Topline
A watchdog report published Tuesday found multiple flaws in the Internal Revenue Service’s management of microfilm backup cartridges that led to millions of sensitive tax information records being unaccounted for—another IRS shortcoming related to the organization’s use of outdated systems.
A man walks into the Internal Revenue Service building in Washington, DC on March 10, 2016. / AFP / … [+]
Key Facts
The Treasury Inspector General for Tax Administration, the authors of the report, said it identified flaws in the IRS’s safeguarding, accounting, and physical storage of its microfilm backup cartridges, noting management officials couldn’t remember the last time a required annual inventory was performed.
The TIGTA reported seven empty boxes at the Ogden, Utah, IRS facility, each of which should have contained 24 microfilm cartridges.
The microfilm cartridges at the Ogden facility are stored in the middle of a large warehouse on open shelving, according to the report.
The IRS’s Kansas City tax processing center was also visited by the TIGTA, which found that more than 8,000 microfilm cartridges from the fiscal years 2018 and 2019 were unaccounted for.
The report said the millions of sensitive individual and business tax records can be used to commit tax refund identity theft.
The TIGTA pitched several recommendations for the IRS moving forward, including taking more precautions on the safeguarding of tax information and assessments of storage conditions.
Contra
IRS Wage and Investment Commissioner Kenneth C. Corbin responded to the report, saying it highlighted the IRS’s reduction in experienced staff. He noted the redirection of experienced employees to higher priorities affected the organization’s ability to keep up with other programs, “including timely updating inventory records” of microfilm cartridges at processing centers.
What To Watch For
A detailed inventory of all microfilm tapes at the IRS’s processing centers will be completed by the TIGTA, which will also ensure annual inventories and reporting of discrepancies to management annually. The corrective action will be implemented this October, according to the report.
Key Background
The IRS has worked with old and outdated technology throughout multiple levels of its operations. The production and storing of microfilm cartridges is something the organization plans to rid itself of in time, though the IRS “may have to continue storing microfilm for numerous years” until the plans are completed, according to the report. The IRS has also been criticized for old IT systems used to process tax information. A report from the U.S. Government Accountability Office found that despite spending hundreds of millions of dollars trying to update the main system used to process individual taxpayer account data, the system won’t be replaced until 2030 at the earliest. By that time, the system will be 60 years old. The office warns that outdated systems can slow down federal payments and services in addition to making taxpayer information vulnerable to cyber attacks.
Further Reading
Committee Urges Congress And IRS To Improve Taxpayer Experience And Upgrade Technology (Forbes)
Outdated and Old IT Systems Slow Government and Put Taxpayers at Risk (GAO)
IRS tech is so ‘archaic’ the agency struggles to find people to work it (Washington Post)
Source: https://www.forbes.com/sites/antoniopequenoiv/2023/08/10/the-irs-cannot-find-millions-of-sensitive-tax-records-watchdog-inspection-finds/