Mr. Werfel at Hearing by United States Congress is licensed under CC
At the Feb. 15 House Ways and Means Committee hearing with IRS Commissioner Daniel Werfel, Rep. Beth Van Duyne (R-Texas) asked Werfel if he will finally release the IRS internal decision memorandum detailing the intentional destruction of 30 million paper documents submitted by taxpayers attempting to resolve their taxes. The method of document destruction has also not been revealed, but options indicate the documents were “shredded, macerated, pulped, or burned.”
Van Duyne: “Chairman Smith and the Oversight Subcommittee Chairman Schweikert wrote a letter on July 25, 2023 requesting a copy of the decision memorandum detailing the recommendation to destroy 30 million unprocessed paper-filled informational returns in March 2021. 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 that the IRS does not even use. We still have not received a response from you and the original response was requested by August 8, 2023. That is 192 days overdue. So, Mr. Werfel, will the IRS ever provide this documentation voluntarily or should we consider other means to obtain it?”
Werfel: “I apologize. It is very important that we are responsive to all congressional requests for documents or information from this committee.”
Van Duyne: “So it has been 192 days. Tell me, will we be seeing that forthcoming or do we have to issue a subpoena?”
Werfel: “I will go back and make sure it is forthcoming.”
Van Duyne: “So that’s a yes? Do you have a date in which we can expect to have a response?”
Werfel: “I will get back to you with a firm date.”
The documents were destroyed at the Ogden, Utah facility and the IRS tried to get away with it without notifying anyone. But they got caught during an onsite visit from the Treasury Inspector General for Tax Administration.
After getting caught, the IRS claimed that no taxpayer would face negative consequences as a result of the destruction of the 30 million documents. But as reported by Tax Notes on Aug. 28, 2023 taxpayers received audit letters wherein the IRS accused taxpayers of failing to file their tax forms — as in, the same forms the IRS had destroyed.
As noted by Tax Notes:
“The decision by the IRS to expunge 30 million information return documents — mostly third-party income reporting on Forms 1099 — meant the agency didn’t have records to match income reported by thousands of low- and middle-income taxpayers claiming EITCs. But it continued auditing those taxpayers for ‘missing’ Forms 1099 anyway.”
The volume of material destroyed by the IRS is considerable: if stacked in a single pile, 30 million pieces of paper would reach a height of two miles. IRS has not revealed the manner of destruction but possibilities include incineration, landfill dumping, or industrial shredding.
If a taxpayer intentionally destroyed an information return along the lines of what the IRS did, the taxpayer would face a penalty of $630 per destroyed form, with no limit. So if the IRS were to hold itself to the same standard, it would owe the taxpayers $18.9 billion in penalties (30,000,000 X $630).
The Werfel – Van Duyne exchange is here and below: