Tech Law Journal Daily E-Mail Alert
August 16, 2002, 9:00 AM ET, Alert No. 493.
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IRS Loses More Computers, Jeopardizes Taxpayer Info
8/15. The Treasury Inspector General for Tax Administration (TIGTA) completed an audit report that found that the Internal Revenue Service (IRS) cannot physically locate many of its computers, and that it cannot ensure that taxpayer e-file data was removed from the lost computers. This is the latest in a string of reports documenting loss of computers by federal agencies.
Sen. Charles Grassley (R-IA) wrote a letter to Office of Management and Budget (OMB) Director Mitch Daniels on August 15 to state that "the federal government has discovered core competency of losing computers".
This audit report focuses only on the IRS's Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs.
Sen. Grassley also wrote a letter to IRS Commissioner Charles Rossotti on August 15 regarding this loss of computers. He wrote that "the report reveals, among other things, that IRS 1) cannot physically account for computers provided to volunteers and 2) did not ensure that taxpayer e-file data was removed from volunteer computers at the end of the 2001 filing season."
Sen. Grassley added that "TIGTA's conclusions are disturbing, to say the least. From my read of the audit report, it appears that IRS neither knows how many computers in total it loaned to VITA and TCE volunteers nor the disposition of the computers it does know it loaned to the same volunteers. As far as I can tell, potentially thousands of computers in the VITA/TCE program are unaccounted for."
Sen. Grassley is the ranking Republican on the Senate Finance Committee, which oversees the Treasury Department and its components, which include the IRS and the Customs Service. He is also a senior member of the Senate Judiciary Committee, which oversees the Department of Justice (DOJ) and its components, including the Federal Bureau of Investigation (FBI).
Picture of Sen. Grassley.Sen. Grassley (picture at right) also wrote in his letter to Mitch Daniels that "In recent days we have seen Inspectors Generals' reports of the Federal Bureau of Investigation (FBI) and Customs Service having thousands of computers that are lost, stolen or missing. Earlier in the summer we learned in another Inspector General report that the Internal Revenue Service (IRS) had approximately 2,300 computers that were lost or stolen. I'm worried that just as dryers have the knack of making socks disappear the federal government has discovered a core competency of losing computers."
He also addressed the latest report regarding losses at the IRS's VITA/TCE programs. He wrote that "this report states that the situation is so poor that the IRS does not even know how many computers are missing".
He also stated that the report concludes that the IRS does not know how many taxpayer returns have been compromised. He wrote that "it is particularly disturbing that sensitive taxpayer information that was on these computers was not adequately protected. Again, the situation is so bad that TIGTA cannot even determine the number of the 1.1 million tax returns prepared under VITA/TCE in Filing Season 2001 that may be in jeopardy".
Sen. Grassley added that "Information on tax forms is regarded as a prime target for identity thieves, including names, social security numbers, income, employment and bank details."
Sen. Grassley has been pressuring the agencies that his Committees oversee to report and remedy rampant computer losses. He has previously addressed computer losses at the DOJ, FBI, Customs Service, and IRS.
The Treasury Inspector General for Tax Administration (TIGTA) released a report on November 29, 2001, titled "Management Advisory Report: Review of Lost or Stolen Sensitive Items of Inventory at the Internal Revenue Service". This report stated that "For the past 3 years, the IRS reported approximately 2,300 missing computers".
See also, letter of January 7, 2002, from Sen. Charles Grassley (R-IA) to Mitch Daniels, and story titled "Sen. Grassley Condemns IRS for 2,300 Missing Computers" in TLJ Daily E-Mail Alert No. 342, January 9, 2002.
See also, TLJ story titled "Customs Service Loses 2,251 Computers", August 8, 2002, and TLJ story titled "FBI Loses 317 Laptops", August 5, 2002.
Treasury Department Withholds Report on Network Security Weaknesses at IRS
8/15. The Treasury Inspector General for Tax Administration (TIGTA) completed, but did not release to the public, an audit report titled "Persistent Security Weaknesses at Internet Connections Can Be Traced to a Lack of Policies and Procedures".
The TIGTA stated that it has "has designated this report as Limited Official Use (LOU) ... Because this document has been designated LOU, it may only be made available to those officials who have a need to know the information contained within this report in the performance of their official duties. This report must be safeguarded and protected from unauthorized disclosure ..."
