Washington (July 2, 2003) -- While improvements have been made in the five years since the passage of the IRS Restructuring and Reform Act, the IRS’s financial information and taxpayers’ personal information remain at risk, according to a letter from the agency’s Director of Strategic Issues.

“Until IRS effectively and fully implements its agency-wide information security program, assurance will remain limited that IRS’s financial information and taxpayers’ personal information are adequately safeguarded against unauthorized use, disclosure, and modification, and its exposure to these risks will remain unnecessarily high,” IRS Director of Strategic Issues James R. White wrote in a June 27 letter to William M. Thomas, chairman of the Joint Committee on Taxation. The letter was in response to questions posed regarding the IRS’s accomplishments in the years since the passage of the IRS Restructuring and Reform Act of 1998.

According to IRS officials, spending for security in fiscal year 2003 is about $132 million, including $39 million dedicated to information technology security improvements. For fiscal 2004, IRS officials have requested about $136 million for information technology security, with about $40 million dedicated to improvements, the letter said. A copy of the letter is available online at http://www.gao.gov/cgi-bin/getrpt?GAO-03-962R.

According to White, the challenges facing IRS in ensuring information security are largely managerial. “Ensuring that known weaknesses affecting IRS’s computing resources are promptly mitigated and that computer controls effectively protect its systems and data requires support and leadership from senior management of IRS’s information technology and operating divisions, disciplined processes, and consistent oversight,” the letter said.

The letter also outlined steps aimed at reducing Earned Income Credit overpayments. Overpayments for the EIC are estimated to be between 27 and 32 percent of dollars claimed, or between $8.5 billion and $9.9 billion, White’s letter said.

The IRS plans to test three new initiatives that cover qualifying child verification, income mis-reporting, and filing status.

-- WebCPA staff

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