The Internal Revenue Service (IRS) is facing criticism for a handful of operational shortcomings, with a government watchdog taking the tax agency to task for several “significant deficiencies” in the areas of security management and access controls, including one that puts sensitive taxpayer data at risk.
A recent audit of the IRS by the Government Accountability Office (GAO) revealed three new significant deficiencies that relate to IT systems, the watchdog said in its April 25 report, which describes all of the shortcomings as “sensitive in nature.”
Specifically, the watchdog identified deficiencies in the areas of access control, configuration management, and security management.
The IRS failed to consistently create a plan of action and milestones to correct identified weaknesses in the area of security management, GAO said.
“Such conditions may lead to insufficient protection of sensitive or critical resources and disproportionately high expenditures for controls over low-risk resources,” the watchdog noted.
The watchdog identified one IT system control deficiency in access controls related to audit monitoring where the IRS failed to review and certify a monthly security report on a timely basis.
“Appropriately designed and implemented access controls reduce the risk of unauthorized access to, modification of, or disclosure of financial and sensitive taxpayer data and disruption of critical operations,” GAO said in the report.
Finally, the watchdog said it found that the IRS failed to consistently implement security configuration settings for some of its servers that are significant to financial reporting.
Besides identifying three new gaps, the watchdog said the IRS failed to complete 36 of the 51 corrective actions that GAO identified in a prior report and flagged for action.
The latest GAO report comes after a prior review faulted the IRS for failing to implement 77 of its 451 recommendations made since 2010, including several that are high priority.
In the past, the IRS blamed a lack of resources for not meeting more of the watchdog’s recommendations. Now that the agency is flush with cash from a recent $78 billion funding infusion, the IRS simply said it would try to fix the identified problems.
The IRS is “committed to implementing improvements dedicated to promoting the highest standard of financial management, internal controls, and information security,” IRS Commissioner Danny Werfel said in a letter viewed by The Epoch Times, with the tax agency chief vowing to take action to resolve the deficiencies identified by the watchdog.
Millions of Missing Records
The latest GAO report follows a review last year by another watchdog—the Treasury Inspector General for Tax Administration (TIGTA)—of how the IRS stores old tax records.
TIGTA found that the tax agency has lost track of thousands of microfilm cartridges containing millions of sensitive business and individual tax records of Americans.
The TIGTA report, issued in August 2023, faulted the IRS for being sloppy in the way it handles sensitive taxpayer information that could be used by criminals to commit identity theft and tax fraud.
It points to “significant deficiencies” in the way the IRS safeguards, stores, and accounts for microfilm cartridges that are used to backup and store photographic records of sensitive business and individual tax information.
“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 watchdog report stated.
In one shocking example of these “significant deficiencies,” the IRS was unable to account for a whopping 9,500 microfilm cartridges containing business tax account information at a Kansas City facility.
With up to 2,000 photographic images per cartridge, that puts the potential number of missing images of sensitive business tax account information at 19 million.
In light of the startling findings, the watchdog recommended that the IRS carry out a detailed inventory of all microfilm cartridges on hand, including microfilm disposed of or missing.
At the time, IRS wage and investment commissioner Kenneth C. Corbin blamed long-term underfunding and staff attrition for the problems.
Massive Tax Haul
Meanwhile, the IRS recently disclosed that it managed to rake in a near-record $4.7 trillion in taxes last year, thanks in part to the $78 billion funding boost from Congress that the agency used to hire more enforcers and deploy advanced technologies like artificial intelligence to squeeze more tax dollars from taxpayers.
Another recent report from the TIGTA shows that the IRS is hiring thousands more tax enforcers in 2024 as the agency looks to boost its tax revenues even further.
Thanks to the tens of billions of dollars in new funding, the IRS announced in September that it was undergoing a “sea change” in every aspect of its operations, including a “sweeping, historic” tax enforcement crackdown to increase tax collections.
The IRS has said it would prioritize its enforcement actions on taxpayers with total positive income above $1 million and who have over $250,000 in recognized tax debt. At the same time, the agency pledged not to increase audit rates on Americans earning less than $400,000 per year.
From The Epoch Times