What Is IRS MBI Clearance and Who Is Required to Get It?

The Internal Revenue Service (IRS) safeguards sensitive taxpayer information. The protection of this data is paramount to maintaining public trust and ensuring the integrity of tax administration. “MBI clearance” is a mechanism through which the IRS ensures that individuals and entities handling sensitive tax data meet stringent security and privacy standards. This article will clarify what MBI clearance entails, who is required to obtain it, what constitutes “Most Burdensome Information,” and the process involved in acquiring this authorization.

Understanding MBI Clearance

“MBI” stands for Most Burdensome Information, and “clearance” refers to the specific authorization or approval granted to access or handle such data. This concept is central to the IRS’s strategy for protecting Federal Tax Information (FTI) from unauthorized access, use, or disclosure. The primary purpose of MBI clearance is to uphold the confidentiality of taxpayer data, which is essential for voluntary compliance with tax laws.

The necessity for MBI clearance is rooted in a robust legal and regulatory framework. Internal Revenue Code Section 6103 generally prohibits the disclosure of tax returns and return information. The Privacy Act of 1974 establishes fair information practices governing how federal agencies collect, maintain, use, and disseminate information about individuals. IRS Publication 1075 provides detailed guidance on the managerial, operational, and technical security controls required to protect FTI. MBI clearance is a formal acknowledgment that an individual or organization has met these established security and privacy benchmarks set forth by the IRS.

Entities Requiring MBI Clearance

Various categories of entities and individuals are required to obtain MBI clearance due to their access to sensitive federal tax information. This requirement extends beyond direct IRS employees to encompass a broader ecosystem of partners and service providers. The need for such clearance arises from the imperative to ensure that all parties handling FTI adhere to consistent and high security standards.

State and local government agencies frequently require MBI clearance. These agencies often access federal tax information for the administration of programs such as tax enforcement, child support enforcement, or Medicaid. Contractors and vendors providing services to the IRS or to government agencies that handle FTI also fall under this requirement. Other federal agencies engaged in data exchange agreements with the IRS, particularly those involving FTI, must also secure this clearance. Certain IRS employees or partners with roles involving sensitive data are subject to MBI clearance, signifying their authorization to handle such information.

Defining Most Burdensome Information

Most Burdensome Information (MBI) represents a specific subset of Federal Tax Information (FTI) that carries the highest risk of harm if compromised. While FTI broadly includes any return or return information received from the IRS or a secondary source like the Social Security Administration, MBI is distinguished by its highly sensitive nature. The IRS uses specific criteria to classify information as “most burdensome,” primarily focusing on the potential for severe harm, its uniqueness, and its direct link to an individual’s financial accounts.

Examples of data elements typically classified as MBI include Taxpayer Identification Numbers (TINs), such as Social Security Numbers (SSNs) or Employer Identification Numbers (EINs). These identifiers are foundational to an individual’s financial identity and their unauthorized disclosure can lead to significant financial fraud or identity theft. Financial account information, along with detailed income, deduction, or credit information derived from tax returns, also falls under the MBI designation. The stringent classification of these data elements as MBI underscores the heightened security measures and clearance protocols required for their handling.

Obtaining MBI Clearance

The process of obtaining MBI clearance is a detailed and multi-faceted endeavor designed to ensure the highest level of security for sensitive tax information. It is not a singular event but rather an ongoing commitment to compliance and adaptation to evolving security landscapes. This procedural journey involves several key steps that entities and individuals must successfully navigate.

Security Assessments

A fundamental component is undergoing rigorous security assessments. Systems and environments intended to handle MBI must comply with established security controls, often referencing standards such as NIST Special Publication 800-53 and IRS Publication 1075. These assessments typically include vulnerability scanning, penetration testing, and comprehensive risk assessments to identify and mitigate potential weaknesses.

Compliance Documentation

Extensive compliance documentation is another crucial aspect. Entities must develop and maintain System Security Plans (SSPs) that detail their security posture and controls. They also need Plans of Action and Milestones (POA&Ms) to track and remediate identified security weaknesses, ensuring continuous improvement. Privacy Impact Assessments are also required to evaluate and address privacy risks associated with the handling of MBI.

Personnel Screening

Personnel screening is integral to MBI clearance, involving thorough background checks and security suitability investigations for all individuals who will have access to MBI. These investigations, which may be classified as Moderate Risk Background Investigations (MBI) or higher, assess an individual’s honesty, trustworthiness, and suitability for handling sensitive data. Mandatory security and privacy awareness training is also required for all personnel, ensuring they understand their responsibilities in protecting FTI.

Ongoing Audit and Monitoring

Ongoing audit and monitoring activities are essential to maintaining MBI clearance. The IRS Office of Safeguards conducts periodic reviews, often every three years, to verify continued compliance with Publication 1075 standards. Formal agreements, such as Memoranda of Understanding or Data Exchange Agreements with the IRS, are also necessary to stipulate the security obligations and responsibilities of the parties involved. This continuous cycle of assessment, documentation, training, and auditing ensures sustained adherence to the IRS’s stringent security requirements for MBI.