Opinion ID: 425173
Heading Depth: 2
Heading Rank: 2

Heading: The Consent Requirement of Subsection 6103(c)

Text: 23 Given that the Code guarantees confidentiality and creates no statutory exception for SSA to verify Benefits eligibility, the agencies have been forced to rely on subsection 6103(c) in order to justify the potential release of confidential tax information. That section provides that the IRS may, subject to such requirements and conditions as [it ] may prescribe by regulations, disclose ... return information ... to such person or persons as the taxpayer may designate in a written request for or consent to such disclosure .... I.R.C. Sec. 6103(c) (emphasis added). Under this proviso, the notice-and-consent form signed by appellants and distributed to millions of Benefits recipients fails to provide the consent that is needed before the IRS can release confidential tax return information. 24 Our holding rests on two independent grounds. First, the notice-and-consent form does not meet the requirements of the IRS' own regulations. Those regulations require that consent be in the form of a written document pertaining solely to the authorized disclosure. 26 C.F.R. Sec. 301.6103(c)-1(a) (1982). That document must contain certain specified information, including, [t]he taxable year covered by the return or return information. Id. The notice-and-consent form fails to comply with this requirement. It contains no expiration date and leaves the taxable year covered totally open-ended. Because the consent exception authorized by subsection 6103(c) is conditioned upon adherence to the regulations adopted by the IRS, the SSA's attempt to secure wholesale access to recipients' tax information is invalid. 25 The second, and more important, basis for our holding is that these forms, which were mailed to 4 million elderly, blind and disabled individuals, cannot solicit the type of knowing and voluntary consent that the statute contemplates before the IRS can release confidential tax information under subsection 6103(c). The purpose of the confidentiality clause of the Tax Reform Act of 1976 was to protect individual taxpayers from unauthorized disclosure of their tax return information. In particular, Congress was concerned about the potential widespread availability of individual tax information to government agencies. See SEN.REP. NO. 938 (Part II), 94th Cong., 2d Sess. 315-16, reprinted in 1976 U.S. CODE CONG. & AD.NEWS 3744-45. The legislative history of section 6103 demonstrates that Congress intended to limit disclosure of tax return information except under narrowly defined circumstances. 26 Prior to enactment of section 6103, tax returns were available for inspection by government agencies under regulations approved by the President or under executive order. Congress was concerned that this system did not protect the privacy of individual taxpayers adequately. The Senate Finance Committee Report (the Report) explained why a new system was needed: 27 It has been stated that the IRS probably has more information about more people than any other agency in this country. Consequently, almost every other agency that has a need for information about U.S. citizens, therefore, logically seeks it from the IRS. However, in many cases the Congress has not specifically considered whether the agencies which have access to tax information should have that access. 28 Id. at 316-17, reprinted in 1976 U.S. CODE CONG. & AD.NEWS 3746. The Report went on to explain how the Finance Committee determined which exceptions to a broad confidentiality rule were desirable: 29 The committee has reviewed each of the areas in which returns and return information are now subject to disclosure. 30 With respect to each of these areas the committee has tried to balance the particular office or agency's need for the information involved with the citizen's right to privacy and the related impact of the disclosure upon the continuation of compliance with our country's voluntary assessment system. 31 Id. at 318, reprinted in 1976 U.S. CODE CONG. & AD.NEWS 3747 (footnote omitted). The Report specifically addressed the use of tax information by SSA to determine the eligibility of beneficiaries under its authority. See id. at 334, reprinted in 1976 U.S. CODE CONG. & AD.NEWS 3764 (describing eligibility under Title II of the Social Security Act). According to the Report, [t]he committee decided to limit strictly the types of returns and return information which would be made available to other agencies on a general basis for purposes other than tax administration or statistical use, and the situations in which they would be made available. Id. at 335, reprinted in 1976 U.S. CODE CONG. & AD.NEWS 3764. The Report therefore concluded that general use of tax return information by SSA and other agencies was not warranted. Id. Specifically, with regard to SSA, Congress concluded that only tax return information concerning employment taxes would be made available. Id. See I.R.C. Sec. 6103(l )(1); see also H.R.REP. NO. 1515, 94th Cong., 2d Sess. 482-83, reprinted in 1976 U.S.CODE CONG. & AD.NEWS 4186-87 (conference agreement to adopt Senate version). 32 In light of this legislative history, the IRS cannot use the consent exception of subsection 6103(c) as a catch-all provision to circumvent the general rule of confidentiality established by Congress. Although a knowing and intelligent waiver of rights by Benefits recipients might permit the IRS to release those individuals' tax return information, the form used in this case makes a mockery of the consent requirement. The form itself contained poorly-veiled threats that the recipients' benefits would be terminated if they failed to sign the forms: If you do not sign the form, your Supplemental Security Income checks may be affected. See Appendix, post. The form also failed to notify recipients of their procedural rights if SSA decided to terminate their benefits. The language of the form was thus likely to coerce individuals, who depend on social security for their subsistence, into giving up their right to confidentiality. The affidavits filed by appellants dramatize this coercive effect on Benefits recipients. See Joint Appendix in No. 82-2449 at 15-26. Without an understanding of their substantive and procedural rights, appellants cannot be said to have consented knowingly and voluntarily to the release of their tax information. 33 Our holding today is limited. We conclude that the form sent out by the Social Security Administration and signed by almost 3 million individuals does not meet the consent requirement of subsection 6103(c) of the Internal Revenue Code. We intimate no views on whether another form--one which contains no veiled threats and sets forth the substantive and procedural rights of Benefits recipients--could result in knowing and voluntary consent. And, of course, no consent form would be required (barring constitutional difficulties) should Congress create another exception to the confidentiality requirement of section 6103 so that SSA could use tax return information to determine the eligibility of Benefits recipients. See Note, The Constitutional Right to Confidentiality, 51 GEO.WASH.L.REV. 133 (1982).