The IRS has had a rough several months defending allegations that it inappropriately targeted conservative groups seeking nonprofit status, wasted taxpayer money on lavish conferences, and some of its employees used agency credit cards to buy alcohol and pornography. Some lawmakers are trying to use these incidents to attack the Affordable Care Act — stating that the IRS is either too incompetent or too untrustworthy to take such an important enforcement and oversight role in the act. One allegation of IRS impropriety, however, never gained much traction with the national media — the fact that the IRS may have disclosed as many as 100,000 names, addresses, and social security numbers on its website. This incident may result in a political black-eye for the embattled organization and a significant judgment as well.

26 U.S.C. § 6103 –

Generally, United States employees are prohibited from inspecting or disclosing a taxpayer’s return information. There are, however, a number of exceptions to this general rule — including disclosing return information to the taxpayer or his agent, to certain individuals and organizations while conducting audits or criminal investigations, to certain committees in congress, and to compile and distribute statistical information. If an employee does not meet one of these exceptions and inspects or discloses an individual’s or entity’s tax return information, the employee is subject to criminal penalties. The employee also exposes the United States to civil liability — either $1,000 for each wrongful inspection or disclosure or actual damages suffered (whichever is higher).

Originally Published in Law360 New York - August 19, 2013.