Improving Business Statistics Through Interagency Data Sharing Summary of a Workshop (2006) / Chapter Skim
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6 IRS Data, Data Users, and Data Sharing--Nick Greenia and Mark Mazur
6 IRS Data, Data Users, and Data Sharing--Nick Greenia and Mark Mazur
Pages 79-90
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From page 79... ...
A critical issue for both the tax system and the federal statistical system is the determination of when a compelling need exists for identifiable tax data (often known as federal tax information or FTI) in lieu of aggregate anonymized data.
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From page 80... ...
This practice differs from that used by most federal statistical agencies. Tax data accuracy is helped by the IRS compliance programs, including legal disincentives for noncompliance.
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From page 81... ...
but also for statistical purposes. For the former purpose, tax data are used extensively by Treasury's Office of Tax Analysis and the congressional tax-writing committees -- the Joint Committee on Taxation, the Senate Finance Committee, and the House Ways and Means Committee.
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From page 82... ...
of the IRC. As might be expected, given the sensitivity of FTI, the law governing access to confidential or identifiable tax data, especially for statistical purposes, is restrictive with respect to both access and use.
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From page 83... ...
For example, the IRS-Census Bureau Criteria for the Review and Approval of Census Bureau Projects that Use Federal Tax Information (sometimes called the Criteria Agreement) has been used to delineate and clarify the process under which FTI may be accessed for new Census Bureau purposes, especially authorized research purposes at the Census Bureau as part of their Research Data Center arrangement.
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From page 84... ...
However, padlocking the treasure of tax data is viewed as neither a desirable nor a viable outcome, so some disclosure risk is accepted as part of the necessary balance of protection and access. The challenge is to identify acceptable risk, and the approach utilized to date is taking steps that prevent reidentification of tax data through "reasonable means." The interpretation of reasonable means includes the use of reasonably available computer technology, mathematical/statistical techniques, and a working knowledge of the related subject matter.
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From page 85... ...
As a result, the Census Bureau and IRS agreed to the terms of the coauthored Criteria for the Review and Approval of the Census Bureau Projects that Use Federal Tax Information, effective September 19, 2000. The Criteria Agreement outlined protocols and other requirements governing access to FTI for new uses by the Census Bureau, especially for RDC projects.
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From page 86... ...
. The Criteria Agreement can be seen as a good outcome for the opposing agency mandates governing access to FTI for statistical purposes.
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From page 87... ...
In fact, support by members in both the House and the Senate would seem critical in order to overcome concerns about increased sharing of identifiable tax data. In a similar vein, the support of congressional staff -- especially on the tax-writing committees -- needs to be enlisted, with a compelling case on why the bill is needed, including not only how government statistical operations would be improved but also how taxpayer confidentiality would remain protected.
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From page 88... ...
and in providing common identifier information that would enable the three agencies to exchange nontax data with each other. The potential for excessive access to tax data under the CIPSEA J bill was a concern, given that expanding item access via regulation would require only Treasury approval, not an act of Congress.
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From page 89... ...
A more direct way to provide Treasury with analytical benefit might be for the Census Bureau to consider Treasury and the IRS researchers for RDC access on meritorious project proposals, as long as they adhere to the same requirements as other researchers, including predominant Title 13 purpose. Preliminary discussions between the IRS and the Census Bureau so far indicate that this might have value.
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From page 90... ...
Accordingly, legislators who understand that the statistical community has the issue of taxpayer and respondent confidentiality foremost in mind as it seeks expanded access to confidential data may be more sympathetic to a future J bill. Demonstrating such care and foresight may also assist with any future proposals that might expand data sharing beyond three agencies and encompass more than business data.
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