You want a piece of me? Pay me.
Soon your tax preparer, like other businesses, may start selling your financial information to the highest bidder. Why not demand a cut?
NEW YORK (CNNMoney.com) – Would you ever agree to work overtime for free, indefinitely, creating profits for someone else?
I didn't think so.
But that's often what we do when we buy a product or service from companies. That's because they can continue to make money off us by selling whatever personal information we give them in the course of the transaction. Your payback: more junk mail and greater risk of identity theft.
And now it looks very likely that tax preparers will be able to profit off clients in ways having nothing to do with taxes.
Thanks to proposed changes to the IRS' privacy regulation of tax preparers, everyone from H&R Block to your local tax-prep shop may be allowed to sell their clients' tax return information to any third party, including marketers and data brokers.
Mind you, they would need to get your consent, according to the proposed regulations.
But why on earth would you ever give it? The firm may try to sell you on the idea that by letting them "share" your sensitive financial information, you will benefit by getting pitched products and services that you really want.
That would be some serious tripe. How many times have you ever gotten a solicitation in the mail and said, 'Oh that's exactly what I need. Sign me up.'
Or, as consumer advocates fear, you may not even know you're giving consent because it may be buried somewhere in the middle of all the documents you'll be asked to sign when filing your returns.
Either way, when you give consent, "you're basically signing a blank check," said Chris Hoofnagle, senior counsel for the Electronic Privacy Information Center.
That's because the proposed regulations don't restrict how the third parties may use your information.
However they use it, I'm sure they'll do their level-best to profit from it.
It's not clear just how much a company can make. Typically, Hoofnagle said, businesses "rent out" their lists, getting a small amount for every name – maybe 10 cents. But they also may sign on for a 30 percent commission of any sale that results.
Then there's your retail value on the data market.
A group called SWIPE created a calculator that prices different pieces of personal information that you can buy from a data broker. I added up just 15 pieces of fairly common information (e.g., address, phone numbers, driver's license, Social Security number, a relative's name, employment history, etc.). Total retail value: $206.30.
Call me crazy, but I always thought the only one who has the right to sell something is the rightful owner.
I asked Hoofnagle who "owns" personal information. "Whoever who possesses it," he said.
So you, the data brokers, the department store where you applied for a store card and now possibly your tax preparer are co-owners of your data.
If the law gave you exclusive property rights, critics contend that those rights "would be meaningless because you'd bargain it away" just to get things like cable or some other service from a business, Hoofnagle said.
Okay. But if I and Choicepoint and Saks can "own" information about me simultaneously, then I think as a co-owner I should get a cut of the profits.
And if consumers demanded a cut, maybe businesses would think twice before spreading your good name wherever they can collect a dollar bill.
For that to happen, lawmakers would need to give consumers at least as much power over their information as they've given to businesses and government agencies.
But I'm not holding my breath. "That business and government are profiting off of our information is a huge public policy question," said Rob Douglas, founder of PrivacyToday.com who has often testified on such matters before Congress. But, he said, it's a question largely ignored by lawmakers so far.
In the meantime, why not let the IRS know that your tax preparer shouldn't be allowed to sell your tax return information to others. (Here's a sample letter you can send, courtesy of the National Consumer Law Center.)
And be sure to ask your tax preparer whether he or she has included a consent form in your tax documents this year. Even though the regulations regarding information sharing aren't final, tax preparers are allowed to use them as guidance and therefore could request your consent this tax season.
H&R Block, the largest tax preparation firm, has always complied with IRS privacy regulations and doesn't sell information, a company spokesperson told me. The firm hasn't implemented any changes as a result of the proposed regulations, she added, further noting that it continues to ask for clients' consent before sharing their information with H&R Block financial and mortgage advisers and the bank HSBC, which offers refund anticipation loans.
Personally, I wouldn't give my consent for any of those things either, especially given the company's recent legal troubles regarding their express IRAs.
For more on privacy advocates' concerns about the IRS proposed regulations, click here.