IRS didn’t comply with record retention rules

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The Internal Revenue Service’s policies don’t comply with some of the federal government’s requirements that agencies must ensure all records are retrievable and usable for as long as needed, according to a new report.

The report, from the Treasury Inspector General for Tax Administration, comes in response to a request from House Ways and Means Committee chairman Kevin Brady, R-Texas, and Senate Finance Committee chairman Orrin Hatch, R-Utah. They asked TIGTA to find out whether the IRS’s policies for record retention and responses to record requests comply with federal requirements. Republicans in Congress have faulted the IRS for losing thousands of emails from Lois Lerner, the former director of the IRS’s Exempt Organizations unit, after her hard drive crashed and backup tapes were recycled. Lerner and other top officials were ousted from the IRS after a scandal erupted in 2013 over revelations her group had used terms such as “Tea Party” and “Patriot” to filter applications from organizations requesting tax-exempt status.

The TIGTA report that was released Monday pointed out that the IRS is required by federal law to retain and produce federal records when requested through appropriate legal means, such as the Freedom of Information Act. However, the IRS recently reported that when responding to requests from outside parties it discovered that some documents had been lost or destroyed.

The report found the IRS’s record retention policies don’t comply with some federal requirements that agencies need to ensure all records are retrievable and usable for as long as needed. For example, messages aren’t automatically archived for all IRS employees. Instead, the IRS’s current policy tells employees to manually archive emails by saving them permanently on hard drives or shared network drives. The policy has led to records being lost when computer hard drives are either destroyed or damaged. On top of that, a recent executive email retention policy, which should have led to the archiving of emails from specific executives, wasn’t implemented effectively because some IRS executives didn’t know they had to turn on the automatic archiving feature.

For some of the cases TIGTA reviewed, IRS policies weren’t implemented consistently to ensure all relevant documents were searched and produced when responding to outside requests for records. TIGTA’s review of 30 completed Freedom of Information Act requests found that in more than half the responses, the IRS didn’t follow its own policies requiring it to document which records were searched. TIGTA also found IRS policies for preserving records from separated employees were inadequate.

TIGTA made five recommendations to improve the IRS’s policies for record retention and responding to outside requests. It recommended the IRS implement an enterprise email solution that would allow it to comply with federal records management requirements. TIGTA also suggested the newly issued policy on collection and preservation of federal records of separated employees be disseminated throughout the agency.

In response to TIGTA’s report, the IRS agreed with all five recommendations. It said the deployment of a new enterprise email solution is currently underway that should allow the agency to comply with federal records management requirements. The IRS also said it has issued interim guidance on the separating employee clearing process for collecting and preserving federal records, and it has been disseminated throughout the agency.

However, an IRS official disagreed with some of the report’s conclusions. “The IRS is committed to properly retaining electronic and paper records and producing those records when requested,” wrote Edward T. Killen, director of privacy, governmental liaison and disclosure at the IRS, in response to the report. He pointed out that the National Archives and Records Administration recently found the IRS fully complied with a directive on managing government records and rated the IRS at a low risk of not managing email effectively. While he agreed with TIGTA’s recommendations, he said that for the period under audit by TIGTA, the IRS followed NARA’s guidance, which allows agencies to retain official records in paper format while transitioning to an approved system for storing records in an electronic format.

“This context and timing is important because during the time period covered by this audit, IRS policies for maintaining official records were in full compliance with NARA regulations for a paper system transitioning to an electronic system,” Killen wrote. “As such, we do not agree with your finding that IRS policies do not comply with the NARA guidelines in place during the time of this audit.”

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