The IRS lost millions of taxpayer files and was caught storing sensitive data cartridges on open shelves in a warehouse, according to a report issued today by the official IRS watchdog, the Treasury Inspector General for Tax Administration.
The report marks the latest example of longtime IRS disregard for taxpayer privacy.
Key excerpts:
Millions of missing files. “As a result of the lack of adequate inventory controls, the IRS cannot account for thousands of microfilm cartridges containing millions of sensitive business and individual tax account records. The personal taxpayer and tax information included on these backup cartridges is key information that can be used to commit tax refund fraud [and] identity theft.
Comprehensive failure to secure taxpayer files: “Our review identified significant deficiencies in the IRS’s safeguarding, accounting for, and physical storage of its microfilm backup cartridges.”
Failure to conduct basic inventory. “In fact, management could not provide a time frame of when the last required annual inventory was conducted. The lack of adequate inventory controls also includes no reconciliation of the microfilm backup cartridges noted as being sent from closed Tax Processing Centers to what was physically shipped and received.”
Sensitive data cartridges stored on open warehouse shelves. “Specifically, the microfilm cartridges are being stored on open shelving in the middle of the Files building, a large warehouse. The warehouse is accessible by all Files Function personnel within the facility, and the shelving is not within eyesight of the IRS personnel responsible for overseeing microfilm activities.“
IRS negligence creates risk for fraud and identify theft. “Significant deficiencies exist in the IRS’s accounting for microfilm backup cartridges. Deficiencies result in the inability of the IRS to account for thousands of microfilm cartridges containing millions of sensitive business and individual tax account records. The sensitive business and individual taxpayer information stored on the unaccounted for cartridges are key information that can be used to commit tax refund fraud identity theft.”
Empty boxes and missing data cartridges. “For example, our physical inspection found empty boxes labeled as including microfilm backup cartridges with no explanation as to the location of the missing cartridges.”
This is the same agency that wants to spend large amounts of taxpayer dollars to get into the tax software business. Yes, the same agency that wants you to trust them with safeguarding your most sensitive personal data cannot even do a basic inventory, and cannot even be bothered to fill out a simple form to keep track of sensitive taxpayer files shipped from one IRS facility to another.
This is also the same agency that purposefully destroyed 30 million taxpayer files without telling anyone. The same agency that is currently failing three out of five major cybersecurity functions. The same agency that has yet to explain — even after two years of investigation — how a “vast trove” of private tax returns and audits were stolen and given to a progressive group.