The objective of this review was to determine whether the Internal Revenue Service (IRS) had established adequate controls to protect the privacy rights of applicants and employees who are interviewed during background investigations. We discussed background investigation interview procedures with managers in the Department of the Treasury, the National Background Investigation Center (NBIC), the Personnel Security Branch; the Office of Personnel Management (OPM), the Oversight and Technical Assistance Office; and IRS, Personnel Security Office. We initiated this review based on concerns raised by Treasury Inspector General for Tax Administration (TIGTA) employees about the propriety of questions asked by NBIC investigators during personal subject interviews.

We reviewed a judgmental sample of 29 of the 96 reports of personal subject interviews and supporting documentation for single scope background investigations (SSBIs) that were initiated between January 5 and December 10, 1999. The individuals interviewed were applicants for positions with the IRS or IRS employees requiring top secret security clearances. NBIC investigators conducted the 29 personal subject interviews between February 11 and December 8, 1999. Our review was limited to analysis of documentation maintained in the official background investigation files at NBIC in Florence, Kentucky.

This limited-scope review was performed between January 3 and February 25, 2000 and, except for the scope limitation described above, in accordance with Government Auditing Standards. Major contributors to this report are listed in Appendix I. Appendix II contains the Report Distribution List.

Individuals selected for certain sensitive positions in the IRS require security clearances for access to top secret information. The NBIC conducts SSBIs on these individuals to obtain information that is used to determine whether the individuals meet the standards established for access to top secret information.

The SSBIs include the completion of a Questionnaire for National Security Positions (Standard Form 86) by applicants and employees. Persons completing the Standard Form 86 provide information on areas such as residences, educational experiences, employment activities, relatives and associates, foreign activities, mental health, criminal activities, and use of illegal drugs and alcohol. Personal subject interviews with applicants and employees are one method used by NBIC investigators to confirm the accuracy of the information provided on the Standard Form 86.

NBIC investigators may have violated the privacy rights of applicants, employees and third parties by asking questions that were not relevant to accomplish legitimate agency activities and/or purposes. During our review, Personnel Security management implemented corrective action to address this problem. Personnel Security management revised training materials to eliminate questions that were not relevant, and they provided this training to NBIC investigators.

The Privacy Act requires agencies to maintain, collect, use or disseminate only such information about an individual that is relevant and necessary to accomplish an authorized purpose of the agency. OPM guidelines expressly limit the scope of the personal subject interview to the questions listed on the Standard Form 86. The OPM allows extra coverage for certain positions, including law enforcement positions. For example, individuals in law enforcement positions can be asked about their physical health. The Department of the Treasury directs bureaus to establish formal, uniform procedures for conducting subject interviews, which conform with OPM guidelines. All questions should be limited to the scope and nature of the questions on the security forms. National Security Directive 63 established a 10-year time frame for certain questions, including questions involving education.

Based on the documentation in the reports of interviews, we determined that NBIC investigators routinely asked 11 potentially inappropriate questions. These questions did not specifically correlate to information listed on the Standard Form 86, were for periods outside the 10-year time frame, or were only relevant for law enforcement positions.

For example, applicants and employees are required to provide basic information on post high school education within the last 10 years, last education above high school, and all degrees obtained. NBIC investigators asked for more detailed information about educational activities, including information about academic and disciplinary problems even when the post high school education occurred more than 30 years ago.

Except for a question on participation in protest marches, the questions came from an interview guide developed for NBIC investigators when the NBIC was part of the former Inspection Service in the IRS. NBIC investigators were using this interview guide in 1999. The interview guide included a relevant question on whether the person had ever been involved in riots or unlawful civil disorders. This question was expanded in a background investigation basic training instructor guide to include any involvement in protest marches. (Appendix III lists the potentially inappropriate questions and the number of times each question was asked.)

