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IRS failed to do background checks on contractors

Published on NewsOK Modified: August 14, 2014 at 4:05 pm •  Published: August 14, 2014
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WASHINGTON (AP) — The IRS failed to do background checks on some private contractors who handled confidential taxpayer information, exposing more than a million taxpayers to an increased risk of fraud and identity theft, a government investigator said Thursday.

In one case, the IRS gave a printing contractor a computer disk with names, addresses and Social Security numbers of 1.4 million taxpayers, but didn't require a background check for anyone who worked on the job, said a report by the Treasury inspector general for tax administration.

In another case, to transport sensitive documents the IRS used a courier who previously had spent 21 years in prison on arson and other charges. In other cases, contractors underwent background checks but weren't required to sign agreements not to disclose sensitive information, the report said.

"Allowing contractor employees access to taxpayer data without appropriate background investigations exposes taxpayers to increased risk of fraud and identity theft," the inspector general, J. Russell George, said.

IRS policy requires contractors with access to confidential taxpayer information to undergo background checks, though the policy wasn't always followed, the report said. About 10,000 private contractors have access to such information.

The report did not examine whether any of the private contractors misused taxpayer information. But the issue of identity theft has been gaining attention at the IRS and elsewhere.

In recent years the IRS has reported a big jump in thieves trying to fraudulently claim tax refunds using stolen Social Security numbers.

In 2012, the IRS issued $4 billion in fraudulent tax refunds to people using stolen identities, according to an inspector general's report released last year. That same year, the IRS blocked more than $12 billion in fraudulent refunds from going to identity thieves.

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