There is no more universally disliked government agency than the IRS.
It’s not hard to see why.
And now the IRS got caught doing something horrible to millions of Americans.
A recent report from a watchdog revealed that the Internal Revenue Service misplaced millions of sensitive tax records belonging to both individuals and businesses.
The Treasury Inspector General for Tax Administration released a report last week which alleged that the IRS had failed to “adequately” safeguard tax information.
“Our review identified that the IRS is not adhering to its own internal guidelines when sending large volumes of sensitive taxpayer information to and from its Tax Processing Centers,” the watchdog report said, adding, “As a result, 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.”
The watchdog reported discovering seven vacant boxes at a facility in Ogden, Utah, according to Politico on Thursday. Each of the boxes was meant to house approximately 170 microfilm cartridges, each capable of holding up to 2,000 images. The IRS staff at the Ogden facility were completely unaware of the whereabouts of these boxes with sensitive information.
“The personal taxpayer and tax information included on these backup cartridges is key information that can be used to commit tax refund fraud identity theft,” the report read.
The watchdog’s report further noted that the IRS appears to have misplaced tax records from the 2010 fiscal year as well; they were intended to be moved from a California facility in Fresno to an IRS processing center in Kansas City after the closure of the California facility. The IRS faced difficulties in locating these records as well.
“The lack of documentation identifying the specific taxpayers whose tax information is included in a lost package has impacted the IRS’s ability to notify and protect taxpayers,” the report added.
The IRS claimed that these problems were due to underfunding and that the IRS is “confident that as the backlog of non-tax documents is processed, the remaining cartridges will be incorporated,” according to the report.
President Joe Biden’s Inflation Reduction Act passed last year which included $80 billion in new funding for the IRS for the next ten years as the agency has come under increasing scrutiny.
Republicans blasted the IRS for multiple instances of alleged mishandling of sensitive tax information. In 2021, the IRS destroyed 30 million paper tax returns, which “horrified” tax experts.
Reps. Jason Smith (R-MO), chairman of the Ways and Means Committee, and David Schweikert (R-AZ), chairman of the Oversight Subcommittee, wrote to IRS Commissioner Daniel Werfel, asking him to submit documentation that authorized the decision, the Center Square reported in July.
“The decision to destroy information returns diligently prepared by millions of American taxpayers demands congressional oversight,” the letter read. “The destruction of these returns raises the question of whether information reporting should be scaled back to reduce the burden placed on taxpayers in reporting information the IRS does not even use.”