While we were performing our field work, Personnel Security management revised the interview guide to eliminate the potentially inappropriate questions, except for:

• Medical assistance received while in a foreign country.
• Appearance of the person’s name in any police files for any reason for individuals applying for or in law enforcement positions.

Personnel Security management also provided training on the revised interview guide to NBIC investigators on February 8, 2000.

In addition to the corrective actions already implemented, we recommend that Personnel Security management:

1. Remove the two remaining potentially inappropriate questions from the revised interview guide.
2. Include steps in the background investigation review process to ensure any documented responses to potentially inappropriate questions are identified and removed.

Management's Response: IRS management disagreed with our recommendations for the following reasons.

1. Personnel Security management opposed eliminating the question concerning medical assistance received while in a foreign country because the ability to safeguard classified information is critical to national security. The purpose of this inquiry is to determine if an individual being considered for a national security clearance was at any time provided medical treatment where he/she may have come to the attention of a hostile foreign intelligence service, particularly if the person was not in complete control of his/her medical facilities. Such incapacitation could result in one’s inability to control the disclosure of information. IRS management also opposed eliminating the question concerning law enforcement personnel names appearing in police files, since an employee’s credibility as a government witness is mission-critical.
2. IRS management responded that they will not review previously closed investigations for the purpose of deleting information because it is closely protected and subject to review prior to any authorized release.

Appendix IV contains the IRS’ complete response to the findings and recommendations presented in a draft of this report.

1. We believe that, for the stated purpose, the question of medical assistance received while in a foreign country is both too broad and underinclusive. For example, the question would require employees to disclose medical assistance received from an American physician abroad, but not assistance provided in the United States by a physician who is a citizen of another country (hostile or otherwise).

We also believe that the question of an employee's name appearing in police files for any reason is also too broad. IRS management contends this information is necessary to satisfy its disclosure responsibilities under Treasury Order 105-13 (Giglio Policy). However, in our opinion, this blanket inquiry is inappropriate because it asks for information that does not reflect on the employees’ truthfulness or bias and, therefore, is not within the scope of Giglio. For example, charges that were unsubstantiated or resulted in exoneration generally are not considered impeachment information and thus do not reflect upon employees’ truthfulness or bias, according to the Treasury Order.

While we understand the underlying rationale for these two questions, as currently written we believe they extend beyond the stated government interests. Personnel Security management should reconsider its position. A reasonable alternative would be to narrow the scope of the questions to address the IRS’ specific interests, thus protecting employees’ legitimate privacy rights.

2. We believe IRS management misinterpreted our recommendation to include steps in their review process to identify and remove any documented responses to potentially inappropriate statements. This recommendation was intended for future background investigations, not a review of previously completed investigations. Implementing this recommendation will strengthen adherence to the Standards for Internal Control in the Federal Government, and provide greater assurance that inappropriate questions and documentation are not being asked by investigators or retained in case files.

NBIC investigators asked potentially inappropriate questions during personal subject interviews based on an interview guide. These questions may have violated the privacy rights of applicants, employees and third parties. The corrective actions already taken by management to address this problem, together with management’s reconsideration of our recommendations in this report, will improve adherence to applicable laws and regulations, and the focus and quality of personal subject interviews.

Maurice S. Moody, Associate Inspector General for Audit (Headquarters Operations and Tax Exempt Programs)

John Wright, Director

Daniel Cappiello, Audit Manager

Albert Sleeva, Senior Auditor

Carole Connolly, Auditor

Deputy Commissioner Operations C:DO

Chief, Agency-Wide Shared Services A

Chief, Personnel Security Office A:PSO

National Director for Legislative Affairs CL:LA

Management Controls Coordinator A:W

Office of the Chief Counsel CC

Office of the National Taxpayer Advocate C:TA

Director, Office of Program Evaluation and Risk Analysis M:O

Office of Management Controls M:CFO:A:M

The response has been removed due to its size. To see the complete response, please go to the Adobe PDF version of this report on the TIGTA Public Web Page.