IRS loses millions of taxpayer records, says watchdog.
The IRS Lost Millions of Sensitive Tax Records, Putting Individuals and Businesses at Risk
According to a new watchdog report, the Internal Revenue Service (IRS) has lost millions of sensitive tax records belonging to individuals and businesses. This alarming revelation raises concerns about the security and protection of taxpayers’ information.
Failure to Safeguard Tax Information
The Treasury Inspector General for Tax Administration recently released a report highlighting the IRS’s inadequate safeguarding of tax information during shipping between processing centers. Shockingly, the report reveals that the IRS cannot locate records that were supposed to be transferred from California to Kansas City and is also missing thousands of records stored in Utah.
The watchdog report states, “The IRS is unable to identify, notify, and/or offer protection to taxpayers when sensitive tax information is lost in the mail and at risk for potential identity theft.”
Missing Records and Lack of Documentation
The report further details the discovery of seven empty boxes in Utah that should have contained around 170 microfilm cartridges, each capable of holding up to 2,000 images. Additionally, records from the 2010 fiscal year that were supposed to be transferred from California to Kansas City could not be located. The lack of documentation identifying the affected taxpayers hinders the IRS’s ability to notify and protect them.
Underfunding and Proposed Solutions
The IRS attributes this problem to underfunding, claiming that it has been forced to reassign employees responsible for inventories to other tasks. However, the agency expresses confidence that as the backlog of non-tax documents is processed, the missing records will be incorporated.
To address these issues, President Joe Biden’s Inflation Reduction Act allocated $80 billion in new funding for the IRS over the next ten years. This funding will enable the IRS to hire additional agents and invest in cutting-edge technology, data, and analytics to operate more effectively.
Recurring Criticisms and Concerns
This is not the first time the IRS has faced criticism for mishandling sensitive tax information. In 2021, the agency destroyed 30 million paper tax returns, causing alarm among tax experts. Additionally, GOP lawmakers raised concerns after ProPublica published an exposé containing information from thousands of tax returns belonging to wealthy Americans.
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