IRS Contractors Retained Access to Sensitive Systems Despite Unfavorable Background Checks

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A recent report from the Treasury Department’s inspector general for tax administration reveals that the IRS continued to grant access to sensitive systems to 19 contractors, despite having received background reports that were marked as “not favorable.” This oversight allowed these contractors to retain their access to sensitive systems, as the IRS failed to take the necessary action to suspend or disable their access, as required.

The unfavorable rating was returned as recently as July 13, 2023. However, IRS Commissioner Daniel Werfel, who assumed leadership of the agency last April, reassures the public that there is no implication that these contractors compromised taxpayer information in any way. Four of the contractors have already been terminated, while the others have submitted their paperwork for reevaluation and received favorable background checks.

Specific dates for when the issues were identified have not been disclosed due to privacy concerns. However, an IRS spokesperson assures that once the problems were flagged by the Treasury Department’s inspector general for tax administration, they were promptly resolved.

Recently, Charles Edward Littlejohn, a former IRS contractor from Washington, D.C., was sentenced to five years in prison after pleading guilty to leaking tax information about former President Donald Trump and numerous affluent individuals to news outlets. Prosecutors described these leaks as unprecedented in the history of the IRS. Littlejohn strategically applied for the contractor position specifically to obtain Trump’s tax returns, and he carefully manipulated his search methods to avoid raising internal suspicions, according to court documents.

IRS Faces Security Concerns After Data Leak

In February 2023, Republican chairman of the House Ways and Means Committee, Rep. Jason Smith, reached out to TIGTA (Treasury Inspector General for Tax Administration) demanding an investigation into a recent data leak. The leaked information raises concerns about the Internal Revenue Service’s (IRS) ability to safeguard sensitive data.

To address these issues, John Werfel, representative of the IRS, is scheduled to testify in front of the House Ways and Means Committee on Feb. 15. Werfel acknowledges that the agency has made significant improvements in data security since receiving funding through Democrats’ Inflation Reduction Act. These improvements have led to a dramatic increase in the security of sensitive information, including addressing audit-trail deficiencies.

Overall, the leaked information and subsequent report raise concerns about the IRS’s ability to protect sensitive data and highlight the need for further improvements in security measures.

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