PERAC Memo #45 - 2006: Confidentiality Guidelines for Tax Return Information

Memorandum # 45/2006

M E M O R A N D U M

To: All Retirement Systems

From: Joseph E. Connarton, Executive Director

Subject: Confidentiality Guidelines for Tax Return Information

Date: November 9, 2006

This memorandum will serve as a reminder that all State and Federal taxation information transmitted to you by PERAC is confidential personal data. Of special note are the rules applicable to retirees’ tax return and tax return information.

Retirement Boards must ensure that all tax returns and/or tax return information obtained under G.L. c. 32, § 91A will remain confidential and be used only for authorized purposes. Retirement Boards are prohibited from furnishing, or from otherwise disclosing or sharing tax returns and/or tax return information to any third party, regardless of the purpose, except in accordance with section 10 of chapter 427 of the Acts of 1996. PERAC may notify the appropriate Retirement Board, established pursuant to G.L. c. 32, if a specifically identified individual has earned in excess of his or her authorized amount and may provide the necessary and relevant information as part of a hearing in accordance with G.L. c 32, § 91A. Such information may include tax returns and/or tax return information.

The Retirement Boards must be aware that information transmitted between PERAC and the Retirement Boards is confidential personal data and as such, PERAC and the Retirement Boards are subject to and must comply with all applicable laws and regulations relating to confidentiality and privacy, including but not limited to G.L. c. 62E, G.L. c. 66A, G.L. c. 62C, § 21(a), and 801 CMR 3.00. PERAC and the Retirement Boards shall cooperate with Department of Revenue (“DOR”) to enjoin or prevent misuse of, regain possession of, and otherwise protect the Commonwealth’s rights in such personal data and ensure privacy thereof.

Retirement Boards must take all reasonable steps to insure the security of any such data, obtained from PERAC. Special emphasis must be given to the security of tax returns and tax return information. Examples of such reasonable steps are utilization of locked files or other devices reasonably calculated to prevent unauthorized copying or removing of data; limited terminal

access; limited access to input documents and output documents; and design provisions which avoid unnecessary use of names of taxpayers or disability retirees.

In order to ensure that tax returns and tax return information is afforded the utmost protection against unauthorized disclosure DOR shall be entitled to periodically review PERAC’s or the Retirement Boards’ requests for tax returns and/or tax return information. The objective of such reviews will be to reasonably determine and verify, as required by G.L. c. 62E, § 8 and G.L. c. 62C, § 21(a), that the confidentiality of the wage report data or tax return information is maintained and that all said data and information is used by PERAC and the Retirement Boards only for authorized purposes. As part of such review, representatives from DOR’s Inspectional Services Division shall have the right to visit PERAC’s offices and the Retirement Boards’ offices for the purpose of verifying and ensuring the security and confidentiality of the wage report data, tax returns and/or tax return information.

The Retirement Boards will take whatever steps are necessary to familiarize each of their employees with the laws and regulations relating to confidentiality of tax return and /or tax return information.

If there are any questions on any aspect of these guidelines, please contact either myself or the Fraud Unit.