This bill increases the criminal and civil penalties for the unauthorized disclosure of taxpayer information by IRS employees and contractors.
Steve Daines
Senator
MT
This bill strengthens protections for taxpayer information by significantly increasing both criminal and civil penalties for unauthorized disclosure. It raises maximum fines and prison time for willful disclosures and establishes new, severe penalties for IRS contractors who fail to safeguard confidential data. The legislation also increases the minimum civil damages available to individuals whose information is improperly disclosed.
New Tax Privacy Bill Hikes Unauthorized Disclosure Fines to $250,000 and Creates New Felony for Contractors
This bill significantly ramps up the stakes for anyone handling your private tax information. By amending the Internal Revenue Code, the legislation increases the maximum criminal fine for willfully disclosing tax returns or return information from $5,000 to $250,000 and extends potential prison time from five years to seven years. It also targets the companies the IRS hires to do its work, creating a brand-new felony for contractors who fail to safeguard data. These changes apply to any unauthorized disclosures or inspections that happen after the bill is officially signed into law.
Locking the Digital Vault
For the average person filing their taxes, this bill is essentially a massive upgrade to the 'security system' surrounding your Social Security number and income details. Under Section 7213(a), the jump from a $5,000 fine to a quarter-million dollars is designed to make even the most tempted bureaucrat think twice before leaking data. If you’ve ever worried about your private financial life becoming public knowledge, this provision creates a much heavier deterrent against the people who have access to your files.
High Stakes for Private Contractors
The bill introduces a specific hammer for outside companies in Section 7213B. If an IRS contractor—think of a software firm or a data processing company—willfully fails to set up the required security safeguards and your data gets out, they face a staggering financial penalty. The fine would be the greater of $500,000 or 25% of their total contract value for that year. For a large firm with a multi-million dollar government contract, a single security failure could result in a penalty that threatens their entire business model. This ensures that privacy isn't just a box to check, but a massive financial liability for the private sector.
Better Recourse for Regular Folks
Beyond the criminal side, the bill also makes it easier for you to seek justice if your privacy is violated. It amends Section 7431(c) to raise the minimum civil damages you can recover from $1,000 to $5,000. While no one wants their tax info leaked in the first place, this five-fold increase in the 'floor' for damages means that if you have to take someone to court for mishandling your data, the baseline payout is more aligned with the actual headache and risk of identity theft involved in the modern world.