Grassley on Protecting American Taxpayer Information from Partisan Messaging

Prepared Floor Remarks by U.S. Senator Chuck Grassley of Iowa

On Protecting American Taxpayer Information from Partisan Messaging

Delivered on Tuesday, August 3, 2021

 

In the past few weeks, there’s been a lot of talk about increasing IRS enforcement to bring in more money to the government.

 

That’d be fine if we could trust the IRS to keep taxpayer information safe and actually use it to enforce the tax code.

 

Unfortunately, that notion is waffling on pretty shaky ground at the moment.

 

In June, the non-profit journalism webpage ProPublica began publishing stories that appear to contain confidential taxpayer information that might have come from the IRS.

 

Unfortunately, attention has focused more on the private tax affairs of the victims of these actions than on the apparently illegal actions taken to produce the data that forms the basis of these stories.

 

The confidentiality of taxpayer information is sacrosanct.

 

Why? Because a federal income tax return contains some of the most sensitive information there is about our fellow Americans.

 

A tax return is essentially a blueprint for how families and individuals live their lives.

 

Aside from detailing where and how taxpayers support themselves and earn money, tax returns potentially detail what charities, including religious institutions, a taxpayer supports. They can also detail where and how they take care of their children, their medical status and lots of other deeply personal information.

 

In part to promote tax compliance, Congress decided that, in exchange for collecting the sensitive information needed to enforce the Internal Revenue Code, the IRS must treat this information carefully and protect it from unauthorized access and disclosure.

 

Significant criminal and civil penalties apply to any violation of those terms.

 

Nevertheless, the ProPublica stories, published in a series titled “The Secret IRS Files, Inside the Tax Records of the .001%” are plainly derived from confidential taxpayer information.

 

The folks in charge of enforcing the tax code quickly recognized the problem here.

 

That very morning, IRS Commissioner Rettig was testifying before the Senate Finance Committee, and said he appreciated the confidential nature of the information collected by the IRS and how important it is that people are able to trust the IRS with that information.

 

Commissioner Rettig isn’t the only Treasury official to express concern.

 

When asked about this apparent abuse of taxpayer information at a Finance Committee hearing on the President’s fiscal year 2022 budget request held on June 16, Treasury Secretary Yellen said she agreed the situation was serious and that the matter has been referred to the Justice Department.

 

The week before, appearing before a different Senate committee, Attorney General Garland also said this was a serious matter and that people are entitled to privacy regarding their tax information.

 

I agree with Commissioner Rettig, Secretary Yellen and Attorney General Garland that the apparent leak of confidential information is a very serious issue.

 

For one thing, we don’t know exactly where the information came from. Was it a leak? A hack? We don’t know.

 

We also don’t know the full scope of information at risk.

 

According to ProPublica, it has “obtained a vast trove of Internal Revenue Service data on the tax returns of thousands of the nation’s wealthiest people, covering more than 15 years.” 

Let me say that again. ProPublica claims that is has thousands of tax returns.

 

Americans know the risk of having their private information unsecure and in the wind. They know the risks, for example, of fraud and identity theft.

 

According to the most recent IRS Electronic Tax Administration Advisory Committee Annual Report to Congress, issued in June of 2021, 185,000 identity theft affidavits were filed with the IRS in 2020.  

 

The report also notes that due to pandemic relief, higher levels of identity theft are expected during the 2021 filing season.

 

Sure, in this case, ProPublica has decided that the wealthiest individuals are the ones worth targeting. But again, we don’t know the full scope of information that is at risk.

 

Maybe you’re not the owner of a sports team, or the head of a multinational company or haven’t built a vehicle in which you have recently travelled into outer space. The unauthorized access and disclosure of taxpayer information should concern all taxpayers.

 

If someone can expose the most private and sensitive information of the nation’s wealthiest citizens, they can do it to anyone.

 

Regardless of what anyone thinks about the known victims of this disclosure, no one should be absolutely confident that their information hasn’t been compromised.

