A Brief Post on an Interesting Article Looking at Privacy and Tax

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We are in the dog days of summer, with vacations and deadlines for updating the Saltzman Book procedure treatise. This is also the time when academics are often polishing off law review articles for submission with the hopes of placement in a law review, the stuff of academic currency. I am doing the same, working on a new article that I hope will take a fresh look at some of the IRS’s challenges in administering refundable credits and ensuring program integrity.

Today’s post is a nod to an interesting article I read in connection with my summer research. The article Privacy in Taxation is by Professor Michael Hatfield at University of Washington School of Law and is forthcoming in the Florida State Law Review. It positions privacy considerations with the IRS’s power and need to collect personal information rather than the traditional focus on limiting the IRS from disseminating private information. Michael situates his article in the abstract:

Historically, tax law and tax scholarship on privacy have focused on the IRS disseminating information. In contrast, this Article considers how privacy is burdened by the IRS collecting information. It extends to taxation the concerns privacy scholars have expressed in other fields — especially national security — that government invasions of privacy impede personal development and autonomy, reduce creativity and innovation, and undermine free and democratic societies. This Article is the first to place the extraordinary authority of the IRS to invade privacy in the context of broader privacy concerns, arguing for the need to protect both tax revenue and personal privacy in the 21st century.

Before reading the article, I tended to be of the mindset that in the 21st century privacy concerns are overblown and that expectations of privacy are no longer the social norm that they perhaps were in past times. But Michael’s article and his focus on the IRS power and need to collect information to administer the tax laws, especially information of the most personal kind, has pushed me off my prior thinking.

I am convinced that weighing the privacy issues associated with the IRS’s need to properly administer the law is important. No doubt that norms around privacy are changing, but do we want laws that consistently place IRS in the position of needing to evaluate the most personal and private information?  Can Congress modify the laws to more properly weigh the interest that people have in not having to serve up the most personal information to the government in order to benefit from a tax provision?

In any event, Michael’s article raises those issues as I think about how IRS is looking to lean on technology changes to help it leverage resources and face the challenges associated with administering the tax system.

If you are heading on holiday and want to supplement the trashy novels with a thought provoking article at the beach or lake, I recommend the full article, which goes into great detail on the history of privacy in the tax context and general privacy scholarship, as well as some specific recommendations for tax policy going forward.

About Leslie Book

Professor Book is a Professor of Law at the Villanova University Charles Widger School of Law.

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