Review of Tax Processing System Planning for the Internal Revenue Service (1980) / Chapter Skim
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2 Privacy, Security, and Confidentiality
2 Privacy, Security, and Confidentiality
Pages 6-22
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From page 6... ...
Until the Tax Reform Act of 1976, tax returns were public records but generally open to inspection only uncler executive orders or regulations promulgated by the Internal Revenue Service. Furthermore, prior law provided a number of specific situations in which tax returns could be disclosed, and appropriate definitions were contained in regulations rather than in law.
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From page 7... ...
Furthermore, the Act accords the citizen a modest level of control over recor~keeping in federal agencies by requiring that new recor~keeping systems, or new uses of old systems, be described in the Federal Register a prescribed period of time before implementation. To summarize, the confidentiality of tax information is in part ensured by computer-system security safeguards, which in turn permit the Internal Revenue Service to fulfill the obligation of such legislation as the Privacy Act of 1974 and the Tax Reform Act of 1976.
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From page 8... ...
The source materials requested consist of information from individuals' tax returns, in the form of computer tapes and check sheets, but with all information identifying individual taxpayers deleted. The appellate court requested that the trial court determine whether the disclosure of' the source materials would entail a "significant risk of' indirect identification" and would, therefore, be exempt from Freedom of Information Act disclosure under the Internal Revenue Code.
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From page 9... ...
Alexancler, and in June 1976 published an interim report entitled Federal Tax Return Confidentiality.4 In view of the concurrent examination of the issue by the Commission and work of Congressional groups, it is not surprising that the Tax Reform Act of 1976 closely parallels in most respects the position expressed in the Commission's interim report. It recommended "the enactment of a federal statute more stringent with respect to disclosures of records made by the {RS than either the Privacy Act of 1974 or the confidentiality provisions of the Internal Revenue Code then in force.
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From page 10... ...
The hearings and Congressional debates that accompanied the passage of the Tax Reform Act, together with the work of the Privacy Protection Study Commission, in eject constituted an ad hoc forum for publicly debating the question: "What are the socially acceptable uses of tax information both within and external to the {RS? " In present governmental processes, there is no standing mechanism other than Congressional debate and hearings by which society collectively can decide to what use certain bodies of information may be put and how such bodies of information should be allowed to interface with one another for the benefit or well-being of society.
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From page 11... ...
For example, in the context of upgrading the microfilm system that stores past years of tax return information, a signed statement of agreement stipulates that there must be two physical breaks in any electrical connection between the National Computer Center at Martinsburg and the Service Centers. One solution would be a physical transfer of (say)
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From page 12... ...
THE BALANCE POINT A mission-oriented entity like the Internal Revenue Service will understandably strive to do its job with the maximum of thoroughness, efficiency, and effectiveness. On the other hand, from a policy point of view in other parts of government and in society as represented in Congress, it is not at all clear how much pressure the {RS ought to be allowed to put on the taxpayer.
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From page 13... ...
The country has yet to conceive and put in place an explicit mechanism to balance the aims of a mission agency with extensive computer resources against society's desire for flexibility in individual behavior and freedom from oppressive recor~keeping practices. At present, due process of law is part of such a mechanism; Congressional debate and oversight is another; public reaction is a third.
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From page 14... ...
However, for the Internal Revenue Service, which deals with perhaps the most sensitive body of information in the country, the normal expectations of the system planner and system architect simply must be moderated by yet unresolved social issues. In this regard a recent report by the Office of Technology Assessments has raised an extensive set of issues and detailed questions that can well serve as a sieve through which the {RS might sift future proposals for tax administration computer systems, and that also could focus Congressional debate and public attention.
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From page 15... ...
In addition, it was briefed on the structure, functions, and authority of the Internal Security group and also the Internal Audit group. In addition, the entire Committee visited both the Atlanta Service Center and the National Computer Center at Martinsburg, West Virginia.
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From page 16... ...
Among them will be chain link fences, guard posts, personnel admission procedures, fire protection for computers, operational procedures to safeguard backup computer files, controls on access to the computer system and also controls embedded in it, administrative monitoring procedures to ensure that safeguards are intact and operational, vaults for magnetic tape storage, administrative procedures to limit access to computer terminals, and operational procedures to prevent computer programmers from accessing real data. Comprehensive security requires physical, personnel, communication, computer hardware and computer software safeguards, all embedded in an appropriate administrative structure with proper procedures.
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From page 17... ...
With respect to software security, the Service Centers and the National Computer Center are quite different in nature. The Service Centers provide terminal access to databases for tax administration purposes and to serve the public.
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From page 18... ...
It must be given careful attention not only by the Office of Data Services but also in {RS management review and oversight proceedings that monitor the overall progress of the replacement effort. Although considerable work has been done by others on computer-system security, its results have been applied mainly to systems used by the military; presently available commercial computing systems are not immune to manipulation by expert systems-level programmers who have authorized access to the overall system Since the Department of Defense has experience in both attempting to penetrate computer operating systems and developing methods for increasing the security of computer operating systems, the Committee recommends that the TRS seek its assistance in the computer security area.
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From page 19... ...
The Committee recommends that technical procedures and administrative means for controlling access to the National Computer Center computers, not only for program development runs but also for access to real data, be thoroughly reviewed for completeness, for possible loopholes, and other shortcomings. The recommendation simply reflects the observation that what may have been satisfactory at past levels of program development may not be equally satisfactory at the much higher levels that will be reached during the equipment replacement program.
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From page 20... ...
The Internal Audit Division of the TRS has an appropriate cross-section of skills classical auditors, computer specialists, and certified public accountants. The stab appears to be aware of the latest EDP audit techniques (e.g., the use of generalized audit software)
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From page 21... ...
The equipment replacement program for the National Computer Center and the Service Centers is a much larger undertaking and a correspondingly awkward situation must not be allowed to develop. In the source selection process, the {RS must examine with extreme care not only the adequacy of each vendor's computer operating system software security safeguards but also the ease with which new ones can be added.
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From page 22... ...
In this sense, therefore, the now defunct Tax Administration System of 1976 was probably ahead of its time in terms of what the country, as reflected by Congress and various elements of the executive branch, could accept comfortably.
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