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IRS Wrongly Withheld Info in Hundreds of Cases, Watchdog Finds

Also improperly released taxpayer information

October 3, 2014

The Internal Revenue Service wrongly withheld or failed to adequately search for records in hundreds of Freedom of Information Act requests, while accidentally releasing sensitive taxpayer information in other instances, an independent government watchdog found.

In a review of IRS compliance with the Freedom of Information Act released Thursday, the Treasury Inspector General for Tax Administration (TIGTA) reported the agency "was not consistent in its service to individuals who requested information under the FOIA/Privacy Act."

TIGTA sampled FOIA requests to the IRS and found 11 percent "in which taxpayer rights may have been violated because the IRS improperly withheld or failed to adequately search for and provide information to the requestors."

"When the sample results are projected to their respective populations, approximately 336 FOIA/Privacy Act and 17 I.R.C. § 6103 information requests may have had information erroneously withheld," the report states.

Additionally, TIGTA found the IRS inadvertently released sensitive taxpayer information in 21 percent of the FOIA requests it sampled. TIGTA identified seven occurrences which released Personally Identifiable Information that was outside the scope of what the requestor’s Power of Attorney or designated representative was authorized to receive.

It also found six occurrences which released Personally Identifiable Information of third-party taxpayers, and two occurrences which treated taxpayer-related information (such as revenue agent reports, bank records, etc.) inconsistently by redacting information on some pages, and then releasing it on others.

The IRS FOIA backlog also increased by 84 percent in Fiscal Year 2013 over the previous fiscal year. TIGTA attributed the increase to a flurry of requests from tax-exempt organizations in June 2013. The IRS "targeting" scandal broke in May 2013.

TIGTA did not give any recommendations to the IRS, but according to the report, "The IRS agreed with the report’s results and will continue to ensure that the provisions of the FOIA, the Privacy Act, and the I.R.C. § 6103 are followed."