IRS Instructs Tax Payers To Keep Accurate Records. Meanwhile, Agency Loses $67 Million
An additional 390,000 taxpayer accounts may have been compromised after cyber criminals fraudulently accessed personal information, the Internal Revenue Service announced Friday.
The new number increases the amount of suspected targets to 720,000 since the discovery of a data breach in 2015.
In a statement released Friday, the IRS said it would notify the victims and offer them free identity-theft protection services. The news comes after a nine-month investigation, the IRS said.
"The IRS is committed to protecting taxpayers on multiple fronts against tax-related identity theft, and these mailings are part of that effort," IRS Commissioner John Koskinen said Friday.
In May, the IRS said cyber criminals used the new "get transcript" tool on the agency's website to access years of transcript history from people whose personal information they had stolen elsewhere.
Taxpayers used the tool to download about 23 million transcripts in its first few months of use at the beginning of 2015, the agency said. It used extensive security measures to keep out cyber criminals, such as asking for Social Security numbers, addresses and birthdays.
The agency said criminals used previously obtained identity information in order to trick the online tool, which been suspended since the launch of the investigation in May 2015.
Initially, the IRS reported 114,000 accessed taxpayer accounts, with an additional 111,000 accounts targeted but not accessed.
In August, they identified 220,000 more suspected compromised accounts and about 170,000 others which were unsuccessfully accessed.
"We appreciate the work of the treasury inspector general for tax administration to identify these additional taxpayers whose accounts may have been accessed. We are moving quickly to help these taxpayers," Koskinen said.
Hoo boy…this isn’t going to go over well.
The IRS has seen its summer from hell extended into autumn, as a report issued today by the Treasury Inspector General for Tax Administration (TIGTA) revealed that the Service cannot account for $67 million that was set aside in a slush fund to help pay for Obamacare.
Yup. That’s $67 million of taxpayer dollars that were spent on, well…nobody is quite sure what it was spent on, other than it appears to have used for employee workspaces and technology. In other words…Grand Theft Auto V for everyone!
Rather than bicker and argue over who spent the missing $67 million, the IRS has agreed to simply move on and prevent future misappropriations by implementing the recommendations made by TIGTA with the hopes that next time around, they’ll have a better idea of what happened to 15% of their working budget.
A new report by the Treasury Inspector General for Tax Administration is unlikely to improve the picture. This latest watchdog report covers the payment of performance bonuses to IRS employees as well as various other incentives and award payments. That may sound like a yawn except for a key fact that is likely to shock most people in the business world.
When the IRS awards performance bonuses, the report states, the IRS doesn’t distinguish between an employee who is unimpeachable and one who has been cited for misconduct. Come again, you ask? You heard right.
Cash bonuses, time off awards and other perks are awarded by the IRS. But the report says that IRS employees with misconduct and other faults still get the bonuses and other perks. This is hardly an isolated problem. The report reveals that the IRS brass handing out the awards simply did not consider employee misconduct.
How is that possible? Well, even something as fundamental as tax compliance issues–like employees of the tax agency failing to pay their own taxes–was not sufficient to nix an award. And the numbers are astounding.
Between October 1, 2010 and December 31, 2012, more than 2,800 IRS employees with recent bad conduct in their record received more than $2.8 million in cash awards, more than 27,000 hours in time-off awards, and 175 quality step increases in their IRS employment. Among these awards, more than 1,100 IRS employees with substantiated Federal tax compliance problems received more than $1 million in cash awards, more than 10,000 hours in time-off awards, and 69 quality step increases within a year after the IRS substantiated their tax compliance problem.
These weren’t isolated instances and they weren’t old and cold. The report also notes that a 1998 federal statute actually requires the removal of IRS employees who have committed certain acts of misconduct. One act is if the IRS employee willfully fails to pay federal taxes. Despite this clear statute, notes the report, the IRS doesn’t discriminate!
Is there a happy ending to this Alice in Wonderland Story? Sort of. The report says that in light of these findings, the IRS has agreed to change its policy in the future. Well, that’s progress, but did someone not see this?
In any case, soon, there will be a policy that will require the management of the IRS to consider conduct issues resulting in disciplinary action before the agency awards all types of performance awards. Who would have thought it?
Considering that the U.S. tax system is built primarily on voluntary compliance, having confidence that we have a fair and impartial tax system is pivotal. That’s one reason the IRS targeting scandal has so deeply undermined the trust people have in the tax agency. As we peel back layers from the IRS, it can seem harder and harder to apply normal standards.
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