IRS Mismanagement at Fault for Recent Data Breach

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Posted by Alexander Hendrie on Tuesday, November 3rd, 2015, 4:27 PM PERMALINK


While addressing the American Institute of CPAs, IRS Commissioner John Koskinen today repeated an excuse that he has made throughout the year – that the agency's poor performance is due to a lack of resources.

As reported by Politico Pro’s Katy O'Donnell, Koskinen claimed that the data breach earlier this year that exposed the personal information of 330,000 taxpayers was a timely reminder that the agency needed “adequate resources.”

In reality, the data breach did not occur because of lack of money. Instead, fault lies with the agency’s failure to heed countless watchdog warnings, and properly allocate resources.

Since 2007, the IRS has been warned at least seven times by watchdog groups that it needed to strengthen its protections of taxpayer information. Most recently:

  • In a 2014 report, the Treasury Inspector General for Tax Administration (TIGTA) warned that if stronger protections are not implemented, “taxpayers could be exposed to the loss of privacy and to financial loss and damages resulting from identity theft or other financial crimes.”  
  • 2013 report found that the IRS had failed to fully implement eight recommendations that would increase security over taxpayer data despite telling TIGTA they had been implemented.
  • 2011 report found that taxpayer data was vulnerable to hackers and stronger security measures were needed.
  • In 2010, TIGTA found that the agency had inadequate safeguards to protect taxpayer information from contract workers.

 

If the IRS had implemented these recommendations, taxpayer information would be better protected and the hack may have been prevented. As TIGTA Chief J. Russell George said during a past Senate Finance Committee hearing, “It would have been much more difficult had they (IRS) implemented all of the recommendations that we made.”

In fact, according to the Annual Report to Congress released by the National Taxpayer Advocate, the IRS has completely failed to prioritize past budget decisions. According to the report:

“The IRS lacks a principled basis for making the difficult resource allocation decisions necessitated by today’s tight budget environment.”

While the IRS continues to complain about its funding, it has not even attempted to properly ensure that scarce taxpayer funds are allocated effectively. As a result, the report states:

“the IRS has come under scrutiny by external oversight organizations who have questioned the IRS’s rationale for its budget decisions. They have not been satisfied with the IRS’s response to their inquiries.”

Photo Credit: 
GotCredit, https://www.flickr.com/photos/jakerust/
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