IRS Caught in Another Troublesome Reality

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IRS

Source: web

If those lawmakers who have been determined to dissolve the Internal Revenue Service could have wished for anything to nudge their efforts forward, they are most certainly doing a jig right about now. The silly video of a group of middle-age folks on a stage, shaking their groove things in the form of a line dance was poor for the government’s image. That’s not to mention the teenagers of these people who likely wanted to shake their own embarrassed groove things to the nearest rock for shelter. It was brutal and bad (bad because they learned their happy dances on taxpayer dollars), though good for a bit of karma comedy for those same taxpayers. The IRS was – and remains – its own worst enemy.

Nixon, Obama and the IRS

Then, the huge IRS scandal broke that threatened the Obama administration in ways not seen since Nixon’s administration. Of course, damage control in this instance was more successful than the fate of the Nixon Administration. It was discovered that the IRS was targeting conservative groups for audits while also delaying paperwork and approvals for those groups.

Somehow, there are those who believe the targeting efforts were erroneously reported in the media, despite testimony made on Capitol Hill by the now-former director that his agency had indeed targeted conservative groups. And now, once again, the IRS is dealing with another catastrophic scandal. This time, it could very well affect any of us on a very personal level.

Public.Resource.org

The troubled agency posted the Social Security numbers of tens of thousands of Americans on a government website. Worse, it didn’t discover its own error, but instead, Public.Resource.org stumbled across the 100,000 names during an audit it routinely conducts on various government websites. The IRS confirmed the social security numbers were indeed placed on the database linked to a public website. The database included numbers for tax exempt political groups. These 527s were in public view.

Public.Resource.org said it stumbled across the database – or as representatives referred to as “privacy breaches” – on Tuesday. It had been working on allegations that IRS data was being stored on various DVDs, flash drives and other formats. There was no evidence of proper vetting of that data, according to the group’s founder Carl Malamud. He confirmed the massive numbers.

Meanwhile, the IRS hasn’t officially made any kind of official announcement; however, it did tell the media it had been made aware of a significant number of social security numbers that were accidentally posted on the website. It removed all access to the information and says it’s investigating how it could have happened while also looking into better solutions to ensure it never happens again.

The website’s 527 page was supposed to be brought back online Tuesday night, but at Credit Dad’s press time, it was still showing an error message.

Malamud called the breach a “serious violation of federal law” and says the time is here for government to send a “tiger team” to the IRS to “help them fix information management practices.” For some, however, that’s not enough.

Cruz Control

On Monday, Republican Texas Sen. Ted Cruz tweeted a picture of a Virginia license plate that read, “RIP IRS.” The tweet read, “Like this license plate?” He’s one of the more vocal lawmakers who is more than happy to criticize the IRS as a whole. Remember, he’s also the one who went to Washington last month to spread his message of abolishing the IRS. He’s not the only one, either.

IRS Leaks Second Database

While this is bad enough, what many don’t yet know is that on Sunday, the day before the 100,000 exposed social security numbers were found, Malamud had filed his first letter to the IRS. This time, it surrounded 3,000 990-Ts. There were at least 319 data sets that included several pieces of information that should have been scrubbed, but wasn’t. When that was discovered, Malamud sent the IRS a letter that read in part,

We’ve analyzed our logs and… the data received from the IRS. We maintain a privacy registry based on any clicks made on the privacy cover sheet on the top of each return. That registry indicates that 8 clicks were made from 4 unique IP addresses. However, none of those resulted in privacy complaints and could have been made by an automated process.

The letter goes on to say that his agency watched the activity for seven days to determine whether there was HTTP access. There wasn’t, but there were indications that at least one DVD ISO image had been transferred. In this instance, it took more than 24 hours for the IRS to respond. That didn’t bode well with Malamud’s agency. Referring to the slow response and lack of efforts in security, Malamud says it was both “unprofessional and amateur” and is now asking the Internal Revenue Service to bring down the entire database in order to ensure an accurate and complete investigation could be made.

Obamacare

One of the growing concerns about the IRS is the new powers it’s been given as part of the Obamacare law. The General Accounting Office reports that the moment Obamacare goes into law, the IRS is granted authority to 48 new laws written specifically and as part of the healthcare plan. Further, it instantly creates two dozen new or higher taxes. These tax increases include a higher capital gains and dividends tax, various new taxes on health insurance plans, taxes on FSAs and HSAs, the very controversial “medicine cabinet” tax that we are beginning to learn about as well as new taxes levied on medical device manufacturers.

To say the IRS, as a whole, is incompetent is an understatement. Regardless of whether it’s abolished or overhauled, time is not something the government nor do the American people have a lot of. With the new healthcare laws going into full force in a matter of months, the continuing scandals, lack of leadership and lack of transparency are coming together in a way that’s sure to redefine the term “the perfect storm”.

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About Author

David is a CPA and has spent the past decade as a financial adviser helping clients meet their fiscal objectives. With an appreciation for journalism, he has spent the past few years overseeing several financial columns as well as writing two previous finance blogs. He resides on the East Coast with his wife and two sons and has guided many through the recent recession while providing a no-nonsense approach to spending and saving.


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