IRS watchdog: Contractors who failed background checks maintained access to sensitive agency systems

A new IRS inspector general report says the agency continued to give 19 contractors access to sensitive systems despite failing background reports as recently as last July.

The Treasury Department’s inspector general for tax administration issued a report this week, saying, “These contractors still retained their access to one or more sensitive systems because the IRS did not take action to suspend or disable the contractors from the IRS’s systems, as required.”

IRS Commissioner Daniel Werfel — who took over the agency last April — told The Associated Press that four of the contractors have since been terminated and the others have resubmitted their paperwork and received favorable background checks, adding that “there’s no implicit implication of any kind,” he said, “that these 19 contractors compromised taxpayer information in any way.”

An IRS spokesperson said due to privacy issues they could not provide specific dates for when the issues were flagged, but said they were “promptly resolved” when identified by TIGTA.

The report comes as access to sensitive taxpayer information has sparked calls for investigations — and calls for reform on taxes for the wealthy.

In addition, the inspector general report outlined a slew of insufficiencies in the IRS security, stating that it “has repeatedly reported that a key deficiency in the IRS’s detection and deterrence processes is not ensuring that all sensitive systems are providing complete, accurate, and usable audit trail logs for monitoring and identifying unauthorized access and for other investigative purposes.”

Since 2002, TIGTA has issued seven reports that detail the IRS’s audit trail deficiencies, with the most recent report being issued in October 2023, the report states.

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