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Vermont Tax Department defends IRS data sharing as vital for enforcement, says legal limits apply
Summary
Deputy Commissioner Rebecca Samrock and Legal Director Will Baker told the Ways & Means committee the Vermont Tax Department relies heavily on IRS data for compliance, uses several routine batch data products, has limited history of federal requests for return information, and has complied with federal inspector general subpoenas when required.
Rebecca Samrock, deputy commissioner of the Tax Department, and Will Baker, legal director at the department, briefed the Ways & Means committee on Friday, April 18 about the department’s use of IRS data and the safeguards that govern intergovernmental data sharing.
“We rely on different IRS abstracts to identify non‑filers [and] flag filing discrepancies,” Samrock said, describing routine automated data exchanges that support compliance work on personal, corporate and business income tax. Under an “implementing agreement” with the IRS, the department receives several batch data products — described to the committee as a suspicious‑filers file, an audit and appeals report, a real estate transfer database, and a state reverse‑filing match initiative — and the department uses those files to identify returns that merit further review.
Baker said states participate in these programs under standard agreements and that Vermont’s access to federal information is materially more valuable to the state than any Vermont data provided to the IRS. “The power of the parties is very lopsided here,” he said, adding that the department could refuse some automated exchanges in theory but that participation is effectively required to obtain federal data the state needs.
Samrock told the committee the department has not received an IRS form 8,796 (a federal request for return information) in the staff’s institutional memory, and she said the department has not observed follow‑up use of shared batch products by the IRS in practice. The department described secure channels for batch transfers and said those data are used for tax administration only under the implementing agreement and any accompanying memoranda of understanding.
Committee members asked about other federal requests and legal limits. Baker noted that some federal inspector general subpoenas preempt state confidentiality laws; the department has declined requests in some cases but has produced information when federal courts or legal advice indicated the federal demand would prevail. He cited a recent Department of Veterans Affairs inspector general matter in which the department ultimately provided tax information after consulting the attorney general’s office.
On direct‑deposit and bank information, the department said banking details are collected to make refunds and enable levy authority where appropriate; Samrock said she had not seen evidence of federal use of Vermont banking information for non‑tax purposes. The department emphasized that confidentiality of taxpayer data is central to voluntary tax compliance and said it resists non‑tax uses of those data.
No formal votes or policy changes occurred at the meeting. Department staff said the implementing agreement, related MOUs and the department’s legal review determine the parameters for sharing and that the department will continue to brief the committee if national developments raise new issues for state practice.
