How private is my tax return in practice?

Question

My tax return contains quite a bit of sensitive and personal information, as I'm sure is the case for many other taxpayers.

The IRS Website states they will only ever share the return involuntarily with

• State taxes
• Other law enforcement for non-tax crimes
• Third-party agencies who are helping with tax investigations
• SSA
• If you give someone power of attorney

I know that mortgage underwriters ask for my tax return from me and my tax transcript from the IRS, which they reconcile. But that's not them getting my full return directly from the IRS. It's just a transcript given voluntarily.

I have provided my tax returns for a background check and a mortgage in the past — but that was voluntary. I am asking about involuntary access of my tax return only.

Finally, I am not asking about a tax refund. I know creditors can garnish a tax refund.

I am asking about situations outside of this — for example, let's say I disclose foreign assets on my tax return and then go into crippling medical debt which ends up in collections. Will the debt collector ever know about my foreign assets?

For another example, let's say I declare bankruptcy. Will the IRS give bankruptcy court my full tax returns without my permission?

Answer 1

for example, let's say I disclose foreign assets on my tax return and then go into crippling medical debt which ends up in collections. Will the debt collector ever know about my foreign assets?

For another example, let's say I declare bankruptcy. Will the IRS give bankruptcy court my full tax returns without my permission?

The IRS may disclose your tax returns in a court proceedings if ordered to do so by a judge. The returns of the bankruptcy (or preceding) year should be made available to the bankruptcy court even without a court order, by request (See IRC Sec. 6103(e)(5)).

The IRS may also disclose your tax returns to the Congress, if asked by a Congress tax writing committee or your congress representative.

But more to your question, disclosure of tax returns and related information is governed by the IRC Sec. 6103. As you can see, there's a long list of various different entities that can get access to your tax returns under various different conditions (including, in certain cases, your family).