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This Loophole Ends the Privacy of Social Security Numbers

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Federal law is supposed to protect the privacy of your Social Security number from government inquiries — but apparently that doesn’t extend to a check on whether you’ve paid back taxes and child support. In a decision with worrying implications for those who oppose a single national identification number, a divided federal appeals court has rejected a lawyer’s refusal to submit his Social Security number along with his renewal of Maryland bar membership.

The state says it needs Social Security numbers to make sure lawyers’ child support and taxes are up to date. The court’s majority said that was enough to fit the Social Security number under the federal law that allows states to use your number for tax purposes. That definition is so loose that it enables states to ask for your Social Security number pretty much whenever they want — even when their records have been hacked.

The test case was initiated by a Washington-based lawyer named Michael Tankersley, who is a member in good standing of the Maryland bar. He got legal help from the watchdog group Public Citizen, which among other things is interested in promoting privacy-rights litigation.

In Maryland, anyone who wants to practice law has to pay a fee that goes to the client protection fund run by the state bar. Along with the annual fee, the lawyer’s Social Security number must be disclosed. That’s by order of the Maryland Court of Appeals, which has responsibility for attorney registration in the state. The Court of Appeals says that it’s necessary so that the state can ensure that its lawyers have paid back taxes and child support that they might owe.

Tankersley paid the fee but never disclosed his Social Security number. He says he’s worried about identity theft generally, and points out that Maryland agencies have had data stolen in cyberattacks. The state authorities suspended his license.

Tankersley’s legal argument was based on the federal Privacy Act, which says that it’s “unlawful for any federal, state or local government agency to deny to any individual any right, benefit, or privilege provided by law because of such individual’s refusal to disclose his Social Security account number.”

On the surface, the privacy law sounds as though it covers Tankersley’s situation. He wants the privilege of practicing law in Maryland, and the state is withholding his right to practice because of his refusal to disclose his Social Security number.

But things are a bit more complicated, because two other federal laws, the Welfare Reform Act and the Tax Reform Act, both allow states to demand your Social Security number in particular situations.

The U.S. Court of Appeals for the 4th Circuit first held that the welfare law didn’t cover Tankersley’s case. That law allows the government to require the Social Security number of “any applicant for a professional license.” The court said Tankersley wasn’t an applicant because he already had a license to practice law and was just seeking to renew the license.

But a majority of the panel went on to say that the Tax Reform Act trumped the Privacy Act. The tax law says that a state can ask for a Social Security number “in the administration of any” tax law from “any individual who is or appears to be” affected by the tax law.

Tankersley doesn’t live in Maryland and doesn’t pay taxes there, nor is the Maryland bar a tax-collecting authority. But the panel thought that didn’t matter. In essence, it held that the state of Maryland is itself an entity empowered to collect taxes, and that it intended to use the Social Security number in part to make sure taxes were paid to it. And it noted that although Tankersley doesn’t live in Maryland, he might become liable to its taxes if were licensed to practice there.

In dissent, Judge Andre Davis wrote that he accepted Tankersley’s arguments. The state of Maryland, he argued, was improperly taking advantage of the client protection fund, which has nothing to do with taxation or the administration of the tax laws.

Davis’s decision is drily written and doesn’t invoke the public policy interest in favor of privacy. But that’s the best rationale for his viewpoint.

The whole point of the federal privacy law is to prevent states from making the Social Security number into a nationally mandated identification number of the kind that’s common in Europe. The practice goes back to the immediate post-World War II era, when Sweden became the first country to assign every citizen a personal identity number that follows you throughout your life and must be used in essentially every interaction with the state. Every Swede memorizes the number in childhood. And notably, the tax authority makes everyone’s number publicly available to anyone who asks for it.

Concern for privacy and suspicion of the federal government have combined to make the U.S. resist this common bureaucratic requirement. The Privacy Act is supposed to block states from making the use of a Social Security number a requirement for all citizen-state interactions.

Taxes are an exception, as they should be. But if states can require you to give your Social Security number in other situations by asserting that it’s going to check if you’ve paid your taxes, that could spell the end of the federal privacy law. A state could simply decide that it needs to check your taxes every time you ask for a benefit to which you’re entitled.

The 4th Circuit got this one wrong, and has needlessly created a loophole around federal privacy law.