IRS Security Breach: Contractors Granted Access Despite Unfavorable Backgrounds

A recent report from the IRS inspector general has raised concerns about the agency’s handling of sensitive taxpayer information. 

Despite receiving unfavorable background reports, the IRS continued to grant access to 19 contractors to sensitive systems. 

The report, issued by the Treasury Department’s inspector general for tax administration, revealed that as of July 13, 2023, these contractors retained access despite the unfavorable ratings.

IRS Commissioner Daniel Werfel assured that actions have been taken since then, with four contractors terminated and others submitting paperwork and undergoing favorable background checks. Werfel emphasized that there is no implication that these contractors compromised taxpayer information.

However, the report comes amidst heightened scrutiny over access to sensitive taxpayer data. Recent incidents, such as former IRS contractor Charles Edward Littlejohn leaking tax information about former President Donald Trump and other wealthy individuals to news outlets, have sparked calls for investigations and reforms.

IRS Strides in Data Security

The IRS system’s weaknesses were highlighted by Littlejohn’s case, in which he disclosed information to ProPublica and The New York Times between 2018 and 2020. He carefully avoided raising suspicion within and gained unauthorized access to private information.

In response to these concerns, Missouri Rep. Jason Smith, chairman of the House Ways and Means Committee, requested a review by TIGTA. The report outlined various deficiencies in IRS security, particularly in ensuring complete and accurate audit trail logs.

Despite past shortcomings, Werfel highlighted improvements in data security, attributed to increased funding through legislative measures. He affirmed that the agency has made significant strides in enhancing security measures since 2020.

Nevertheless, the report underscored lingering challenges, including inadequate controls to detect unauthorized data access. Werfel assured that terminated contractors no longer have access to sensitive data, but acknowledged the need for continued vigilance in safeguarding taxpayer information.

As Werfel prepares to testify before the House Ways and Means Committee, the report serves as a reminder of the ongoing imperative to strengthen IRS security protocols and protect taxpayer confidentiality.