable person to handle your tax matters with the IRS.

Form 8821

You can use this form if you want the IRS to disclose information about your taxes to your tax professional. However, this form will not authorize them to act on your behalf.

If you hire the services of a tax lawyer or an accountant, make sure you receive a written copy of his or her privacy policy.

The tax information of every employee within your organization is also to be kept private and confidential. With increasing incidences of identity theft, leakage of tax information can cause irreparable damage to a victim. IRS agents or tax professionals who disclose tax information without authorization are liable to face stiff penalties.

On the contrary though, it seems the US government is allowing Americans to be hacked. The Chinese and Russians are cyber attacking America every day since they do not have the innovation of America. Regardless though, they are stealing our secrets and our President does not care. 60 Minutes has discussed this as well as other news outlets. China and Russia are pilfering America for its secrets and the White House issues no ultimatum, no threats, no retaliations. It is open season on America now.

The IRS does have a security system in place to safeguard Americans’ tax information – hopefully it is safe enough.

To help keep your tax matters private you ought to:

• Identify who has access to your tax records
• Family members and your accountant must understand that this information is confidential
• Review the privacy policy with your tax professional regularly
• Keep all your tax records protected with a password and store them in a secure location
• Pay your taxes on time so that the government does not disclose any details on their website

Tax privacy: does it really exist?

The debate is still open on how private and confidential tax information really is. The assumption is that our tax information is confidential. However, privacy can be easily breached with the advancements in technology as already indicated via the Russians and the Chinese and even the North Koreans. A majority of Americans hire other people to do their tax returns because no one in America understands the tax code, which increases the risk of tax information being leaked.

No matter how secure their data may seem, there is no guarantee of them not leaking your information in spite of a privacy policy. In addition, technology has a bad side to it, with hackers and identity thieves able to break into the securest databases, again, as already stated but it cannot be emphasized enough.

The only thing to do if you are worried about your tax privacy is to prepare your tax returns on your own. However, this may not be possible as a business owner or anyone else really. The only remedy is to make sure your tax professional has a stringent privacy policy in place.

Remember, when you work with a tax lawyer you are protected by the attorney-client privilege. A legal pro cannot be compelled to disclose confidential information to any opposing party or the IRS. So whether you face wage garnishment, bank levies, tax liens, or are even are wrongfully accused of tax fraud, your legal counselor will protect your interests. Unless you are Louis Roulet, a murderer, in the Lincoln Lawyer but you are not are you!? So do not worry about that!

You can find legal help using this digital tool: Tax.USAttorneys. With this sensational website, legal help is right around the virtual corner!