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BAM 803 1 of 14 IRS DATA EXCHANGES BPB 2025-015 6-1-2025

BRIDGES ADMINISTRATIVE MANUAL STATE OF MICHIGAN DEPARTMENT OF HEALTH & HUMAN SERVICES

DEPARTMENT POLICY FIP, SDA, MA and FAP The Michigan Department of Health and Human Services (MDHHS) is required to match income information reported by third parties to IRS for all FIP, SDA, MA and FAP recipients. The data is compared to earned and unearned income for the recipient. This occurs at application and prior to each redetermination. Information provided with MDHHS applications (MDHHS-1010, - DHS-4574, DHS- 4574B, DCH-1426 and MDHHS-1171 inform clients of the data exchange process. OVERVIEW FIP, SDA, MA and FAP MDHHS conducts two data exchange processes with IRS. When a data match occurs, applicants or recipients are sent a notice informing them of the data obtained, the source and further instruction that MDHHS will be contacting them. IRS PENALTIES FIP, SDA, MA and FAP The Internal Revenue Code contains criminal and civil penalties for unauthorized disclosure of tax return information: • Per Section 7213(a), unauthorized disclosure of a federal tax return or return information is punishable by a $5,000 fine and/or 5 years imprisonment; see EXHIBIT I in this item. • Per Section 7431, such disclosure is also subject to a lawsuit, including punitive damages if the disclosure is willful or caused by gross neglect; see EXHIBIT II in this item. These criminal and civil penalties apply even after leaving MDHHS employment. IRS tape match information is always confidential whether or not the client has signed the release of information and should never be distributed by any means including email or fax for any reason.

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Official source

BAM 803 1 of 14 IRS DATA EXCHANGES BPB 2025-015 6-1-2025

BRIDGES ADMINISTRATIVE MANUAL STATE OF MICHIGAN DEPARTMENT OF HEALTH & HUMAN SERVICES

DEPARTMENT POLICY FIP, SDA, MA and FAP The Michigan Department of Health and Human Services (MDHHS) is required to match income information reported by third parties to IRS for all FIP, SDA, MA and FAP recipients. The data is compared to earned and unearned income for the recipient. This occurs at application and prior to each redetermination. Information provided with MDHHS applications (MDHHS-1010, - DHS-4574, DHS- 4574B, DCH-1426 and MDHHS-1171 inform clients of the data exchange process. OVERVIEW FIP, SDA, MA and FAP MDHHS conducts two data exchange processes with IRS. When a data match occurs, applicants or recipients are sent a notice informing them of the data obtained, the source and further instruction that MDHHS will be contacting them. IRS PENALTIES FIP, SDA, MA and FAP The Internal Revenue Code contains criminal and civil penalties for unauthorized disclosure of tax return information: • Per Section 7213(a), unauthorized disclosure of a federal tax return or return information is punishable by a $5,000 fine and/or 5 years imprisonment; see EXHIBIT I in this item. • Per Section 7431, such disclosure is also subject to a lawsuit, including punitive damages if the disclosure is willful or caused by gross neglect; see EXHIBIT II in this item. These criminal and civil penalties apply even after leaving MDHHS employment. IRS tape match information is always confidential whether or not the client has signed the release of information and should never be distributed by any means including email or fax for any reason.