Presidential hopeful Mitt Romney has caused a stir by his refusal to release to the public any of his tax returns prior to 2010.
While it’s tradition for candidates running for the nation’s highest office to disclose their personal finances to voters, there’s nothing in the law that compels Romney or any other would-be public official to turn their returns over for media scrutiny.
In what situations could private consumers be forced to share their tax documents with a third party?
Almost none. “There are strict laws that tax returns and the information therein is kept confidential by the government,” says David Hryck, a tax attorney with New York City-based firm SNR Denton. “Generally the only cases are where there’s an audit or an administrative proceeding or tax court proceeding, or a matrimonial case where it’s relevant.”
Obviously if the IRS is auditing you, they already have a copy of your returns. These could be brought into court as evidence if criminal charges for tax evasion or fraud are filed.
Divorce, alimony and child support hearings are the only places outside of tax crimes where your returns could be obtained and scrutinized without your consent. “It could be relevant in the proceedings,” Hryck says. “One spouse may ask to see a copy of the other’s return. It may be relevant to the children.” Courts can use the returns to figure out exactly what obligations a divorced spouse or non-custodial parent should have to his or her ex and/or children. (Incidentally, your tax return could also be seized to to make up for non-payment of alimony or child support.)
The bottom line is that outside of certain circumstances, no one, be it your employer, nosy neighbor or a pesky reporter who files a Freedom of Information Act request will be able to get their hands on your personal tax information without your permission.
Voluntary Disclosure
Almost everybody in American has to file a tax return, as long as their income is above a certain threshold that depends on age and filing status — $9,500 for single people under 65 who don’t have any self-employment income. The return should list all types of income from salary, interest, investments and other sources, as well as a myriad of possible deductions and credits. Depending on how much tax your employer withholds from your paycheck, you might owe the IRS money, or have overpaid over the year and get some money back. The return functions as a comprehensive snapshot of your finances over the course of any given year.
Presidential candidates usually show Americans their returns as a gesture to show that they have nothing to hide, a tradition started by Romney’s father George Romney in 1968. Presidents and other executives can also request to view the returns of a person who is to be appointed to a high-profile position as part of a vetting process to suss out any lurking scandals or skeletons in the closet.
However, the disclosures are voluntary, not compulsory. In the same vein, when trying to rent an apartment or apply for a mortgage, landlords or banks might ask to see your tax returns as proof of income. “That’s voluntary,” Hryck points out. “You don’t have to rent that apartment.” Verification from an employer or an attorney can often stand as proof of income in lieu of handing out the original document.
Most Americans don’t need to worry about the general public caring about their income, nor whether their Swiss bank accounts are in tax compliance. Rest assured, consumers can sleep soundly in their beds knowing that the clamoring public can’t get access to their returns, even if they wanted to.
Learn more about tax law and locate an attorney in your area who can answer your questions at Lawyers.com.
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