Millions Of Taxpayer Records Go Missing From IRS

The Internal Revenue Service (IRS) has no idea how millions of sensitive taxpayer records have gone missing. The lost information could easily be used to commit tax refund fraud by filing false returns and committing identity theft.

The Taxpayer Inspector General for Tax Administration (TIGTA) posted a report last Tuesday detailing the loss of at least 8500 microfilm cartridges that were supposed to be transported from the Fresno, CA processing center to Kansas City. There’s also more cartridges missing from the IRS center in Ogden, UT.

The lost records contained both personal and business information. The problem is that this is only what they’ve discovered so far.

“Our review identified significant deficiencies in the IRS’s safeguarding, accounting for, and physical storage of its microfilm backup cartridges,” the report said. This includes “no reconciliation of the microfilm backup cartridges noted as being sent from closed Tax Processing Centers (like Fresno) to what was physically shipped and received.”

The report also noted significant security issues in the types of personnel having access to the records. It also showed significant gaps in the physical inventory process for the storage cartridges in question.

Let me leave you with this.

I’m sorry to say that this may just be the tip of the iceberg. I can’t tell you how many times in the past 33 years that an IRS employee has asked me to forward another copy of something because their records went missing.

These sorts of problems are only to be expected given the personnel challenges the Service has faced over the past ten years.

If you’ll remember, prior to the Inflation Reduction Act boosting their funding by $80B, there had been a hiring freeze at the Service for most of those years. Any organization that doesn’t have its basic manpower requirements covered is going to have security issues.

Exactly where all of this information is and how it went missing is still a mystery. Given the lack of security and oversight, this enigma may remain unsolved.

But I’m sure you can imagine all of it being marketed on the Dark Web.

Identity theft through filing fraudulent tax returns is a big business. The IRS stopped providing facts and figures about the enormity of the problem several years ago.

But the last time they did, it showed that almost 5% of all of the tax returns filed at the Kansas City processing center had been cloned. Millions of returns are processed there every year.

5% is a big number. We can only hope that none of our records were included on those microfilm cartridges.

We’re all going to get through this. Let’s get through it together.

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