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US States Must Do More To Protect Taxpayer Privacy, TIGTA Urges

by Leroy Baker, Tax-News.com, New York

05 September 2007


A new report by the US Treasury Inspector General For Tax Administration (TIGTA) has concluded that insufficient attention has been given to ensuring that state government agencies protect taxpayer information.

TIGTA's findings were published in an audit of the Internal Revenue Service's Safeguard Review program, which is designed to ensure that states have adequate security in place so that taxpayer information doesn't become vulnerable to identity theft or other fraudulent activities.

The audit followed up a 2005 review which also noted security weaknesses with regard to federal tax information provided to state agencies. However, according to TIGTA: "Corrective actions to the prior report have not yet been taken or have not been effective to improve the scope of the Safeguard Reviews and to monitor corrective actions. Also, the IRS is not timely reporting the results of its Safeguard Reviews to the States."

The Treasury Department watchdog attributed these weaknesses to a "lack of management oversight".

During the course of the review, TIGTA became "very concerned" at the lack of management attention being directed to the Safeguard Review program. As a result, TIGTA expanded the review to assess the administration of the contract with the contractor.

The IRS signed a five-year contract with Booz Allen Hamilton to conduct further reviews of the program, but TIGTA accused the IRS of failing to oversee the contract properly.

"Controls over the contract were insufficient to ensure the Federal Government receives the services for which it contracted, on time, and in accordance with specifications," TIGTA observed.

The report stated that additional oversight for the contract is needed, so that the IRS can ensure it is prudently spending the $1.4 million designated annually for the Safeguard Review program. The IRS agreed with TIGTA's findings, and has planned a series of corrective actions to tighten security.


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