GAO Observations on the Use of Tax Return Information for Verification in Entitlement Programs

Pursuant to a congressional request, GAO provided information on the transfer of tax return data from the Internal Revenue Service (IRS) and the Social Security Administration (SSA) to Federal and State agencies for their use in entitlement program administration.

GAO found that Congress has restricted the disclosure of certain tax return information that would be useful for verifying earnings and assets in entitlement programs. States currently have limited access to SSA earnings and pension data. Congress is considering legislation that would: (1) authorize the disclosure of additional tax return information; (2) require that information related to both earned and unearned income be used for verification purposes; and (3) expand the number of programs in which IRS and SSA data could be used. Because of concerns about personal privacy and the nature of the tax system, GAO has supported only restrictive use of data from third-party sources such as employers and banks, with one exception. GAO believes that the use of tax return data of self-employed individuals should be expanded since, without this information, their eligibility for entitlement programs would be difficult to verify.