How Private Are My Tax Returns?

The request by a committee of Congress for the president’s tax returns is causing pangs and headaches to various persons out there. But as I chomped down on a taco at my favorite corner stand, I said “maybe people want to know how “safe” their returns are from prying eyes”. Chances are Congress is not going to be interested in your returns, so we can put that aside.

Originally, tax return information wasn’t private at all. Tax collectors would post lists of collections from each person. Being on the list was a source of great pride, since you made enough to pay tax.

All that’s long gone and there are restrictions in place to safeguard both tax returns and return information. It is very strict in actuality—but there are some exceptions.

The most important one allows state (and some local) tax administrators to access your federal return information. There is a wide range of information that is very valuable to the states in figuring if you are or should be, one of their “customers”. Some states have detailed agreements with the IRS specifying what info is released and how. The vast amount of the information exchange is ongoing and automatic. That’s how a state knows you’ve filed a federal return with an in state address, but alas, they don’t have a matching state return for you. Hence a state “love letter” to you, asking you to clarify. States tell the IRS stuff about you, too, from one taxman to another.

Naturally, if a tax administrator needs additional specific information about you, that can be requested as well and your permission is not required. Again, that’s all limited to tax administration purposes and cannot be used for anything else.

If the information sought relates to a criminal investigation, it could be released to federal officials, for example, but only if a federal judge orders it. So “regular” investigators can’t be digging up tax information from the IRS unless there is good reason to.

The law also allows IRS disclosure of your tax information to foreign governments with a treaty or convention that authorizes information sharing. Those are also highly detailed and are generally not automatic. There are individual ones (like the U.S.-Mexico tax convention) plus an international convention that provides mutual “administrative assistance” for tax administration to which they are both signatories. So if they really want your stuff, it could be had. Now you know!

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Orlando Gotay is a California licensed tax attorney (with a Master of Laws in Taxation) admitted to practice before the IRS, the U.S. Tax Court and other taxing agencies. His love of things Mexican has led him to devote part of his practice to federal and state tax matters of U.S. expats in Mexico. He can be reached at tax@orlandogotay.com or Facebook: GotayTaxLawyer. This is just a most general outline. It is informational only and not meant as legal advice.

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Orlando Gotay
Lawyer
Orlando Gotay is a California licensed tax attorney (with a Master of Laws in Taxation) admitted to practice before the IRS, the U.S. Tax Court and other taxing agencies.
His love of things Mexican has led him to devote part of his practice to the tax matters of U.S. expats in Mexico. He can be reached at tax@orlandogotay.com, online radio at mixlr.com/orlandogotay