DOGE accessing ‘the motherlode' of Americans' private IRS data raises serious questions. We've got answers.

Yahoo

20-02-2025

A fast-moving bid to find waste and fraud within the federal government is coming closer to touching everyday Americans' financial lives, as the Trump administration's so-called Department of Government Efficiency sets its sights on a carefully monitored IRS data system.
The database that DOGE wants access to contains individuals' and companies' tax-return data, bank account details, Social Security numbers and the status of any audits or criminal tax probes they might be facing, experts told MarketWatch.
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It also contains details about who owes taxes, where they make their charitable donations and who lives in their house. The data system also has tax information about businesses that investors don't typically see, experts told MarketWatch.
'The only way I can describe it is, it's the motherlode,' Nina Olson, former IRS National Taxpayer Advocate, said of the data system, formally known as the Integrated Data Retrieval System.
Also read: Should you be worried about Elon Musk's DOGE accessing your Social Security information?
The Treasury Department is now working on a memorandum of understanding to establish the terms under which DOGE could access the database, the Washington Post reported.
Olson's current organization, the Center for Taxpayer Rights, is one of the plaintiffs now suing the Treasury Department and the IRS to block DOGE access to the data system. The lawsuit argues that granting DOGE access would violate a slew of federal laws guarding against unauthorized disclosure of the information in the system.
At stake are taxpayer privacy and a fair market, the plaintiffs say in court papers. People on the DOGE team, led by Elon Musk, could see the tax records of Musk's business competitors, the lawsuit said. Musk, the world's richest man, is CEO of Tesla TSLA and SpaceX and owner of the social-media platform X, formerly Twitter.
Everyone should be concerned by DOGE's foray toward the sensitive data, Olson said. 'This is extremely private information that's not just about moguls,' she told MarketWatch. Two big looming questions about the DOGE request are what data DOGE will be allowed to see, and what happens next with the request, she said.
Olson was the chief advocate for taxpayers at the IRS from 2001 to 2019, serving from President George W. Bush's first administration to President Donald Trump's first term.
Other former IRS officials say Americans should take a breath before worrying too much about DOGE prying into their personal finances. There are ways to balance taxpayers' rights to privacy with efforts to reduce misspent tax dollars, according to David Kautter, a former acting IRS commissioner in the first Trump administration.
'It's not like there's no reason for concern,' Kautter said of DOGE's request to access the database. 'There is reason for concern. If done appropriately, with appropriate restrictions and monitoring, the reason for concern diminishes dramatically.'
One way to strike the balance would be to shield taxpayers' names and identifying information from DOGE employees, he said. If the Trump administration's goal is to get a sense of how much money is accurately paid out by the IRS, 'I don't know how you can do it without access to the data,' Kautter said.
Related: Should you be worried about Elon Musk's DOGE accessing your Social Security information?
The fact that Musk is at the helm of DOGE may make the request seem more controversial, said Kautter. But the IRS routinely gives some level of access to the sensitive database to people outside the agency, he noted. That includes federal contractors, people at the Joint Committee on Taxation inside Congress, and Treasury Department economists, he said.
If someone is worried about about DOGE staff invading their privacy by having read-only access to the data system, they should have 'that same concern extending to the hundreds of outside contractors and researchers who also have access to these systems,' former IRS Commissioner Charles Rettig told MarketWatch. More than 500 outside contractors and far more than 500 non-IRS employees working on various research projects have access to the data system, Rettig said.
Rettig served as the IRS chief under the first Trump and Biden administrations.
IRS employees themselves have limited access to the database. Rettig and Kautter both said they did not have access to the system when they headed the IRS. The ways a person is allowed to use the database are circumscribed by their job role, they and Olson noted.
For Olson, designating DOGE workers as 'special government employees' doesn't give them adequate permission to view the data. Even government officials using the database need to articulate clear reasons why they need the information, she said.
