Frequently I’ve been asked to explain the extent to which tax returns and the information contained in them are confidential or otherwise inaccessible to the government. It’s an interesting and important question, and there’s a lot of misinformation around on the subject.
Section 6 1 03 of the Internal Revenue Code provides that tax returns and “return information” are confidential (at least as a general proposition).
If you look at the legislative history of Section 6103, you’d find that in enacting it Congress was concerned about how much access the government had to, and the use it could make of, tax information collected by the Internal Revenue Service. However, not surprisingly, Congress also fully recognized that the government needed that kind of material.
Therefore, as with most Congressional legislation, Section 6103 represents a compromise: an attempt to balance the individual’s right to financial privacy against the legislatures clearly perceived recognition that the government needed tax return information.
Before we go any further, two points have to be made.
First, Section 6103 applies only to information initially obtained by the Internal Revenue Service. The Section is inapplicable, and thus no protection is afforded by it, if tax information was obtained by a Justice Department lawyer from a source other than the Internal Revenue Service.
For example, if the Justice Department serves a grand jury subpoena on an accountant and obtains a copy of the accountant’s client’s tax return, there is no issue whatever of confidentiality under Section 6103. The Section simply does not apply. more
