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Regulation and Compliance > Federal Regulation > IRS

IRS completes exchange disclosure regs

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The Internal Revenue Service is about to publish a regulation that will help it send information from tax returns to the new health insurance exchange system.

The IRS developed the regulation to implement Section 6103(L)(21) of the Internal Revenue Code.

The IRC Section 6103(L)(21) and the new regulation authorize the IRS to give the Patient Protection and Affordable Care Act exchange program information about a taxpayer’s adjusted gross income, Social Security benefits not included in gross income, and basic information that could explain why an individual did not need to file a separate tax return.

The regulation also would let the IRS notify the exchange system when an individual collects health insurance subsidy tax credits in advance, then fails to file a tax return.

The regulation is supposed to appear in the Federal Register on Wednesday.

Carol Cantrell, chair of the federal tax policy committee at the Texas Society of Certified Public Accountants, wrote to suggest the U.S. Department of Health and Human Services and the HHS exchange system might have a hard time protecting taxpayer privacy.

“While HHS may have experience protecting patient privacy with respect to medical information and records, it does not have experience safeguarding taxpayer information,” Cantrell wrote.

Cantrell asked the IRS to impose tougher penalties on improper use of confidential information and to require HHS to adopt IRS data security procedures.

IRS officials said in a discussion of the comment that, as a matter of law, IRC Section 6103(p)(4) tax return information security rules already apply to the HHS exchange system.

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