IRS destroys 30 million tax documents, insists ‘no negative taxpayer consequences’

An audit of the Internal Revenue Service found staffers destroyed 30 million taxpayer documents, as they faced a massive backlog. However, the tax collection agency says no taxpayers were adversely affected by the destruction.

The Treasury Inspector General for Tax Administration made three recommendations for the IRS to improve its processing of paper tax forms and promote more e-filing. However, the IRS disagreed with two of the recommendations.

"This audit was initiated because the IRS’s continued inability to process backlogs of paper-filed tax returns contributed to management’s decision to destroy an estimated 30 million paper-filed information return documents in March 2021," says the TIGTA report signed by Michael E. McKenney, the deputy inspector general for audit. "The IRS uses these documents to conduct post-processing compliance matches to identify taxpayers who do not accurately report their income."

The IRS issued a public statement last week regarding the inspector general report first released on May 4.

"There were no negative taxpayer consequences as a result of this action," the IRS statement says. "Taxpayers or payers have not been and will not be subject to penalties resulting from this action."

The destroyed tax documents included W-2 forms and 1099 forms, according to the inspector general. The IRS responded to the inspector general with inaccurate responses, according to the report.

"Of particular concern is the fact that the IRS does not have an accurate and comprehensive list of individual and business tax forms that are not able to be e-filed," the report says. "For example, on Sept. 16, 2020, the IRS provided us with a list identifying 365 tax forms that are not able to be e-filed. Our review identified inaccuracies with this list. There were tax forms included on the list that could be e-filed and tax forms absent from the list that could not be e-filed. When we discussed the inaccuracies of this list with IRS management, they stated they have not updated the list since calendar year 2018 due to other agency priorities and limited funding."

The IRS referred FOX Business to a public response last week, as well as the ag... (Read more)

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