Treasury  Inspector General for Tax Administration

Inspections and Evaluations Highlights

Highlights of Report Number:  2016-IE-R006 to the Commissioner, Small Business/
Self-Employed Division.

WHY TIGTA DID THIS STUDY

This project was initiated to determine whether the IRS’s Offer in Compromise public inspection files contained properly redacted Taxpayer Identification Numbers, i.e., Social Security Numbers and Employer Identification Numbers.

WHAT TIGTA RECOMMENDED

TIGTA did not make any recommendations in this report because the IRS took immediate action during the evaluation.  However, TIGTA intends to conduct a follow-up review to determine whether the issues have been addressed.  Additionally, TIGTA plans to issue a second report related to the completeness of the Offer in Compromise files, the costs to administer the program, and any potential efficiencies or cost savings.  TIGTA anticipates making recommendations in the subsequent report.

In response to the report, IRS officials stated that because public viewing requests are rare, the risk that sensitive taxpayer information was exposed is minimal.  The IRS indicated it is pursuing safeguards and enhancements of Offer in Compromise public inspection file redaction procedures.  TIGTA agrees that there is limited opportunity for the disclosure of sensitive taxpayer information.  However, each taxpayer has a right to expect that the IRS will protect their sensitive information in all circumstances.  TIGTA believes that the IRS needs to be committed to safeguarding the identity of all taxpayers in administering programs, whether large or small, high-profile or little known.  Identity theft continues to be a serious and evolving issue which has a significant impact on tax administration.

Issued on March 28, 2016

LETTER REPORT:  PROCEDURES TO PROTECT TAXPAYER INFORMATION AT OFFER IN COMPROMISE PUBLIC INSPECTION FILE LOCATIONS SHOULD BE ENHANCED

IMPACT ON TAXPAYERS

The Internal Revenue Code permits public inspection and copying of accepted Offer in Compromise case files.  Once an Offer in Compromise is accepted, the IRS creates a hard copy public inspection file which is shipped to one of 10 locations around the country based on the taxpayer’s geographical residence.  To view the files, individuals must call the IRS in advance and request an appointment.  If public inspection files are not properly redacted, public inspection sites expose sensitive taxpayer information to the risk of unauthorized disclosure and put taxpayers at risk of identity theft.

WHAT TIGTA FOUND

Ineffective redaction practices put sensitive, legally protected taxpayer information at risk.  Specifically, files available for public review contained visible Taxpayer Identification Numbers.  TIGTA identified and documented more than
300 instances of visible Taxpayer Identification Numbers in files accessible to the public.  TIGTA provided the IRS with photographs of the redaction omissions and advised management to suspend public inspections until a full review could be completed.

READ THE FULL REPORT

To view the report, including the scope, methodology, and full IRS response, go to: 

https://www.treasury.gov/tigta/iereports/2016reports/2016ier006fr.pdf

 

E-mail Address:  TIGTACommunications@tigta.treas.gov

Phone Number:   202-622-6500

Website:   https://www.treasury.gov/tigta