Tax & Accounting News

IRS Lost Millions of Tax Records, Watchdog Report Says

IRS Lost Millions of Tax Records, Watchdog Report Says

According to a new watchdog report, the Internal Revenue Service (IRS) has lost millions of business and individual tax records. 

Politico shared details regarding the report, which alleges that the millions of misplaced tax records were supposed to be transferred from a classified facility in California and a storage facility in Utah, but seemingly never made it to their new locations.

The issue was discovered during an audit of the IRS’s mandatory microfilm backup storage system. The Office of the Treasury Inspector General For Tax Administration (TIGTA) reported yesterday, August 10, that it discovered "significant deficiencies in safeguarding and accounting for millions of tax records that contain sensitive taxpayer information."

Credit: Zach Gibson/Stringer/Getty Images

TIGTA noted that its team discovered seven empty boxes at the IRS facility in Ogden, Utah, each of which should have been filled with 168 microfilm cartridges, containing a maximum of 2,000 images apiece.

The report indicates that onsite IRS staff were unable to point to the location of the missing cartridges. Per TIGTA, this could be because the company that created the cartridges unexpectedly closed in 2018.

In addition, the aforementioned Fresno, California facility -- which closed in 2021 -- held fiscal year 2010 tax records that were never transferred to Kansas City, Missouri, as planned.

“The personal taxpayer and tax information included on these backup cartridges is key information that can be used to commit tax refund fraud identity theft,” TIGTA noted.

The watchdog also shared that IRS staff members have been lax in performing requisite annual inventories microfilm and that storage of the microfilm boxes is not secure. The Ogden facility, for instance, reportedly keeps the boxes easily accessible on open warehouse-style shelving.

This news comes amid an IRS overhaul that is designed to provide taxpayers with better service over the course of five years. In July 2022, IRS IRS Commissioner Chuck Rettig introduced the Strategic Plan, saying:

“ "Through the Strategic Plan, we want to share our priorities and how they shape the important work that takes place at the IRS, year in and year out, to help taxpayers. We serve and interact with more Americans than nearly any other public or private organization. The IRS has undergone tremendous change over the last five years, and we continue to evolve to better serve the nation's taxpayers." ”


The Inflation Reduction Act provided the federal tax agency with $80 billion in additional funding and resources to hire 87,000 new employees.

Credit: Hisham Ibrahim/Getty Images

The Washington Post previously confirmed that $15 million of this $80 billion boon is earmarked for the development of a new government-backed free file platform that is intended to rival TurboTax and other tax preparation software options.

What do you think about this IRS misstep?

Feature Image Credit: Chip Somodevilla/Getty Images

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Rebekah Barton

Rebekah Barton

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