The Social Security Administration would like to use previously confidential tax records to check up on recipients of Supplemental Security Income. The more than 4 million aged, blind and disabled participants in this welfare program will lose their benefits unless they "voluntarily" sign a waiver allowing SSA to ask the IRS for information about interest and dividend income.

At stake is the conflict between sound administration of benefit programs and protection of a tax system that encourages rather than erodes voluntary compliance. Earlier this week, Judge Gesell struck a blow for obscurantism by issuing a one-page order upholding the SSA proposal, but offering no help whatever in understanding the difficult issues involved.

The Treasury Department and the IRS have historically opposed sharing tax files with other agencies for two reasons. First, taxpayers have privacy and confidentiality interests in preventing non-tax uses of their personal information. It's a civil liberties issue. Second, voluntary compliance with filing, audit and examination procedures may suffer as taxpayers begin to sense the possibility of widespread and unpredictable exploitation of whatever the IRS knows. So it's also a tax administration and enforcement issue.

A health program might want the IRS to turn over the records of physicians whose audits raise questions about overcharges or malpractice. The antitrust division might like audit information suggesting price-fixing or attempts to monopolize. A state's emergency welfare program might want a quick computerized check on the incomes of an applicant's nearest relatives. The possibilities are countless.

Congress has been stingy in providing exceptions to the general rule of IRS confidentiality. There are special provisions for food stamps, some student assistance, child-support enforcement, administration of the pension system and a few other areas. Only last year, however, Congress rejected proposals to use IRS files for enforcing draft registration and studying occupational disease victims. Now SSA, prodded by the GAO and budget-cutting fervor, wants to circumvent that legislative gauntlet by getting elderly welfare recipients to sign consent forms. Or else.

It is not enough to accept this particular plan because these taxpayers are seeking a government benefit. There are countless benefit programs for individuals and corporations. Whether the programs look like "welfare" should not be the question if one is concerned with program administration rather than thumbscrews for the undeserving. What about state and local government programs? And why stop with interest and dividend income reported by third parties? It's time for Congress and the courts to consider carefully where this slippery slope is leading--and how to get off it.