Today I have signed into law H.R. 1226, the "Taxpayer Browsing Protection Act," to provide additional criminal penalties and civil remedies to help ensure that taxpayers' returns and return information remain confidential.
Our system of taxation relies heavily on taxpayers' voluntary compliance with their tax reporting obligations. Maintaining the confidentiality of the information submitted by taxpayers is critical to the operation of this system. If taxpayers do not believe that the Government is adequately safeguarding their personal financial information they may be less willing to supply that information in the future.
Taxpayers have the right to expect that their returns and return information are, and will remain, confidential. Such information should be inspected or reviewed only for proper purposes, including tax administration, in accordance with the criteria established by law. It is my Administration's clear policy that unauthorized inspection of tax information will not be tolerated. This is a bipartisan issue on which everyone can agree: "browsing" taxpayer information is wrong, and we all condemn it.
Using currently available tools, the Internal Revenue Service (IRS) has stepped up its efforts to end browsing, and my Administration has supported providing the IRS with additional tools. Significant progress was made on this issue last year. The National Information Infrastructure Protection Act of 1996 made it a crime to access intentionally a Federal computer without proper authority and obtain information from any department or agency of the United States Government. Thus, browsing tax records stored in a Federal computer is already punishable as a crime. The bill I have signed today will further strengthen the tools the IRS can employ against unauthorized inspections of taxpayer data.
This legislation will add a separate provision to the Internal Revenue Code specifically prohibiting unauthorized inspection or browsing of tax returns and return information. It will make a misdemeanor of certain activities that are not covered under current law. For example, it will prohibit the unauthorized inspection of noncomputerized tax information, such as "hard copies" of paper returns or return information. It will prohibit unauthorized inspection using computers belonging to State or local governments or contractors when Federal tax information has been conveyed to them pursuant to existing law. Finally, the new misdemeanor will serve as an additional option for prosecutors even in cases already covered under current law.
I am pleased that the bill provides additional civil remedies to those taxpayers whose privacy has been invaded by unauthorized inspection or disclosure of their tax information. Current law requires an actual disclosure to a third person of taxpayer information before a civil remedy is available. This bill will provide a civil remedy to taxpayers whose tax information has been unlawfully inspected, regardless of whether there has been a subsequent disclosure. Further, H.R. 1226 will require notification to taxpayers whose tax information has been either improperly inspected or disclosed whenever a person is indicted or otherwise charged with a violation of criminal provisions applicable to browsing or unlawful disclosure.
It is entirely appropriate for taxpayers whose tax information has been improperly inspected to have the same remedies as taxpayers whose information has actually been unlawfully disclosed. Further, notification to the taxpayer is appropriate when the Government has sufficient evidence to support a criminal charge. Acknowledging that we believe someone has violated the confidentiality rules, and advising taxpayers that we are vigorously pursuing such individuals with criminal penalties, will ultimately enhance taxpayers' confidence that the Government is vigilant about protecting their privacy.
These actions should deter persons who have access to tax returns and return information from unauthorized browsing, and the number of such instances should decline significantly in the future.
For these reasons, I am pleased to have signed H.R. 1226 into law.
WILLIAM J. CLINTON
The White House, August 5, 1997.