GAO Report Critical Of IRS Data Security

by Mike Godfrey, Tax-News.com, Washington

20 April 2005

The United States government financial watchdog has uncovered a worrying lack of security controls on the information collected and held by the Internal Revenue Service concerning personal taxpayer details.

It a report released to Congress on Monday, the Government Accountability Office expressed concern over the ease with which taxpayer records can be accessed and viewed by potentially thousands of unauthorized users, noting at the same time many flaws in IRS computer systems.

The report found that the agency has fixed 32 of the 53 problems identified by the GAO in 2002. However, the most recent report has uncovered an additional 39 new security flaws to add to the 21 that remain unfixed.

In another major finding, the GAO reported that barriers do not exist between information relating to money laundering and fraud investigations and ordinary tax returns, in theory allowing a law enforcement officer to scrutinise an individual's personal tax return in the course of an investigation.

The GAO found that a total of 7,500 IRS employees, law enforcement officers and outside contractors have the ability to access and modify tax returns. Alarmingly, a master list of user names and passwords is also widely available, the report stated.

"Increased risk exists that unauthorized users could...claim a user identity and then use that identity to gain access to sensitive taxpayer or Bank Secrecy Act data," the GAO report warned.

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