The report is dated August 2002. It is Reference Number: 2002-20-145. See, TIGTA release [PDF].
Bush Addresses Homeland Security Bill
8/15. President Bush gave a speech at Mt. Rushmore, South Dakota, in which he addressed, among other things, legislation to create a new Department of Homeland Security. The House passed the bill before leaving for the August recess. The Senate recessed without taking action.
He said that "I called upon Congress to join me in the creation of a Department of Homeland Security. And we're making some progress on the Department of Homeland Security. But I'm a little worried about some of the noise I hear. I don't want our hands tied so we cannot do the number one job you expect, which is to protect the homeland."
He continued that "I need to be able to ship resources without a time consuming approval process. If you're trying to defend the homeland, if you need to act quickly in response to a threat, we need to be able to move resources. We're not trying to do away with congressional authority. We're trying to have the capacity to respond to the needs of the American people. Unfortunately, the bill in the Senate right now won't let me do that."
Federal Circuit Opinions
8/13. The U.S. Court of Appeals (FedCir) issued its opinion in Abbott Laboratories v. TorPharm, a patent infringement case involving TorPharm's attempt to introduce a generic version of Abbott's Depakote, an anticonvulsant medication used to treat epilepsy, migraine headaches and bipolar disorder. The Appeals Court affirmed the District Court's rulings on validity and enforceability of the patent in suit, but vacated the grant of summary judgment of infringement, and remanded.
8/14. The U.S. Court of Appeals (FedCir) issued its opinion in Bayer v. Carlsbad Technology, a patent case involving antibiotic ciprofloxacin. The Appeals Court affirmed the District Court holding regarding the expiration date of the patent at issue.
8/15. The U.S. Court of Appeals (FedCir) issued its opinion in Bionx Implants v. Linvatec, a patent infringement case involving a surgical fastener that is used to repair tears in the meniscus of the knee. The Appeals Court vacated and remanded the District Court's summary judgment of noninfringement.
IRS Seeks John Doe Summonses for Credit Card Records
8/15. The Department of Justice (DOJ) and Treasury Department announced that the DOJ filed a petition in U.S. District Court (SDFl) seeking "approval to serve a John Doe summons on MasterCard for records on transactions using credit cards issued by banks in over 30 tax haven countries for 1999-2001." See, Treasury release.
The DOJ stated in a release that "The petition filed today seeks records relating to the years 1999, 2000 and 2001, of cards issued by banks in more than 30 countries. The 30 countries include Liechtenstein, Switzerland and numerous Caribbean nations, such as Belize, Bermuda, and St. Kitts and Nevis. Recently, a federal court in San Francisco authorized the IRS to serve a summons on Visa International for records of cards issued by banks in those same 30 countries."
Wednesday, August 21
Deadline for those persons requesting to testify at the Federal Election Commission's (FEC) August 28-29 hearing to submit comments to the FEC regarding its second Notice of Proposed Rulemaking (NPRM) [67 pages in MS Word] regarding the Bipartisan Campaign Reform Act of 2002 (BCRA), the recently enacted campaign finance reform legislation. This NPRM pertains to "electioneering communications". The proposed rules would exempt webcasts. See also, FEC release.
Thursday, August 22
RESCHEDULED FOR SEPTEMBER 5. 10:00 AM - 12:00 NOON. The Federal Communications Commission's (FCC) Advisory Committee for the 2003 World Radiocommunication Conference (WRC-03 Advisory Committee) will hold a meeting. See, notice in Federal Register, July 19, 2002, Vol. 67, No. 139, at Page 47549.  See, notice in Federal Register, August 2, 2002, Vol. 67, No. 149, at Pages 50437 - 50438, rescheduling the meeting.
People and Appointments
8/15. Federal Bureau of Investigation (FBI) Director Robert Mueller appointed Bruce Gebhardt as Deputy Director of the FBI, the second highest ranking position in the FBI. Gebhardt is currently the Executive Assistant Director for Criminal Investigations, with oversight for all criminal and cyber investigations. See, FBI release.
8/15. Dale Watson, Executive Assistant Director for Counterterrorism / Counterintelligence at the Federal Bureau of Investigation (FBI), will retire. See, DOJ release.
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