As for DOGE's assertion that it's acting 'under the rubric of fraud, waste and abuse, that's so broad you drive a tanker truck through it,' Olson said. 'It's not clear to me what you are looking for.'
Treasury Secretary Scott Bessent said Americans shouldn't be concerned about DOGE access in government systems at the IRS or elsewhere. At the IRS, 'one person, out of 90,000 employees, is looking at this outdated IT system. That's all they're doing,' he said in a Fox News interview airing Tuesday.
The IRS improperly paid out $22 billion in earned income tax-credit money in fiscal year 2023, according to the U.S. Government Accountability Office, an independent, nonpartisan agency tasked with monitoring government spending. The tax credit is geared at low-income families and its rules are complex.
Improper payments are generally considered money that should not have been paid, or paid in a different amount, the report noted. The GAO, the Treasury Inspector General for Tax Administration and other government entities monitor IRS spending and issue regular reports on misspent money.
But tax fraud has specific legal definitions and standards of proof that require accounting and legal training that DOGE data-crunchers may not possess, Olson said.
Taxpayers can take legal action when their information is wrongly outed.
Charles Littlejohn was not an IRS employee, but through his contractor status, he gained access to the personal tax information of people like Trump and Musk — and then leaked the data to media outlets. Littlejohn was sentenced to five years in prison last year.
The ways Littlejohn downloaded information have been identified and addressed, Rettig said. The IRS faces over 1 billion cyberattacks yearly, he said. 'If their systems were deficient, you'd hear of more scenarios involving unauthorized access,' Rettig said.
Federal law lets taxpayers sue the IRS for money damages if the agency allows unauthorized disclosure of a taxpayer's information. Ken Griffin, founder and CEO of the hedge fund Citadel, sued the IRS over Littlejohn's leak of his tax returns. He ended the case once the IRS publicly apologized and said it made 'substantial investments in its data security.'
The lawsuit — joined by groups including two labor unions and a small-business group called Main Street Alliance — says DOGE access to the IRS database could give Musk an inside track if he's able to see the tax situations and audit woes of his business rivals.
'No other business owner on the planet has access to this kind of information on his competitors, and for good reason,' the court papers said.
But Kautter said there could be ways to make some tax data off-limits to DOGE employees. Business-related tax returns have industry codes, he noted. As part of its agreement with DOGE, the Treasury Department could block DOGE access to those codes and keep particular names out of search results, he said.
Rettig agreed that programming around industry codes could be the solution. Still, tax returns only show so much, he noted.
'Tax filings represent a summary of business activities. Companies don't disclose confidential operating plans, trade secrets or similar in their tax filings. Tax filings would demonstrate profit margins for certain activities,' Rettig said.
A congressional hearing on IRS operations last week dug into what Musk and DOGE could do at the IRS. Olson was one of the witnesses.
Neither Musk nor DOGE 'have the power to cut off Social Security checks, Medicare benefits or tax refunds,' said Rep. Aaron Bean, a Republican from Florida who co-chairs the DOGE caucus, a group of lawmakers that says it's working with DOGE to 'rein in reckless spending.'
Democrats were trying to 'create a scandal,' Bean said of criticisms that DOGE is prying too much into sensitive government data. If Trump and Treasury Secretary Scott Bessent 'want to open the books on Treasury payment systems, that's their prerogative and we would encourage them to do so, subject to applicable legal rules,' Bean said.
Bean's office did not immediately respond to a request for comment.
Olson said she worries that talk of DOGE potentially snooping around in IRS data could make some people reluctant to file taxes and claim the credits and deductions they deserve, especially 'most vulnerable parts of society, the working poor and the working middle class.'
DOGE is making headway in its attempts to examine other government data. On Tuesday, Washington D.C. Federal Judge Tanya Chutkan refused to immediately block the DOGE team's access to government data at agencies including the Education Department, Labor Department and Energy Department.
The lawsuit over the IRS database says there are different laws governing how taxpayer information can be accessed. The Treasury Department, IRS and White House did not respond to a comment request.
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