PRINTER'S NO. 1506
No. 252 Session of 2003
INTRODUCED BY MARKOSEK, COSTA, FABRIZIO, LEH, PHILLIPS, BEBKO- JONES, CAWLEY, HERSHEY, JAMES, JOSEPHS, LESCOVITZ, LEVDANSKY, McGEEHAN, PRESTON, READSHAW, SAINATO, SCRIMENTI, SHANER, TIGUE, TRAVAGLIO, WASHINGTON AND YOUNGBLOOD, APRIL 29, 2003
REFERRED TO COMMITTEE ON INTERGOVERNMENTAL AFFAIRS, APRIL 29, 2003
A RESOLUTION 1 Urging the United States Department of the Treasury to amend 2 regulations under 26 U.S.C. § 7216 to prohibit commercial tax 3 preparers who participate in the Free File program from 4 marketing financial products and services to taxpayers and 5 using confidential tax information for cross-marketing 6 purposes. 7 WHEREAS, In 2001 the Office of Management and Budget 8 instructed the Internal Revenue Service (IRS) to provide free 9 on-line tax return preparation and filing services to taxpayers 10 in an effort to enhance Government to citizen electronic 11 capabilities and encourage increased use of electronic tax 12 filing; and 13 WHEREAS, In October 2002 a public-private partnership 14 agreement was officially signed between the IRS and the Free 15 File Alliance, LLC, a group of tax software companies managed by 16 the Council for the Electronic Revenue Communication Advancement 17 to provide free on-line tax preparation and electronic filing 18 services to an estimated 78 million taxpayers; and
1 WHEREAS, Nearly 53 million taxpayers anticipate using the 2 Free File program to electronically file for Tax Year 2002; and 3 WHEREAS, The Free File agreement grants authority to each 4 participating software company to set its own eligibility 5 requirements, subject to all Federal rules and regulations on 6 taxpayer privacy, for paying customers and free customers, 7 including prohibiting use of tax return data for purposes not 8 specifically authorized by the taxpayer; and 9 WHEREAS, Recent information indicates that private companies 10 participating in the Free File program are using new marketing 11 methods, appearing simultaneously with preparation and filing of 12 individual taxpayer information, to promote fee-based products 13 and services; and 14 WHEREAS, These new marketing techniques, including multiple 15 World Wide Web popup boxes requiring an immediate affirmative or 16 negative response from the taxpayer before advancing to the next 17 screen, may effectively divert taxpayer concentration and 18 attention from the immediate personal filing; and 19 WHEREAS, Taxpayers using commercial tax preparation sites in 20 the Free File program may be forced to accept license agreements 21 and privacy policies that authorize data sharing with affiliates 22 of the tax preparation entity which may not be exposed by the 23 popup box; and 24 WHEREAS, This practice is extremely troubling and potentially 25 exposes taxpayers to the cross-marketing of unrelated financial 26 services through a Government-sponsored free tax filing program; 27 and 28 WHEREAS, Alliance members in the Free File program are 29 subject to 26 U.S.C. § 7216, whose purpose is to protect the 30 disclosure or use of information by preparers of tax returns 20030H0252R1506 - 2 -
1 from unwanted solicitations; and 2 WHEREAS, An existing consent loophole in those regulations 3 currently permits commercial preparers to advertise refund 4 anticipation loans and potential subprime mortgages to taxpayers 5 who access World Wide Web sites through the Free File program; 6 therefore be it 7 RESOLVED, That the House of Representatives of the 8 Commonwealth of Pennsylvania urge the United States Department 9 of the Treasury to amend regulations under 26 U.S.C. § 7216 to 10 close this consent loophole; and be it further 11 RESOLVED, That the United States Department of the Treasury 12 prohibit commercial preparers participating in the Free File 13 program from marketing financial products and services to 14 taxpayers and using confidential tax information for cross- 15 marketing purposes; and be it further 16 RESOLVED, That copies of this resolution be transmitted to 17 Ms. Pamela F. Olson, Assistant Secretary for Tax Policy, United 18 States Department of the Treasury, 1500 Pennsylvania Avenue, NW, 19 Washington, D.C. 20220. D3L82SFL/20030H0252R1506 - 3 -