A report by the Treasury Department's inspector general faults the Internal Revenue Service for its management of taxpayer records.

"The Internal Revenue Service has a responsibility to control and manage a variety of sensitive records, including taxpayer information," said the report. "However, the IRS Records Management Program Office did not have adequate controls in place to fulfill this responsibility."

The Treasury Inspector General for Tax Administration said it could not determine if the IRS records management practices were in full compliance with existing laws and regulations. The report warned of the risk that taxpayer services and enforcement functions could be hindered or delayed if the IRS records were not available to conduct business.

TIGTA credited the IRS records office with making some improvements, but cautioned that there needed to be better oversight and training. The IRS said it agreed with some of TIGTA's recommendations and has taken some steps already, but TIGTA wasn't sure if the IRS's recent realignment of some of the records management responsibilities would meet its goals.

In a separate report, TIGTA reviewed the security controls at two private tax collection agencies and found that their controls were adequate. Files were securely transmitted from the IRS to the contractors and adequately secured on the contractors' systems to prevent unauthorized copying of taxpayer information to removable media or transfer via e-mail.

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