- The Washington Times - Tuesday, October 21, 2014

The IRS hasn’t done enough to protect sensitive tax information, according to an new inspector general report that riled Republicans.

The Internal Revenue Service lacks the proper “management oversight and internal controls” and has failed to require sufficient background investigations or reviews of protocol at federal, state or local agencies that receive personal tax information from the federal government, said the audit released Tuesday by the Treasury Inspector General for Tax Administration (TIGTA).

It’s the latest blow to an already embattled IRS, still reeling from allegations it singled out conservative nonprofit groups for extra scrutiny and from the agency’s hiring of a police officer previously convicted of illegally accessing FBI records. Last year, The Washington Times reported that the personal tax records of former Senate candidate Christine O’Donnell were illegally accessed in 2010 and used to damage the Delaware Republican’s political prospects.

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“The IRS should take its responsibility for protecting taxpayer information more seriously, especially when it shares information with state, local, and other federal agencies. This report shows that the IRS‘ current actions are not enough,” said Sen. Chuck Grassley, Iowa Republican and ranking member on the Senate Judiciary Committee. “The IRS needs to take the recommendations in this report to heart and make sure taxpayer information is not vulnerable to inappropriate access.”

Following last year’s disclosure of Ms. O’Donnell’s tax ordeal, TIGTA revealed that at least four politicians or political donors have had their personal tax records inappropriately accessed since 2006, including one case described as a “willful violation” of federal law. The Justice Department declined to prosecute any of the cases.

The IRS previously stated that the “willful violation” found by the inspector general was not by an IRS employee.

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Because the federal government will not discuss personal tax information, it is not certain that the “willful violation” refers to Ms. O’Donnell’s case.

But she maintains she was politically targeted and that her personal records — including reports of an erroneous tax lien against a home she no longer owned — were used to discredit her and to derail her 2010 campaign against Sen. Chris Coons, Delaware Democrat.

Ms. O’Donnell welcomed Tuesday’s report but said it remains to be seen whether it will lead to real change.

“The question is, what do they plan to do about it? It’s one thing to acknowledge a problem. It’s something entirely different to take the difficult steps to correct it,” she said. “With this situation, there are some powerful people in powerful positions who do not want to see the truth exposed. When it is, there will be major ramifications.”

The TIGTA report does not mention the O’Donnell case but does say the IRS should take steps to protect personal tax records.

“Our audit found that effective controls have not been established to ensure that the Internal Revenue Service’s annual report on the safeguards of agencies that receive federal tax information (FTI) is timely submitted to the required U.S. congressional committees,” said Treasury Inspector General J. Russell George. “If required safeguards for FTI are not established and maintained, the FTI is at an increased risk of unauthorized use and disclosure.”

The review found that the IRS Office of Safeguards “does not set specific background investigation requirements for employees and contractors at agencies receiving FTI and also does not “conduct on-site review tests on each agency’s background investigation policies and procedures.”

The IRS said it agrees with most of TIGTA’s recommendations, which include putting in place on-site reviews before any department or agency at the federal, state or local level is given access to personal tax information.

TIGTA also said the IRS should institute “background investigation requirements” for all employees or contractors with access to tax records and should put in place better procedures to inform Congress of efforts to protect information.

The latter recommendation, the IRS says, already has been implemented, as have other TIGTA suggestions.

Furthermore, the agency says its Office of Safeguards has “undergone significant change” over the past two years, including the establishment of a new inventory management system and adding additional personnel to oversee the sharing of tax data with other agencies.

“It is important to note that the IRS has deployed a new, comprehensive inventory management system while TIGTA’s audit was in process that addresses many of the concerns outlined in this report. This new system, which established an additional layer of protection, was not evaluated by TIGTA in the report,” the agency said in a statement.

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