Letter from Sen. Charles Grassley (R-IA) to OMB Director Mitch Daniels.
Re: 2,300 Lost Computers by the IRS.
Date: January 7, 2002.
Source: Office of Sen. Grassley.

January 7, 2002

The Honorable Mitchell E. Daniels, Jr.
Office of Management and Budget
725 17th St. NW
Washington, D.C. 20503

Dear Mr. Daniels:

As you put the final touches on the President's budget proposal for the coming year, I am writing to you regarding the budget for the Internal Revenue Service (IRS).

I recognize that you receive many letters from members of Congress asking for increases in the budgets of various federal agencies. Thus, I know it will be a welcome change of pace to receive a letter asking that you actually take a harder look in considering the funding for an agency.

A recent Treasury Inspector General for Tax Administration (TIGTA) report highlights for me what I believe is the trend at the IRS: historical poor management of money and personnel that justifies the administration scrutinizing the recent unquestioned budget increases given to the IRS year-in and year-out.

TIGTA recently concluded a report at my request regarding missing or stolen items of IRS inventory. The results are shocking: in just the last three years alone, the IRS is missing approximately 2,300 computers.

Capitol Hill has heard a relentless call about the need for IRS modernization and the Congress has spent hundreds of millions of dollars in response. Now, we learn that the IRS is like the child who asks for a doll all year and then loses it the day after Christmas -- or in this case loses 2,300 dolls. Worse yet, the TIGTA report underscores what appears to be a carefree attitude by the IRS about losing computers purchased with taxpayer money -- the IRS doesn't even know how many of the computers are lost, stolen or damaged. Nor, does there appear to be any serious effort to hold accountable those responsible for the missing computers.

Let me be clear that the 2,300 missing computers covers only a three-year period. The problem of poor inventory control at the IRS has been around for much longer. The TIGTA report states that the IRS has reported a material weakness in inventory controls every year since 1983. In addition, the General Accounting Office (GAO) reported recently that serious weaknesses in the inventory control systems continue to prevent the IRS from having equipment information available for management purposes, and from having reasonable assurance that the assets are properly safeguarded. Finally, because of the lack of information it is unknown to what extent, if any, taxpayer information may be inappropriately released.

Sadly, all this from the IRS -- an agency that requires taxpayers to show every receipt -- can't find 2,300 computers. The IRS wouldn't accept from a taxpayer the non-answer it has given regarding the missing 2,300 computers.

Just as a taxpayer would be held accountable for missing receipts, so must the IRS be held accountable for missing 2,300 computers. It is my view that serious consideration should be given to placing a limitation on the IRS' budget until there is real improvement -- not real promises -- in inventory management.

Cordially yours,

Charles E. Grassley
Ranking Member

cc: The Honorable Paul O'Neill
Department of Treasury

The Honorable Charles Rossotti
Internal Revenue Service

The Honorable Larry Levitan
IRS Oversight Board