We recently wrote a policy post highlighting the privacy issues involved in an Internal Revenue Service proposal that would require “brokersâ€? — including online auction sites like eBay — to collect the Social Security numbers of millions of users. It seems that at least one member of Congress shares our concerns. Yesterday, Rep. Thomas Davis (R-VA) wrote a letter to U.S. Treasury Secretary Henry Paulson expressing his concern that the proposal could put the privacy of millions of Americans in jeopardy.

The goal of the IRS proposal is to track down unreported small business income generated by the online sale of goods. It would require “brokers” of transactions involving tangible personal property to file income statements about all sellers who conduct 100 or more separate transactions that generate $5,000 or more in gross income. As Rep. Davis points out, Internet businesses would likely collect SSNs from all users, because there is no easy way to determine beforehand which users will end up meeting the threshold for reporting. With endless recent data breaches and elevated levels of consumer concern about the security of online transactions, constructing massive new private-sector databases of sensitive information seems like a step in the wrong direction.

The IRS proposal is part of the President’s 2008 budget (see page 65 of the general explanation of the budget proposal). While no lawmaker has yet come out in support of the proposal, the measure could easily find its way into a larger legislative package. We are glad to see that Rep. Davis has raised a red flag, and we are hopeful that other members of Congress will follow suit.

This entry was posted on Wednesday, May 23rd, 2007 at 4:11 pm and is filed under Consumer Privacy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.