Posted on September 5, 2022 at 4:56 AM
The Internal Revenue Service (IRS) has accidentally exposed the confidential information of about 120,000 taxpayers. The affected taxpayers filed the 990-T report, which was part of their tax returns.
The IRS 990T form is filed when reporting “unrelated business income” paid to a tax-exempt organization, such as SEP retirement accounts, IRA, or nonprofits.
Taxpayers’ Data Was Erroneously Exposed To The Public
Regular taxpayers that use the forms generally want their information to remain confidential to the filing entity. In this case, the IRS keeps this information and only uses them on tax-related filings. But nonprofits sometimes make a Form 990-T available to the public for inspection for 3 years.
The IRS stated on Friday that while sharing Form 990-T data for nonprofits, it erroneously added the data for taxpayers’ IRAs that wasn’t meant for the public.
According to the disclosure, some machine-readable (XML) Form 990-T data that were prepared for bulk download on the TEOS were not supposed to be made available to the public.
The section is usually used by people with the ability to utilize machine-readable data, but the more frequently used sections of TEOS are not affected, the IRS noted.
Social Security Numbers Of The Taxpayers Were Not Exposed
According to a report by the Wall Street Journal, the accidental data leak exposed details of 120,000 taxpayers, which include names, their reported income for the IRAs, and their contact information.
But IRS stated that the users’ important details were not included. The exposed files didn’t contain details like detailed account-holder information, individual tax returns, or social security numbers.
The WSJ also noted that an IRS research employee first discovered the error before others, including Congress, became aware of the leak.
But the IRS has confirmed that the data is no longer available to the public and they will notify all the affected taxpayers in the coming weeks. Those affected would also need to be cautious even though there is no evidence that bad actors had access to the data before they were deleted.
The agency has cited a human coding error that was not discovered on time as the reason for the accidental leak. The law under the Federal Information Security Modernization Act requires the IRS to notify the Congress of any incident involving more than 100,000 individuals.
The IRS Took Immediate Steps To Deal With The Issue
IRS acting assistant secretary for management, Anne Canfield Roth, commented on the issue. She stated that the agency took immediate steps to address the issue and there is no cause for alarm over the incident. The agency has stated that it will continue to review the incident and provide more details on the issue in the next 30 days.
IRS said it will continue to review the situation and will provide more details on the matter in the next 30 days.
The US Treasury, in a press statement, explained that the error was discovered on August 26, but it’s not clear how long the data has been available for the public to download.
The USTreasury has also ordered the IRS to quickly review its practices to prevent a situation like this in the future. It’s not clear whether bad actors were able to get the information before it was deleted from the public space.
The incident comes after Congress passed historic tax law, healthcare, and climate bill that will improve IRS’s funding for improvements.
The Agency Has Been Strengthened To Perform Better
As part of its massive health care and climate bill, the House has approved $80 billion for the tax collection agency over the next decade.
Part of the fund will be used to improve customer service, including the phone lines of taxpayers. Another part of the fund will go into updating decades-old computer systems.
However, most of the funds will be used to accelerate reinforcements. This will enable the IRS to collect more of the $600 billion in taxes that are not paid every year. The fund will enable the firm to see the loopholes and collect more taxes. Most of the unreported taxes are from rich people who always underreport their income.
When the IRS is strengthened to go after rich tax cheats, the agency could collect about $400 billion in tax over the next ten years. But Republicans are having bitter prepositions about the new IRS funding as it passed Congress along strict party lines.