IRS Improperly Withheld Info From Taxpayers 12.3 Percent of the Time

IG: Taxpayer rights may have been violated due to erroneously withheld information

IRS building / AP

The Internal Revenue Service improperly withheld information requested by taxpayers 12.3 percent of the time, according to a new government audit.

The Treasury Inspector General for Tax Administration (TITGA) reviewed the IRS’ compliance with the Freedom of Information Act (FOIA) and discovered that disclosure specialists at the agency failed to properly respond to all requests, actions that the watchdog said may have violated taxpayer rights.

TITGA looked at a statistically valid sample of 65 FOIA requests for their review and found eight cases—or 12.3 percent—in which the IRS improperly withheld requested information. Under the Freedom of Information Act, federal government agencies must make records requested by the public available unless a specific exemption is given while providing an initial response to the request within 20 business days.

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The eight instances discovered by the watchdog were found to improperly withhold "information of examination and collection activity and other tax return information that the taxpayer or authorized Power of Attorney should have received." When this number is projected to the entire population of 2,809 FOIA requests that the agency closed between Oct. 1, 2013, through Sept. 30, 2014, it equates to 346 FOIA requests that may have been erroneously withheld from the requestor.

Additionally, the audit found that the agency withheld four (7.3 percent) of the 55 Internal Revenue Code (IRC) information requests that were reviewed.

"Although the IRS properly released thousands of pages from these documents, taxpayer rights still may have been violated because these information requests had some information erroneously withheld," the report states.

Unlike FOIA requests, the agency does not have a set time frame in which they must respond to Internal Revenue Code requests. However, in 25.5 percent of these reviewed cases, the IRS took longer than 30 days to provide a response to the requestor. The number of backlogged information requests also increased for the second straight year but were answered in a timely manner, the IG notes.

In three total cases, IRS specialists inadvertently disclosed sensitive taxpayer information.

A significant problem discovered by the watchdog was that the disclosure office does not have direct control over how other functions within the agency process information requested by taxpayers and does not regularly assess the quality levels of the responses the IRS releases.

Mary J. Howard, director of governmental liaison and disclosure at the IRS, defended the agency in a written response to the IG on the report.

"Although we do not dispute those findings, it is important to understand the eight exception cases involved the release of 12,984 pages of records," she wrote. "Of those 12,984 pages identified, only 102 of those pages contained errors in under or over-withholding."