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Washington, D.C.—An independent audit citing violations of data privacy regulations by the Internal Revenue Service (IRS) reinforces the position of the National Treasury Employees Union (NTEU) that the IRS should not be permitted to turn thousands of taxpayer records over the private collection agencies, the leader of the union said today.

The report by the Treasury Inspector General for Tax Administration (TIGTA)—which found that the IRS is not complying with legislative privacy requirements and is not ensuring that the privacy of taxpayer data is being monitored adequately—is the latest in a series of reports by TIGTA and the Government Accountability Office that have highlighted internal data security problems at the IRS.

The report also found that, in 2004, the IRS received over 130 million tax returns and that information was used in 241 IRS computer systems. More than half (54 percent) of those computers did not have the required Privacy Impact Assessments (PIA), an analysis of how the personal information is handled to ensure security, the review found. And, the IRS does not have an effective system to track those assessments.

“Every independent audit of IRS internal security practices has found ongoing security failures and gaps. What further evidence do we need that taxpayer information is at serious risk?” asked NTEU President Colleen M. Kelley. “The IRS should be required to get its own house in order and not only meet, but exceed, the privacy standards. Instead, the IRS is outsourcing the sensitive and private financial information of American taxpayers to private debt collectors, increasing the risk of security breaches exponentially,” she stated.

According to the TIGTA report, “Despite the Office of Privacy and Information Protection’s efforts to increase privacy awareness and manage its program, the IRS is not complying with legislative privacy requirements and, thus, is not ensuring the privacy of taxpayer data is being tracked and monitored adequately.” The end result is “unnecessarily exposing sensitive data to theft or misuse,” the report stated.

“Sending private taxpayer financial information out-of-house is risky, costly and unnecessary,” said President Kelley. “Not only does it expose our most private information to abuse and misuse, but it costs the government more to do it this way.”

IRS Commissioner Mark Everson testified twice before Congress that using IRS employees would be less expensive than the private collection companies the agency has hired to pursue tax debts and that are retaining up to 24 percent of taxpayer payments owed to the federal government.

Under the much-criticized IRS tax debt privatization plan, private debt collectors are paid a bounty on the money they collect. Despite the frequent admissions that this is much more costly than having IRS employees perform the work, the IRS is intent not only on continuing the program, but expanding it over the next year or so from three private collectors to as many as 10.

NTEU is the largest independent federal union, representing some 150,000 federal workers in 30 agencies and departments, including 94,000 in the IRS.