The IRS Can’t Find Millions Of Sensitive Tax Records For Individuals, Businesses

The Internal Revenue Service (IRS) has lost millions of tax records for businesses stored at their facilities, according to a government inspector general report released on Tuesday.

The IRS maintains several storage facilities across the country where tax records — such as tax returns, additional filings, evidence and dispute forms — are held, some in microfilm cartridges dating back decades. An investigation by the Department of the Treasury’s Inspector General for Tax Administration (TIGTA) found empty boxes in place of the cartridges at two storage facilities, according to a report they issued on their findings.

“We observed seven empty boxes … Each box holds 24 cartridges meaning as many as 168 cartridges may have been sent for reformatting. IRS personnel in Ogden were unaware of the current location of these cartridges,” TIGTA wrote of their visit to the IRS’ storage facility in Ogden, Utah. One cartridge may contain up to 2,000 images, according to Politico.

Another IRS storage facility in Kansas City, Missouri, was missing over 4,500 cartridges containing individual tax information from Fiscal Year 2019, as well as 4,000 cartridges with business tax information from fiscal years 2018 and 2019, the report noted. The Kansas City facility also could not locate all cartridges with tax information from fiscal year 2010, which had apparently been shipped from Fresno, California.

“[A]nnual inventories have not been performed. In fact, management could not provide a time frame of when the last required annual inventory was conducted,” TIGTA wrote, assessing that the IRS suffered from “significant deficiencies” in their storage of such microfilm. TIGTA also said the IRS left security vulnerabilities, which risked confidential taxpayer information being accessed.

“[M]icrofilm cartridges … are not being adequately safeguarded to limit access to this information. Specifically, the microfilm cartridges are being stored on open shelving,” the report outlined. It is a federal crime to disclose taxpayer information, particularly tax returns, to persons unauthorized by law to view them.

“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 [or] identity theft,” the report summarized. It included several recommendations to the IRS to improve its record retention and destruction protocols, with microfilm over 30 years old required to be destroyed by law, according to the report.

The TIGTA report highlights another lapse regarding the IRS, which has been at the center of significant political controversy. The agency is currently the subject of a scandal involving a tax investigation into Hunter Biden, the son of President Joe Biden, with two employee whistleblowers claiming that officials pressured them to not investigate Hunter Biden vigorously.

Additionally, the IRS attracted attention during the dispute between Biden and House Republicans on raising the national debt limit, earlier this year. House Republicans insisted on cutting $21 billion of prior appropriations to the IRS, which would have hired 87,000 investigative agents to enforce tax collection.

Democrats have accused Republicans of hypocrisy regarding the cuts, claiming they want to “defund the tax police.”

The IRS did not immediately respond to a request for comment.