Letter from Sen. Charles Grassley (R-IA) to IRS Commissioner Charles Rossotti. Re: Lost computers at the Internal Revenue Service. Date: August 15, 2002. Source: Office of Sen. Grassley.

August 15, 2002

The Honorable Charles O. Rossotti
Commissioner
Internal Revenue Service
1111 Constitution Avenue, Northwest
Washington, DC 20224

Dear Commissioner Rossotti:

Today, the Treasury Inspector General for Tax Administration (TIGTA) released an audit report that focuses on Internal Revenue Service (IRS) computer equipment loaned for use in Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs. As you know, 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.

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.

The fact that IRS cannot account for this equipment is troubling, particularly given that, and I quote the TIGTA report here, "Every year since 1983 the IRS has reported a material weakness with respect to its inventory controls in its Annual Assurance Statement to the Department of the Treasury."

I appreciate that the IRS has agreed to the recommendations by TIGTA but I am concerned that words are matched by deeds. TIGTA's report notes that these problems are not new and previous TIGTA reports highlighted the issue, made suggested corrections and the IRS has not acted:

Concerns regarding the removal of taxpayer information from volunteer computers were raised in a prior TIGTA audit report ["Persistent Physical Security Vulnerabilities Should be Corrected to Better Protect Facilities and Computer Resources" (July 2001)]. Specifically, TIGTA reported the potential for unauthorized disclosure of taxpayer data if the taxpayer information is not properly removed. In its response, the IRS' SPEC management agreed that all computers must be cleared of all tax return information at the end of the filing season and planning to provide further instructions to its territory managers requiring the removal of the information.

To date, this has not been done and the same conditions exist; however, the significance is further exacerbated with the inability of the IRS to account for computers provided to the VITA/TCE program. (P. 9 emphasis added).

In your response to this report you provide various corrective actions. I would ask that you please inform my office when those corrective actions are performed.

I also extend to you my offer of assistance if there are statutory changes that would assist the IRS in addressing this matter -- specifically as it relates to the provision of computers to the VITA/TCE programs. These programs are important to hundreds of thousands of low income taxpayers and seniors and it is important that any clouds of concern be removed.

Should members of your staff have any questions about the follow up request, please encourage them to contact either Dean Zerbe or Robert Kerr of my Finance Committee staff at 224-5315.

Sincerely,

Charles E. Grassley
Ranking Member