Six weeks before the income tax filing deadline, a Supreme Court justice yesterday may have handed taxpayers a new weapon in their eternal contest with the Internal Revenue Service.
Justice William H. Rehnquist, reversing an earlier temporary postponement, refused to block the application of a lower court ruling ordering the government to turn over to two taxpayers the computer data used to determine which tax returns are audited.
The case involves Susan and Philip Long, a Bellevue, Wash., couple that has been battling the IRS since their 1969 tax return was audited. They sought the computer data under the Freedom of Information Act and prevailed in the lower courts. The government is appealing the case to the Supreme Court, buy Rehnquist's ruling yesterday means that the information the Longs are seeking should be given to them pending any Supreme Court decisions in the case.
There was no immediate comment yesterday from the IRS, where lawyers scurried to get a copy of Rehnquist's order. "There will be no comment until our attorneys have a chance to examine this and see what options we have," said Larry Batdorf, an IRS spokesman.
The information the Longs are seeking is part of the IRS's Taxpayer Compliance Measurement Program. That data, fed into government computers, is used to grade tax returns according to their "audit potential." The higher the grade the more likely a tax return is to be singled out by the computers for an audit.
Batdorf said the IRS expects to receive 93 million tax returns this year, of which about 2 million will be audited. As of Feb. 20, about 31 million taxpayers had already filed their returns.
The likely effect of making the computer data public was not clear, but in arguing its case in the lower courts the IRS suggested that it could undermine the audit system. Access to the data by persons with knowledge of statistical methods, the agency said, could reduce their chance of being audited and allow them "to decrease the amount of taxes they pay to the government with some degree of safety that they will not be discovered."
The Longs, however, argued that the government was overstating the effects of making the data public.
And Batdorf noted that the IRS had methods to decide which tax returns to audit even before the application of sophisticated computer technology. Even with access to the secret computer data, he said, "I don't think people will be immune from auditing."