IRS Exposed Taxpayer ID Numbers on Offers in Compromise

The Internal Revenue Service failed to fully redact Social Security Numbers and Employer Identification Numbers from hundreds of its Offer in Compromise files that are available to the public, according to a new report.

The report, from the Treasury Inspector General for Tax Administration, found that files available for public review contained visible Taxpayer Identification Numbers, such as SSNs and EINs. TIGTA identified and documented more than 300 instances of visible Taxpayer Identification Numbers in files accessible to the public. TIGTA provided the IRS with photographs of the redaction omissions and advised IRS management to suspend public inspections until a full review could be completed. The report noted that ineffective redaction practices put sensitive and legally protected taxpayer information at risk.

The IRS took immediate action during the evaluation, according to TIGTA, so it did not make any recommendations in the report. However, TIGTA plans to conduct a follow-up review to see whether the issues have been addressed.

In response to the report, IRS officials pointed out that public viewing requests of Offers in Compromise are rare, so the risk that sensitive taxpayer information was exposed was minimal. Nevertheless, the IRS said it is pursuing safeguards and enhancements of Offer in Compromise public inspection file redaction procedures.

“Your investigation revealed instances in which certain taxpayer information had not been fully redacted from public inspection file,” wrote Karen Schiller, commissioner of the IRS’s Small Business/Self-Employed Division. “When TIGTA alerted IRS to this issue, the IRS immediately removed the files from availability for public inspection until the required redactions were completed.”

TIGTA agreed there is limited opportunity for the disclosure of sensitive taxpayer information but pointed out that each taxpayer has a right to expect that the IRS will protect their sensitive information in all circumstances. TIGTA said it believes the IRS needs to be committed to safeguarding the identity of all taxpayers in administering programs, whether large or small, high-profile or little known. Identity theft continues to be a serious and evolving issue which has a significant impact on tax administration, TIGTA noted.