Prior to 1976, the IRS regularly shared tax returns and other information with law enforcement agencies. As a result of Watergate and revelations that tax-related information was being used for political gain, in 1976 Congress enacted strict rules limiting the circumstances under which the IRS may disclose taxpayer information.[1]�
In light of the perceived misuse of tax returns, Congress amended the Internal Revenue Code to permit disclosure of tax returns and related information under only very limited circumstances, establishing a general rule that the IRS will hold tax return information in confidence.[2]� Through this legislation, Congress also sought to enhance self-reporting by giving taxpayers greater assurances of confidentiality.[3]�
