U.S. Sen. Steve Daines (R-Mont.) is taking aim at unauthorized disclosures of taxpayer information, introducing bipartisan legislation that would dramatically increase criminal and civil penalties for those who mishandle or leak Americans’ sensitive tax data.
Daines introduced the bill alongside Sen. Catherine Cortez Masto (D-Nev.), amending the Internal Revenue Code of 1986 to crack down on bad actors — including IRS contractors — who improperly access or disclose taxpayer records.
“One of the IRS’s most important responsibilities is protecting the confidentiality of taxpayer information,” Daines said. “The last thing hardworking Americans should have to worry about is their tax information being breached or leaked. I’m proud to work with Senator Cortez Masto on this bill to protect taxpayer privacy rights and crack down on criminals who try to take advantage of the system.”
The legislation would sharply escalate existing penalties. Under current law, unauthorized disclosure of tax returns carries a maximum fine of $5,000 and up to five years in prison. The bill would raise those penalties to a maximum fine of $250,000 and up to seven years imprisonment.
The measure also establishes a new felony offense targeting IRS contractors who willfully fail to enforce required data safeguards. Penalties for contractors could reach $500,000 or 25 percent of the total amount obligated under all IRS contracts held by the contractor in the first fiscal year when access to the return information was granted — whichever is greater. Civil damages for unauthorized disclosure would also rise from a minimum of $1,000 per act to $5,000 per act.
The bill comes as the IRS has increasingly relied on outside contractors to handle sensitive operations, raising concerns among lawmakers on both sides of the aisle about the security of Americans’ financial data — including Social Security numbers, banking details and other highly personal information.
“When Americans pay their taxes, they are entrusting the government with extremely sensitive information,” Cortez Masto said. “This bipartisan legislation will hold bad actors who put everyday Americans’ data in harm’s way accountable.”