Does the IRS Share Information with States?

The Internal Revenue Service (IRS) engages in information sharing programs with federal, state, and local government agencies. These programs aim to enhance tax administration, improve compliance, and strengthen collaboration among various government entities.

IRS Information Sharing Programs

The IRS has established several information sharing programs to facilitate the exchange of taxpayer data and leverage resources for effective tax administration. These programs include:

• Federal-State-Local Government Information Sharing: The IRS collaborates with state and local governments to share audit results, federal individual and business return information, and employment tax data. This information sharing enhances tax administration by identifying non-compliance, improving outreach efforts, and supporting joint initiatives.

• Safeguards Program: The Safeguards Program ensures the privacy and confidentiality of taxpayer data shared with other government agencies. The program establishes strict guidelines and protocols for accessing and using taxpayer information, safeguarding it from unauthorized disclosure or misuse.

State Information Sharing

The IRS’s state partnering program fosters collaboration between the IRS and state taxing authorities, such as departments of revenue and state workforce agencies. Through this program, the IRS and state agencies share a variety of data, including:

• Audit results
• Federal individual and business return information
• Employment tax information

This data sharing enables states to improve their tax administration processes, identify potential non-compliance, and enhance their enforcement efforts.

Benefits of IRS Information Sharing

The IRS’s information sharing programs provide numerous benefits, including:

• Improved Tax Compliance: By sharing information with other government agencies, the IRS can identify taxpayers who may be underreporting their income or engaging in other forms of non-compliance. This collaboration helps ensure that all taxpayers fulfill their tax obligations fairly and equitably.

• Enhanced Tax Administration: The exchange of data among government agencies streamlines tax administration processes, reduces redundancies, and allows for more efficient use of resources. This collaboration enables the IRS and state agencies to focus their efforts on areas of greatest need.

• Strengthened Collaboration: Information sharing fosters stronger relationships and collaboration among government agencies. By working together, the IRS and state agencies can develop joint initiatives, share best practices, and improve the overall effectiveness of tax administration.

The IRS’s information sharing programs play a crucial role in enhancing tax administration, improving compliance, and strengthening collaboration among government agencies. These programs facilitate the exchange of taxpayer data, leveraging resources, and supporting joint initiatives to ensure a fair and efficient tax system.