Alexander Hendrie

New Report Finds IRS Failing to Protect Confidential Tax Information

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Posted by Alexander Hendrie on Wednesday, October 22nd, 2014, 2:30 PM PERMALINK

A new report by the Treasury Inspector General for Tax Administration released yesterday found that the IRS has been failing to safeguard federal tax information, drawn mostly from the tax returns of Americans everywhere.

The IRS provides confidential information to over 280 federal, state and local agencies and has responsibility for oversight over the safe use of the information. But according to the report “The IRS’s Internal Revenue Manual does not require the performance of on-site validation of an agency’s ability to protect (federal tax information) prior to its release to the agency”. Instead, the IRS will examine the ability to protect federal tax information after it has given away confidential information.

As if that wasn’t bad enough, the IRS does not set any guidelines for an agency’s background investigation policy as a requirement of accessing information.

Federal tax information provided to other agencies must remain confidential by federal law. But apparently it doesn’t matter to the IRS if another agency has a sufficient background investigative policy or even if any investigations occur.

Of 15 agencies surveyed that receive federal tax information, the report found that none of them conducted sufficient background checks on employees handling the data. Just one agency conducted national background investigations, four fingerprint employees and only one checks the sex offender registry, while almost half of the agencies hire convicted criminals.

The IRS has said it will now develop appropriate background checks and will use a risk-based assessment before approving the release of federal tax information to other agencies. But given this is not the first time that the IRS has failed to provide adequate protection to sensitive information, taxpayers should continue to be concerned about the security of their personal information.

More from Americans for Tax Reform

Amid International Pressure, Ireland Standing Firm on "Sovereign Right"

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Posted by Alexander Hendrie on Thursday, September 25th, 2014, 1:11 PM PERMALINK

The Organization for Economic Cooperation and Development (OECD) released a plan last Tuesday that will "change the rules of the game" to prevent corporations from shifting profits between different countries. At the same time, Washington has said it plans to crackdown on firms relocating to lower tax jurisdictions.  

Both moves take aim at Ireland’s pro-business tax policy, which has attracted hundreds of foreign firms to the Emerald Isle and has been a key factor in Irish economic success. Ireland’s extremely competitive 12.5% corporate tax rate has directly created over 150,000 jobs in Ireland and is a major reason for Ireland’s economic growth reaching seven times the European average.

Irish policies have also seen the nation place highly amongst rankings measuring competitiveness. The 2013 International Property Rights Index (IPRI) ranked Ireland 13th for Legal & Political rights and 15th for Intellectual Property Rights (out of 131 countries). In a recent report released by the Tax Foundation, Ireland ranked second for tax competitiveness amongst OECD countries. The U.S. was ranked 32nd (out of 34 countries).

President Obama announced Monday that he would take new steps to punish firms that relocate offshore. This move would prevent corporations from moving to more competitive business environments such as Ireland by making the process more complex and costly.

In the past, President Obama has branded firms that leave the U.S. as "unpatriotic", however he remains unwilling to seriously consider the root of the problem – the high US corporate rate, which at 35% is almost triple Ireland’s rate and is one of the highest in the OECD.

Meanwhile, Director of Tax Policy for the OECD, Pascal Saint-Amans, took aim at Irish policy by suggesting Dublin could not defend its low tax rate without removing some of the more controversial provisions, and that changes to the current budget "make sense".

Despite pressure to water down its tax code, Dublin is standing firm.

On Sunday, Jobs Minister Richard Bruton publicly ruled out early changes to the tax system and reiterated that while Ireland will work with the OECD, it will not be pressured into reducing Ireland’s competitiveness. In separate comments, Anne Anderson, Irish Ambassador to the U.S. said that the 12.5% corporate tax rate that is crucial to Irish competitiveness will remain as a “sovereign right”.

While the decision against early changes to the tax code is good news, it appears inevitable that the OECD will force Ireland to modify its business policy. For its part, Dublin has indicated its willingness to compromise on the more controversial provisions once the OECD report is completed. However, given the recent economic success of the Emerald Isle, other countries including the U.S. should consider emulating Ireland rather than demonizing it.