Representative Diane Black (R-TN) blasted the IRS on Thursday after a new watchdog report found that the agency had not conducted background checks on some contractors who had access to sensitive taxpayer data.
“Americans deserve to have their personal information treated securely and with discretion, and the IRS should follow the policies that are there to protect taxpayers from fraud and identity theft,” Black, who is a member of the House Ways and Means Committee, said in a written statement. “The pattern of inexcusable behavior at the IRS is unacceptable and why we need to press for reform of this agency, especially in light of their new responsibilities overseeing Americans’ healthcare decisions. I will continue to work with my colleagues on the Ways and Means Committee to conduct necessary oversight of the IRS and to hold them accountable to the American people for their actions.”
In its report, which was released publicly on Thursday, the Treasury Inspector General for Tax Administration (TIGTA) found that taxpayer data and other sensitive but unclassified (SBU) information may have been at risk due to a lack of background investigation requirements in five contracts for courier, printing, document recovery, and sign language interpreter services.
IRS policy requires background investigations for contractor personnel who have or require access to SBU information, including taxpayer data.
During its audit, TIGTA found that in one contract for printing services, the IRS provided the contractor a compact disc containing 1.4 million taxpayer names, addresses, and Social Security numbers; however, none of the contractor employees who worked on the project were subject to a background investigation.
Additionally, TIGTA found 12 service contracts for which employee background checks were required by the contract, but some contractors did not have interim access approval or final background investigations before they began working on the contracts. Twenty contracts were also identified where some contractors had not signed nondisclosure agreements.
“Allowing contractor employees access to taxpayer data without appropriate background investigations exposes taxpayers to increased risk of fraud and identity theft,” Treasury Inspector General J. Russell George said in a written statement.
In June 2013, after the period covered by TIGTA’s audit, the IRS issued more explicit guidance indicating that all contractor personnel who require or have access to SBU information would have to complete, sign, and submit an approved nondisclosure agreement.
The IRS agreed with four of the five recommendations that TIGTA outlined in its report, including updating its incident management plan (IMP) to include procedures for emergency procurements, as well as addressing contractor background investigation concerns.
“We are committed to ensuring that background investigations are conducted for contractor personnel who have access to SBU information,” J. Stuart Burns, chief of IRS agency-wide shared services, wrote in response to the TIGTA report.
However, the tax agency disagreed that the Office of the Chief Counsel should work with the US Treasury Department’s Security Office to review the background investigation waiver issued in August 2005 and to determine if the waiver is still appropriate. That waiver exempts expert witnesses from background investigations.
“Chief Counsel is of the opinion that there is no need to revisit the waiver with regard to expert witnesses issued by the Treasury Security Office,” Burns wrote. “These witnesses do not obtain staff-like access to IRS facilities and systems. Each expert witness signs a nondisclosure agreement to make them aware of their responsibilities for maintaining confidentiality of taxpayer or SBU information. In addition to deter noncompliance, the consequences of unauthorized disclosure are outlined in the NDA. The SBU data to which they are exposed is limited and only relevant to the case at hand. The attorney responsible for the litigation carefully conducts an investigation to ensure that there is nothing in the expert’s background which could be damaging to his or her credibility.”