 

As soon as the apparent disclosure of taxpayer information was known, I pressed authorities in the executive branch to take action. I questioned Commissioner Rettig about it during a Finance Committee hearing that very day.

 

Three days later, I sent a letter with Leader McConnell and Finance Ranking Member Crapo to Attorney General Garland and FBI Director Christopher Wray asking them to take action in this matter.

 

In part the letter reads, “Find those responsible for these disclosures and ensure they are punished as directed by law. Unless you do, ordinary Americans will fall victim to these politicized and criminal disclosures, and trust in the IRS and our tax system will continue to erode.” 

 

On the same day, I joined every other Republican on the Finance Committee on a letter to the Treasury Inspector General for Tax Administration asking for an immediate investigation.

 

Following Treasury Secretary Yellen’s June 16 appearance before the Finance Committee, I also submitted several questions to her in writing. My questions ask about the scope of the leak or hack and whether or not anyone with advanced knowledge of the first ProPublica piece had reached out to Treasury or the IRS.

 

On June 16, I sent a letter to Attorney General Garland and FBI Director Wray with other Judiciary Committee Republicans seeking a briefing and confirmation that the FBI or Department of Justice is investigating.

 

I have not received a single response to any of my written inquiries.

 

There appears to be a massive flaw somewhere in our system of tax administration. Our job is to determine exactly what the situation is, how it happened, and how we can fix it.

 

Unfortunately, it appears some are using the apparent illegal disclosure of taxpayer information and the violation of taxpayer rights to advance a partisan agenda.

 

It’s important to note that the ProPublica pieces aren’t talking about tax evasion, but generally tax avoidance, which is the legal minimization of taxes owed.

 

On June 24, ProPublica published a story about Roth IRAs using the information of a wealthy tech investor. The purpose of this story was to show that this investor “and other ultra-wealthy investors have used them to amass vast untaxed fortunes.”

 

The next day on June 25, ProPublica published a story highlighting a senior Democratic Senator’s legislation intended to crackdown on large Roth IRA accounts; the same type of accounts criticized in the previous day’s article.

 

A different ProPublica story seemed intended to wield private taxpayer information to affect the outcome of an election.

 

On June 16, ProPublica published a story containing taxpayer information of a candidate in the Democrat primary to be the next District Attorney of Manhattan.

 

Given how concerned many of my colleagues have been about potential election interference, I’m shocked that this story completely missed their attention.

 

If a candidate’s confidential, legally protected information is somehow disclosed less than a week before an election, especially when we don’t know the ultimate source of the confidential information or how it was obtained, shouldn’t that raise some red flags? 

 

Or does it only matter depending on who the candidate is?

 

Finally, I want to address ProPublica’s role in this situation.

 

Although they may be well intentioned, in my opinion they’re facilitating an abuse of power by publishing stolen, confidential information of individual citizens who are by all appearances complying with their legal obligations.

 

They think they are informing the public of information they need to know. They are really telling the public that their tax-return information may not be private.

 

That could have serious consequences for the proper administration of our tax laws.

 

Plainly, this isn’t about tax cheats who broke the law. It’s about certain people not paying what ProPublica thinks they should pay, regardless of the law.

 

It’s about promoting changes to the tax law that ProPublica, and certain members of this body, would support.

 

The identities of the specific taxpayers that we know have had their information violated isn’t an excuse.

 

The notion that taxpayer information – every taxpayer’s information – should be protected is not a view only held by this senator.

 

I’ve quoted the Treasury Secretary and the Attorney General as holding that view.

 

The use of this information to advance partisan objectives and apparently to influence an election should concern all of us.

 

We need to get to the bottom of what happened. We need to know what taxpayer information is at risk, how many taxpayers have been compromised and then determine what we can do going forward.

 

I implore Secretary Yellen and Attorney General Garland to respond to my questions and letters so we can get on with our important work.