If there are privacy laws that agencies follow it would be considered an illegal act to do otherwise.
If Congressman Hayworth doesn't like it, he needs to do his job and change the laws.
As I stated in an earlier post, the heads of these agencies (IRS and Social Security), both Bush appointees, are saying this to justify or cover-up their unwillingness to share this information with local U.S. Attorneys offices and other pertinent Federal law enforcement and immigration agencies and also various state law enforcement agencies as well.
Trust me, neither the IRS nor Social Security would have no problem in sharing your private/confidential information with pertinent U.S. Attorney's Offices, other Federal and even State law enforcement agencies if they wanted to bust you for tax fraud. The "Privacy" claim is just a smokescreen.