Opinion ID: 339299
Heading Depth: 1
Heading Rank: 3

Heading: the tax information use violation

Text: 43 In its complaint the Commission charged that the retention and use of the customer tax information violated § 5 in two respects. First, it charged that the special relationship between a tax return preparer and a customer had the capacity and tendency to mislead the customer into the erroneous and mistaken belief that the information provided would be used solely for the preparation of the tax return and would remain confidential. Thus the failure to disclose anticipated use in loan solicitation was said to be a false, misleading and deceptive practice injuring the customers. Secondly, the Commission charged that because Beneficial had competitors in the tax return preparation business, from whom business could be diverted, the failure to disclose anticipated use of the tax information in loan solicitations was an unfair method of competition. 44 Beneficial does not contend that the use of the tax information in loan solicitation, absent § 316 of the Revenue Act of 1971, is a subject matter beyond the reach of the Commission's § 5 authority. Rather, it contends that the latter statute and the Treasury Regulations issued thereunder preempt the field, that it is now in full compliance with those regulations, and that the Commission's order requiring more is invalid. While admitting that § 5 originally gave the Commission authority to find unfair trade practices in relation to tax preparation services, Beneficial argues that § 316 was intended by Congress to circumscribe that power. Nothing on the face of § 316 supports that construction, and we have been referred to no legislative history which would tend to suggest such an intention. 12 The criminal prohibition in § 316 appears to be directed at preserving the confidentiality of tax return information except under specified circumstances. Enforcement under § 5 of the Federal Trade Commission Act, in contrast, is aimed at preventing unfair and deceptive acts and practices. There is nothing inconsistent between the two policies, and there is no reason for attributing to Congress the intention of reducing the Commission's power to prevent deception or unfairness. If the Commission had directed conduct which is inconsistent with the confidentiality policy of § 316, we could understand Beneficial's objection. But in this case the Commission is pursuing a separate governmental objective in a manner wholly consistent with that policy. That the Commission's order goes beyond the requirements of Treasury Regulation 301.7216-3 in several insignificant respects seems to us unexceptionable. Nor does Beneficial's contention 13 that the Internal Revenue Service has approved its Form BOR-56 change our view. Assuming such approval, nothing in the Revenue Act of 1971 or any other statute confers on the Internal Revenue Service authority to determine what is an appropriate remedy for a violation of § 5 of the Federal Trade Commission Act. 45 The Commission's finding that Beneficial's practices, both prior to the enactment of § 316 and thereafter, were misleading because of the failure of Form BOR-56 to adequately disclose the nature and purpose of the waiver of confidentiality is supported by substantial evidence in the record as a whole. The remedial order, which permits Beneficial to solicit tax return customers for loan business, only requires the observance of certain procedural formalities. Items (1), (2), (3), (7), (8) and (9) duplicate the six requirements of the Treasury Regulation. The additional items required to be disclosed are: 46 4. The exact information which will be used. 47 5. The particular use which will be made of such information. 48 6. The parties or entities to whom the information will be made available. 49 These additional requirements are rationally related to the unfair practices which the Commission found. We cannot in these circumstances hold that the Commission abused its discretion in fashioning the remedy it did.