In June 2021, a source who has not yet been named gave ProPublica private IRS tax information about wealthy Americans. We don't know who dumped the data yet, but we do know that this is not the first time that the tax agency, which makes people reveal sensitive information about their finances, has been a bad steward of that information.
Too often, people who collect taxes for the federal government use official records for fun, profit, or political gain. On June 8, 2021, ProPublica's Stephen Engelberg and Richard Tofel wrote, “Today, ProPublica is publishing the first in a series of stories based on the private tax data of some of our country's richest citizens.”
“Many people will wonder if it's right to share such private information. We do this very carefully and selectively because we think it's in the public's best interest and will help people see patterns that were hidden before.”
Some of the people whose tax bills were in the treasure trove of tax information were Jeff Bezos and Warren Buffett. The information came from IRS records and was sent to us through “secure systems that let whistleblowers send us information without telling us who they are.”
The data showed that many wealthy Americans are able to keep their tax burdens to a minimum. This may have been the point of the source, but no one knows for sure. People can release information for many different reasons, and ProPublica says it doesn't know what the source's goals were.
In Fact, the Irs Leaks Information Like a Sieve All the Time, and for a Lot of Different Reasons.
The U.S. Government Accountability Office reported last month that the IRS had finished 1,694 investigations into employees who accessed tax data without permission. Of those, 27% were found to be in violation.
In 2015, Quartz wrote about a man who found out that someone else got his tax refund: “[Michael Kasper] was almost certainly one of the more than 330,000 Americans who fell victim to an audacious hack of the Internal Revenue Service (IRS), which was revealed earlier this year.”
“Tea Party, anti-abortion, and other conservative groups told Congress on Tuesday that the Internal Revenue Service held up their applications for tax exemptions, bothered them with questions, and gave their donor lists to political opponents,” USA Today reported in 2013.
Poor security lets outsiders get money, and IRS employees often look at and share financial information to satisfy their own curiosity, make money, or help political causes. Sometimes these political causes are their own, and sometimes they are part of what the person in charge of the federal government wants to do.
In 1989, The New York Times said, “The history of the I.R.S. is full of examples of agents acting in their own self-interest or pursuing their own ideological agendas. There are also examples of Presidents, White House staff, and Cabinet officials putting pressure on the tax agency to take political actions.”
As the tax agency's powers grew, they were used in a bad way from the start. Elliott Roosevelt, who is the son of former President Franklin Delano Roosevelt, once said, “My father may have been the first person to think of using the IRS as a political weapon.”
The government under FDR may have been the first to use the tax agency as a weapon, but it wasn't the last. John F. Kennedy set up the “Ideological Organizations Audit Project” in the IRS to go after his political opponents on the right who were more conservative.
Richard Nixon is famous for using the tax agency as a political hitman against well-known Democrats. The fact that tax information was still being used wrongly is clear from the story the Times wrote about it during the Bush Sr. administration, as well as from the scandal over how Obama's administration treated Tea Party groups and, more recently, from the ProPublica leak.
So, it's not a big deal that ProPublica and its source used tax data to make a policy point. Some agents and politicians who used the IRS as a weapon in the past wanted to make the world a better place, or at least hurt only people and groups they thought were bad.
And leaks from government agencies do sometimes lead to good things. Where would we be without Daniel Ellsberg's copies of the Pentagon Papers, Mark Felt's role as “Deep Throat” in the Watergate scandal, or Edward Snowden's news about government spying?
But leaks from the IRS are not war plans, abuses of power, or politicians' schemes. They are sensitive, private financial information that we have to give to government agents. We have no choice but to fill out our tax forms, even though we know that federal workers have a history of using the information they get from us in ways that hurt us.
And invading people's financial privacy for political reasons is not a good reason in and of itself. Andrew Moylan and Andrew Wilford of the National Taxpayers Union Foundation wrote in Reason that ProPublica's use of the data was “misleading and sure to lead to bad policy making.”
Even if you try to be nice about it, that sounds like a sneaky way to use sensitive private information. Even though the tax authorities might not care. From what we know about the past, IRS leaks don't hurt the agency much.
“The Treasury Inspector General for Tax Administration (TIGTA) had done an audit of the IRS's Office of Privacy in September 2006 and found that the IRS was not following privacy laws,” TIGTA said in a 2013 report. “Even though it cares about privacy and has made improvements since our last review, the IRS is still having trouble meeting privacy laws.”
And here we are in 2022, and it looks like there is still a lot of room for improvement after decades of tax collectors breaking the law and their watchdogs giving them slaps on the wrist. Almost a year after the first ProPublica story and after Treasury Secretary Janet Yellen said she would “get to the bottom of this criminal activity,” the government still says it doesn't know who leaked the data.
The Wall Street Journal says that there have been no arrests or official hints about how the wall of secrecy around tax records was broken. No one knows if the IRS has found or fixed any security holes.
Many of us complain about how much of our money the government takes. Even worse, the information we have to give to tax collectors is likely to be used against us by politicians, government agents, and activists who want to use the details of our finances to get what they want. The IRS is not just a strong government agency; it is also a tool used against the public.