In 1976 and since, Congress has granted  some statutory exceptions to confidentiality and repealed or modified  certain existing exceptions. Exceptions to the general rule of confidentiality can be  very narrowly prescribed. How This Guide Was Developed

To identify what criteria or other policy factors Congress might wish to  consider when deciding whether to grant exceptions to the general rule of  tax information confidentiality, we reviewed
Treasury and JCT reports; congressional reports and hearing records dated between 1999  through April 2011 with references to Section 6103, including  proposals enacted and not enacted; available research on the effect of tax-information confidentiality on
Treasury and IRS criteria used in assessing proposals to disclose tax  information for nontax purposes, the Fair Information Practices; and
GAO internal guidance for recommendations on using tax data for  nontax purposes. The guide consists of two sections of key questions for evaluating Section  6103 exception proposals, as shown in figure 2. Because tax information is generally recognized as being collected and  developed to administer tax laws, its use for other purposes needs to be  transparent. It is also important that taxpayers receive notice about the  use of their information. Because continued willingness of  taxpayers to provide their personal information is critical to voluntary  compliance and tax administration, any proposed disclosure’s effect on  such willingness warrants specific consideration. Some in the tax community are concerned that granting  exceptions to confidentiality could compromise voluntary taxpayer  compliance. One possible general effect  of increased use of FTI by entities other than IRS could be a sense  among taxpayers that the information reported to IRS is not kept private,  so providing information to IRS is a bad idea. Appendix I: Internal Revenue Code Section 6103—Current Taxpayer Confidentiality and Disclosure Provisions, and Safeguard and Record-Keeping Requirements

	Current Taxpayer Confidentiality and Disclosure Provisions

Under Internal Revenue Code (IRC) § 6103, tax returns and tax-return  information are confidential and may not to be disclosed unless  specifically authorized. Safeguard Requirements

To safeguard taxpayer privacy and ensure confidentially, Section 6103  imposes the following requirements for government entities receiving  returns and return information from IRS: establish and maintain a permanent system of standardized records  of requests including the reason for such requests, date of requests,  and any disclosures; establish and maintain a secure area for storage; restrict access to the information to only those whose duties or  responsibilities require access and those to whom disclosures are  permitted under section 6103; establish and maintain any other safeguards IRS deems necessary or provide IRS a report describing the safeguard procedures; and dispose of the information in an appropriate manner after use. What are the expected costs of obtaining and using the tax  information to be disclosed? Internal Revenue Service.
What GAO Found

The Internal Revenue Service (IRS) receives a great deal of personal information about individuals and businesses. While taxpayers are required to provide this information to IRS under penalty of fine or imprisonment, confidentiality of information reported to IRS is widely held to be a critical element of taxpayers willingness to provide information to IRS and comply with the tax laws. As a general rule, anything reported to IRS is held in strict confidenceInternal Revenue Code (IRC) Section 6103 provides that federal tax information is confidential and to be used to administer federal tax laws except as otherwise specifically authorized by law.
Although tax information is confidential, nondisclosure of such information is not absolute. Section 6103 contains some statutory exceptions, including instances where Congress determined that the value of using tax information for nontax purposes outweighs the general policy of confidentiality. Since making amendments to Section 6103 in 1976, Congress has expanded the statutory exceptions under which specified taxpayer information can be disclosed to specific parties for specific purposes. Today, Section 6103 exceptions enable law enforcement agencies to use relevant tax information to investigate and prosecute tax and nontax crimes and allow federal and state agencies to use it to verify eligibility for need-based programs and collect child support, among other uses.
Periodically, new exceptions to the general confidentiality rule are proposed, and some in the tax community have expressed concern that allowing more disclosures would significantly erode privacy and could compromise taxpayer compliance. In evaluating such proposals, it is important that Congress consider both the benefits expected from a disclosure of federal tax information and the expected costs, including reduced taxpayer privacy, risk of inappropriate disclosure, and negative effects on tax compliance and tax-system administration. This guide is intended to facilitate consistent assessment of proposals to grant or modify Section 6103 exceptions. This guide consists of key questions that can help in (1) screening a proposal for basic facts and (2) identifying policy factors to consider.