Anti-terrorism program mines IRS' records

The masses of detailed data give investigators broad power to sift through the finances of people, charities and businesses suspected of illegal activities. But they also worry privacy advocates who fear that tax and other financial records may be used improperly.

In 2002, in the wake of the Sept. 11 terrorist attacks, the IRS and the Social Security Administration made 12,236 emergency disclosures of personal tax information to intelligence and law enforcement agencies, according to a count obtained through a Freedom of Information Act request.

These emergency requests are granted only when investigators cite imminent danger or death -- and after 2002 became much less common. Since then, the IRS has made only 180 emergency disclosures to the Federal Bureau of Investigation and other agencies, but thousands more to intelligence and law enforcement agencies using new powers written into the U.S. Tax Code after 9/11.

Federal investigators, armed with otherwise confidential taxpayer information, have used these records to prosecute some individuals and deport others.

After receiving a tip from a high-level Al Qaeda operative in Pakistan in 2003, the FBI began investigating an alleged plot to poison prepackaged Meals Ready to Eat bound for U.S. troops overseas. McAllen, Texas-based Wornick Co. had a $47.2-million contract with the Department of Defense for packaged meals for troops in Iraq.

Federal investigators screened Wornick employees, relying on confidential taxpayer information, including Social Security numbers. The FBI also reviewed employee records for the temporary employment agency Remedy Intelligent Staffing, which supplied workers to Wornick.

In January 2005, Remedy pleaded guilty to hiring illegal immigrants and falsifying hundreds of employee eligibility verification forms. Twenty-eight illegal immigrants and a Remedy vice president paid fines or served jail time -- although none had any ties to terrorism.

To help the IRS increase its ability to organize and share sensitive financial information, the agency's law enforcement arm began in 2002 building a sophisticated data-mining system it named Reveal. Current and former IRS officials say this system has been invaluable in building cases against suspected terrorists and money launderers.