Watchdog Reveals IRS's Loss of Millions of Sensitive Taxpayer Records

A Recent Report Reveals IRS Losing Millions of Sensitive Tax Records

A recent report by the Treasury Inspector General for Tax Administration reveals that the Internal Revenue Service (IRS) has lost millions of sensitive tax records belonging to individuals and businesses. The report states that the IRS failed to adequately protect tax information during the shipping process between processing centers. The agency is unable to locate records that were supposed to be transferred from California to Kansas City, Missouri, and thousands of records stored in Utah are also missing. This incident raises concerns about the security and protection of sensitive taxpayer information.

IRS Not Following Guidelines for Handling Sensitive Taxpayer Information

According to a watchdog report, the Internal Revenue Service (IRS) is not following its own guidelines when it comes to handling sensitive taxpayer information. This includes sending large amounts of this information to and from its Tax Processing Centers. As a result, the IRS is unable to identify, notify, and protect taxpayers when their sensitive tax information is lost in the mail, putting them at risk for potential identity theft.

Lost Tax Records and Microfilm Cartridges

According to a report by POLITICO, the IRS has lost important tax records and microfilm cartridges containing thousands of images. The watchdog discovered seven empty boxes that were supposed to contain around 170 microfilm cartridges at a facility in Ogden, Utah. Each cartridge can hold up to 2,000 images, and IRS employees at the facility were unaware of their whereabouts. Additionally, tax records from the 2010 fiscal year were meant to be transferred from a facility in Fresno, California, to an IRS processing center in Kansas City, but the records could not be located.

Difficulties in Notifying and Protecting Taxpayers

According to a report, the IRS is facing difficulties in notifying and protecting taxpayers due to a lost package containing tax information. The lack of documentation identifying the specific taxpayers affected has made it challenging for the IRS to take appropriate action. The agency attributed the problem to underfunding, stating that employees responsible for handling inventories have been reassigned to other tasks. However, the IRS expressed confidence that as they process the backlog of non-tax documents, the remaining cartridges will be addressed.

President Biden's Inflation Reduction Act Allocates Funding for IRS

President Joe Biden's Inflation Reduction Act, which was passed last year, allocated $80 billion in new funding for the IRS over the next decade. This funding will enable the IRS to hire more agents and improve its operations. The funding is divided into four categories: enforcement, operations support, business system modernization, and taxpayer services. The IRS plans to use some of the funding for advanced technology, data, and analytics to enhance its effectiveness.

Concerns Raised by Republicans in Congress

Republicans in Congress have raised concerns about the Internal Revenue Service (IRS) mishandling sensitive tax information. One issue involved the destruction of 30 million paper tax returns in 2021, which drew criticism from tax experts. Additionally, GOP lawmakers questioned the IRS after ProPublica published an exposé that revealed information from thousands of tax returns belonging to wealthy individuals.