The Tax Law Center at NYU Law

Statement from our executive director Chye-Ching Huang, in response to reporting that the acting chief counsel of the IRS has been removed: “DOGE has been pressuring the IRS to get extraordinarily broad access to the confidential information of individual taxpayers, which the IRS has properly denied as unlawful – and now the Administration has removed the IRS’s top lawyer. If the Administration’s new appointee accedes to DOGE requests despite the law, taxpayers’ data and their rights will be at risk of large-scale breach and abuse. IRS career staff are right to be concerned: officials who disclose taxpayer data outside the bounds of the law are exposed to potential criminal and civil liability. The series of IRS officials who have put the law above their personal job security join a line of public servants, stretching back to Treasury and IRS leaders? during the Nixon era, who have resisted unlawful attempts by elected officials to weaponize taxpayer data and systems.” Read our analysis of the laws protecting taxpayer data here: https://lnkd.in/g2WjbbsP https://lnkd.in/gVcm79NV

From our executive director Chye-Ching Huang: “DOGE wants political appointees across agencies to get unprecedented access to taxpayer data like SSNs and bank details. Delayed social security checks, political favors/retribution, and identity theft are just a few of the risks. ? Social Security payments could be disrupted due to erroneous fraud flags, which may be slow to reverse. Similar with Medicaid coverage (including for those in long-term care), and various other programs. ? The approach we’ve seen from DOGE elsewhere of overcutting and then “correcting” does not work for people living on fixed incomes. ? Broad data sharing puts Americans at greater risk of identity theft. Sensitive info—SSNs, income, bank details—could be exposed, hacked or misused. ? Taxpayer data has long been protected from political appointees given the obvious potential for abuse. Reversing course risks returning to a Nixonian approach of targeting enemies and helping allies. ? Appointees could also improperly use this info for personal gain (e.g., training AI models using Americans’ private data, securing big government contracts, or selling the data to businesses/foreign adversaries. ? ?Disregard of legal protections for protected info could result in millions of improper disclosures or inspections of this data. The Tax Code has a special cause of action taxpayers can bring, at $1,000+ per violation. This could mean billions in penalties owed by the government.” Read more in the Tax Law Center’s latest analysis: https://lnkd.in/eZV6EHDA?

The Tax Law Center just published a new piece that may be of interest,?DOGE Access to Tax Data and Systems Creates Major Risks for Taxpayers (https://lnkd.in/eVdrVcZk). It was recently?reported that?a?representative?of the Department of Government Efficiency (DOGE) was stationed at IRS and seeking extraordinarily broad access to systems that include sensitive personal information including taxpayer identification numbers, addresses, bank account information, tax liability, and details on taxpayers’ transactions.?It has since?been?reported?that this representative will be given read-only access to a more limited set of “anonymized” tax data. But we have no detail on what it will mean for the data that DOGE affiliates can access to be “anonymized” and “in a manner that cannot be associated with, directly or indirectly, any taxpayer.” It could still contain return information that, while not containing names, could easily be traced back to identifiable taxpayers — especially if DOGE cross-references across data sets it has access to, including tax data it accesses through other agencies beyond the IRS.?Transparency about the purpose of DOGE access is also necessary to determine whether all laws and rules are being followed. ? There are substantial risks associated with political appointees accessing and misusing taxpayer data. Reporters, lawmakers, and the public should urgently seek to more fully understand those risks — and continue to demand more information about exactly what DOGE is seeking to do with sensitive taxpayer data and systems. ? The full piece is available here:?DOGE Access to Tax Data and Systems Creates Major Risks for Taxpayers — and May Carry Criminal and Civil Penalties for Anyone Violating the Laws Protecting Taxpayers | by The Tax Law Center at NYU Law | Feb, 2025 | Medium (https://lnkd.in/eVdrVcZk)

Thousands of misguided layoffs at the IRS will hurt everyday Americans who pay their taxes and count on the IRS to pay refunds on time while encouraging wealthy people and large businesses to cheat on their taxes.?? These IRS layoffs and other recent actions will undermine each of the priorities Treasury Secretary Bessent set for the IRS: “collections, customer service, and privacy.”? The layoffs will undermine revenue collection and increase the budget deficit. Most of the IRS employees laid off worked in tax compliance, which raises revenue by preventing tax fraud. Nonpartisan estimates by both CBO and Treasury show each dollar "saved" by cuts to IRS enforcement resources will likely cost $6 or more to taxpayers. These cuts will encourage wealthy people and large corporations to cheat on their taxes. After a decade of sharp budget cuts, audit rates for high-income people and large corporations plummeted. In 2022 Congress gave the IRS resources to rebuild its ability to address high-end non-compliance by hiring, e.g., skilled accountants and lawyers.? These initiatives were already starting to pay off, e.g., collecting more than $1 billion from just 1,200 millionaires who had more than $250,000 in overdue taxes, but who the IRS didn’t have the resources to pursue. This progress is now in jeopardy, and egregious tax cheats are the winners.?? The layoffs put taxpayer services and refunds that millions of Americans count on at risk. The layoffs are so large that there is no way to guarantee they won’t disrupt filing season, and they put timely and accurate refunds at risk.? The layoffs put data security and privacy at risk. IT officers engaged in important modernization efforts are among those fired, and the scale of the layoffs increases the risk of systems breaking down.? These risks are heightened by DOGE affiliates reportedly seeking broad access to systems with sensitive personal information, such as taxpayer IDs, addresses, and bank account information.? Finally, we can’t lose sight of the impact on IRS employees themselves. Thousands of people across the country who committed to serve a critical public function are now left without a job.? It will also harm workforce morale, deprive the government of expertise, and make it even more challenging to eventually rebuild the IRS into the modern tax collection agency the country needs.??

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The tax code protects the confidentiality of taxpayer information under section 6103 and related statutes. We analyze these protections in the context of recent reporting that DOGE-affiliates have accessed systems that could include taxpayer information: https://lnkd.in/d26agSEY

Today, the Fifth Circuit will hear oral argument in Sirius Solutions v. Comm’r, a case which could open the door to some business owners seeking to avoid Social Security & Medicare taxes, with billions of dollars in revenue for these programs at stake. The Tax Law Center filed an amicus brief arguing that the text and structure of section 1402(a)(13) support interpreting “limited partner” to mean a largely passive investor. We recently published new analysis building on the arguments in our brief. Read more about the case on our blog: https://lnkd.in/ewSuaGai Our new analysis can be found here: https://lnkd.in/eaUPayS3 You can find the brief we filed in October with the Fifth Circuit here: https://lnkd.in/eRmQHkb5

There has been confusion about the impact of the “Unleashing American Energy” Executive Order on energy tax credits. Tax credits should not be impacted, and trying to stop tax credits or refunds under this EO would result in legal challenges. Read our full analysis: https://lnkd.in/eRatyJtg

Treasury recently issued final regulations that adopt our key recommendations and expand access to elective pay for clean energy tax credits, making it easier for tax-exempt organizations like rural electric co-ops and Tribal governments to access these credits. Read more on our blog: https://lnkd.in/eJ8NV_mD

Our new explainer breaks down Granite Trust transactions, a common tax planning tool used by large corporations. More aggressive versions of these transactions allow corporations to super-charge their losses and result in significant tax avoidance. These have a substantial revenue impact, with a single transaction easily generating over $1 billion in tax savings. Congress, IRS, and Treasury can all act to close this loophole. Check out the explainer: https://lnkd.in/dk-9kw7i ? Read more in our report: https://lnkd.in/dF4bCVP2