The Internal Revenue Service generally has adequate processes in place to prevent inadvertent disclosures of taxpayer information to unauthorized people, but it also understates the number of inadvertent disclosures it makes, according to a new government report.

The report, from the Treasury Inspector General for Tax Administration, noted that the IRS established the Return and Income Verification Services and the Income Verification Express Service programs within the Wage and Investment Division to provide tax information to taxpayers and their authorized representatives (such as tax preparers), along with federal agencies and other parties. However, TIGTA stressed that employees in these programs need to process requests for sensitive taxpayer information properly, or else personally identifiable information could be inadvertently disclosed and used to perpetrate acts such as identity theft.

The report acknowledged that the verification service units have adequate processes and procedures in place. However, TIGTA found that the number of inadvertent disclosures reported is significantly understated because disclosures are counted by incident, and the information related to each unique taxpayer involved was not recorded in the IRS’s Service-Wide Notice Information Program system as required. In addition, inadvertent disclosures were not reported within one hour of discovery, the verification services units were using inconsistent methods for documenting disclosures, and the cause of the disclosures could not be readily determined. In one location that TIGTA reviewed, the required quality review reconciliation was not routinely conducted.

Lastly, the correct process for reporting inadvertent disclosures to the IRS’s Wage and Investment Division Office of Taxpayer Correspondence was not fully documented in the Wage and Investment Division reporting procedures.

In response to the report, Debra Holland, commissioner of the IRS’s Wage and Investment Division, pointed out that the Return and Income Verification Services and the Income Verification Express Service units processed nearly 118 million requests for taxpayer information during the five years from fiscal year 2009 to 2013, and experienced only 778 incidents of inadvertent disclosure, an error rate of only 0.00066 percent.

“We agree, however, that even one disclosure of Personally Identifiable Information (PII) is significant and we appreciate your recommendations for improvements to the program,” she wrote. “We will standardize best practices throughout the campus operations and improve instructions to employees and managers on the importance of timely reporting and performing detailed reviews of the reporting process. Actions have been taken to ensure employees receive appropriate training in processing PII-sensitive requests and preventing unauthorized disclosure.”

She added that the IRS is also addressing the issue of inadvertent disclosures due to human error, such as keystroke errors, by providing self-service options for taxpayers and their representatives through transcript delivery options on, like the Get Transcript online service.

Register or login for access to this item and much more

All Accounting Today content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access