Are Tax Returns Public Record?
By Justin Moyer, a North Carolina Tax Controversy Attorney
Tax returns contain highly confidential information that can relay the entire financial snapshot of a person or business. Aside from the income, investments and other financial data, tax returns may show political affiliations and charitable contributions. For this reason, many politicians are encouraged to make their tax returns public record as an effort in transparency. Are tax returns public record? Can anyone access this information? How does it impact credit scores?
The U.S. tax code states that all tax returns and the information contained within are confidential. This confidentiality extends to any reviews, audits or collection efforts made. Violation of this law may be charged as a felony, punishable by up to 5 years in prison and up to $250,000 in fines. The victim can also sue civilly for damages.
If tax returns are not public record and the law specifically requires them to be kept confidential, then who has access to your tax returns?
- Anyone you voluntarily choose to view them.
- Committees of Congress – House Committee on Ways and Means, the Senate Committee on Finance and the Joint Committee on Taxation may request taxpayer information from the IRS in a closed executive session.
- State Tax Authorities.
- Law Enforcement. Pursuant to a valid court order, tax information may be shared with law enforcement for the investigation and prosecution of non-tax crimes.
- Social Security Administration and Medicare.
- By Court Order. Typically, this occurs in family court matters such as divorce or child support.
In the event that spouses file their taxes jointly, each one will have equal legal rights and full access to every year’s tax records that were shared. For married individuals that file separately, there is no legal right to view or obtain access to the other’s return, even if still married.
Mandatory Public Disclosure
Certain types of organizations that do not have to pay taxes must make their tax returns public record. Anyone can request this information from the IRS directly. These tax-exempt organizations include:
- Political organizations
- Private foundations
- Non-profit organizations
Individual and business tax returns are not public record. Since this is the case, many clients facing tax issues then wonder if tax liabilities and unpaid debt impacts their credit. Prior to 2018, your IRS debt may have appeared on your credit report if the IRS filed a Notice of Federal Tax Lien against you. In 2018, the three major credit bureaus removed tax liens from consumer credit reports.
If someone conducts a public records search for tax liens, they may still be discoverable there. The IRS may file a tax lien against you if you have an outstanding tax bill. This gives the IRS a legal claim against all your current and future property (such as your home and car). It establishes priority of the IRS claim over other creditors. If you enter into an installment agreement, a lien will not be filed. Taking the step of setting up a payment plan with the IRS does not trigger any reports to the credit bureau.
If you are concerned about your privacy as it pertains to your tax debt, contact the attorneys at Murray Moyer, PLLC to establish a plan that prevents the credit bureaus, or anyone else, from obtaining your private information. You can reach us at (919) 846-6779 to set up an appointment.