What's Happening?
The Internal Revenue Service (IRS) is currently managing over 1,124 data-sharing agreements with external organizations, primarily to support state and local tax administration. However, a report by the Treasury Inspector General for Tax Administration
(TIGTA) highlights the IRS's difficulty in tracking all these agreements due to the absence of a centralized database. As of March 2026, the IRS's Privacy, Governmental Liaison and Disclosure office had recorded 1,094 agreements in its Governmental Liaison Agreement Library but was unaware of 30 additional agreements established by other IRS business units. This lack of comprehensive tracking has raised concerns about the IRS's ability to ensure compliance with legal restrictions on the use and disclosure of federal tax information.
Why It's Important?
The inability of the IRS to fully track its data-sharing agreements poses significant risks to taxpayer privacy and the integrity of the tax system. The IRS is responsible for safeguarding federal tax information against unauthorized use or disclosure, as mandated by Section 6103 of the Internal Revenue Code. The current gaps in tracking could lead to potential breaches of sensitive information, undermining public trust in the IRS's ability to protect personal and financial data. This issue is particularly pressing given the IRS's recent scrutiny over sharing information with immigration authorities, which has drawn congressional interest and public concern.
What's Next?
In response to the TIGTA report, the IRS has agreed to implement several recommendations, including the creation of a centralized database to manage all data-sharing agreements and contracts. The IRS's chief privacy officer and chief procurement officer are expected to coordinate efforts to improve the tracking and management of these agreements. Additionally, the IRS plans to remind all business units to engage with the Privacy, Governmental Liaison and Disclosure office when developing new data-sharing agreements. These steps aim to enhance the IRS's oversight and ensure compliance with legal requirements for sharing federal tax information.
