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Ways and Means Holds IRS Accountable for Failed Record Retention Policies

July 25, 2017

Today, the House Ways and Means Oversight Subcommittee – chaired by Rep. Vern Buchanan (R-FL) – held a hearing to review a new report from the Treasury Inspector General for Tax Administration (TIGTA). The report found the Internal Revenue Service (IRS) fails to adequately retain electronic records, impeding Congressional oversight efforts and the IRS’s ability respond to taxpayer requests for information.

Chairman Buchanan discussed the report’s findings at the start of the hearing:

“The production of IRS emails currently relies on the IRS’s ability to search thousands of employee hard drives; or, alternatively, each employee’s ability and willingness to print and file important emails. Neither system is sustainable or reliable enough to satisfy the voluminous record requests received by the IRS.”  

As Gregory Kutz, the TIGTA Assistant Inspector General for Audit, Management Services and Exempt Organizations, explained:

“The IRS is required by federal law to retain and produce records when requested through appropriate means. However, the IRS has had challenges responding to several high-profile requests from the Congress, the public, and the courts.”

TIGTA found that in order to comply with record requests, the IRS must update its electronic record retention policies and systems. However, the Agency is struggling to modernize. As Mr. Kutz said about the IRS’s outdated systems and confusing policies:

“The current email system does not meet federal requirements for storing and managing email messages … Electronic record storage policies have changed repeatedly since May of 2013. The policy has changed from wipe and re-use information technology, to save everything, to wipe and re-use equipment for all but two parts of the IRS, to the current policy of refrain from wiping the data of any hard drive. It is not surprising that this has resulted in some confusion. Storage of tens of thousands of laptops and hard drives at dozens of locations across the country is not a sustainable record keeping solution.”

The IRS’s recent effort to modernize its enterprise email system failed when the agency spent $12 million on a new system that was not included on the existing Blanket Purchase Agreement – a simplified method of government contracting that, in this case, provides a broad range of email solutions for the federal government. The purchase was challenged through a bid protest, forcing the IRS to then purchase an entirely new system and spend even more taxpayer dollars. Rep. Jackie Walorski (R-IN) asked the IRS what steps they’re taking to ensure this waste doesn’t happen again:

Taxpayers spent $12 million on software that was never used … basically what it boils down to is you pick from something not on the list, taxpayers get stuck with a $12 million bill, and this isn’t used. So what safeguards are in place from that experience to say, ‘Oh my gosh, we made a mistake, we’re never going to do this again!’? Because in my district and fellow-Hoosiers in the State of Indiana – $12 million is a lot of money. Especially for something not used, sitting on a shelf.” 

Jeffrey Tribiano, the IRS Deputy Commissioner for Operations Support, responded saying the Agency is taking steps to protect taxpayer dollars in future purchases:

“We have a mechanism now within our procurement office that has a policy and process in place that has a secondary view of any schedule that we go to on Blanket Purchase Agreement that allows us to have that secondary sign off … I’m being briefed that it’s a successful process and that a process that happened like that in the past should not happen again within the IRS.”

Edward Killen, the IRS Director of Privacy, Governmental Liaison, and Disclosure, assured Members that the IRS is committed to complying with TIGTA’s document retention recommendations:

“We are squarely focused on making improvements because we realize that taxpayers have a right to request information of their government. And we’re committed to being able to provide that information.”

Ways and Means Members will continue their work to protect taxpayer dollars, hold the IRS accountable, and help bring the Agency into the 21st century.

CLICK HERE to learn more about today’s hearing.