In 1997, a practice at the Internal Revenue Service known as "browsing" came to
the attention of Congress and the public. Thousands of IRS employees have access
to the files of American taxpayers thanks to the nationwide IRS database at
Martinsburg, West Virginia. Though there have always technically been rules against
browsing those files, the IRS has done little to prevent employees from doing so.
In a 1997 case, the First Circuit Court of Appeals threw out the conviction of an IRS
employee who had reviewed numerous returns of people he knew or wanted to know
about. It turned out that the laws he was charged with required him to disclose
taxpayer information to others before he could be found guilty. Thus, until Congress
closed this loophole later that year, IRS agents could legally sift through anyone's
personal financial information.
Citizens have no option but to submit personal financial information to the
government on tax returns. When information is collected by force of law, then made
available to any bureaucrat with the interest to peruse it, this violates our
reasonable privacy expectations.
This example illustrates how privacy law governing the public sector fails to protect
citizens. It moves in fits and starts, responding after the fact to new threats to
privacy created by agencies and bureaucrats.
This example also illustrates the weakness of government's incentives to protect
privacy. Even if a private-sector employee could examine customer files, he
or she would not, knowing that termination would be the immediate result. A General
Accounting Office report found, however, that in fiscal 1994-95 IRS accused 1,515
employees of computer misuse. Only twenty-three were fired for snooping, while 349 were
disciplined and 472 were "counseled."
in United States v. Czubinski, No. 96-1317 (1st Cir.)