IRS loses track of computers

IG report

The Internal Revenue Service can't account for computers that it lent to volunteers who help the elderly and others prepare their tax returns, according to a Treasury inspector general's audit report.

The Aug. 13 report from the Treasury inspector general for tax administration comes on the heels of well-publicized reports of missing laptops from the Justice Department, the U.S. Customs Service and Defense Department.

Under its volunteer programs, the IRS lends about 6,600 desktop and laptop computers with tax preparation software to volunteers located at 18,000 sites nationwide. However, the IG did not specify how many machines might be unaccounted for.

The volunteer programs help encourage e-filing and are designed to assist elderly people and others who can't afford to pay for tax filing assistance. For the 2001 tax-filing season, volunteers prepared about 1.1 million tax returns, and more than 700,000 of those were done electronically, the audit said.

The IG audit found that the IRS:

* Cannot physically account for computers provided to volunteers. For instance, IRS did not ensure that computers obtained from external agencies, including the military, were immediately recorded in its inventory system.

* Did not ensure that taxpayer e-file data was removed from volunteer computers at the end of filing season 2001. The IG could not determine how many taxpayers whose e-file data may not have been adequately protected from unauthorized disclosure or misuse.

* Did not ensure that only authorized software was loaded on volunteer computers when provided. Some computers had software other than operating systems and the tax preparation software.

The IRS agreed with the IG recommendations and said it would take action. Among the agency's plans:

* Perform a complete inventory assessment and validate the equipment used in volunteer tax preparation programs.

* Temporarily suspend the acquisition of equipment from external sources.

* Issue instructions to territory managers to delete all taxpayer data from volunteer computers after a filing season.

* Pursue a legislative change to allow the transfer of computer ownership to organizations that deliver volunteer tax return preparation.

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