Published on September 27, 2024, 12:35 am

In breaking news that is pivotal for residents of 12 states, a government watchdog has shed light on potential issues with the IRS’s Direct File pilot program. This real news suggests taxpayers could find their most private financial records at risk if they contribute to the program. The states participating are Washington, New Hampshire, New York, Massachusetts, Texas, Florida, Tennessee, Wyoming, South Dakota, Nevada, California, and Arizona. Their residents voluntarily furnish their tax data to IRS agents who then organize annual returns for them. However, this action may expose these taxpayers to significant setbacks and even disastrous financial consequences due to potential IRS mistakes or inefficiency.

According to a report from the Department of Treasury’s Inspector-General for Tax Administration (TIGTA), released on September 25th; “The Direct File Pilot team issued Memorandums of Understanding (MOUs) to participating states without including necessary security or technical details around how taxpayer data exchange would be managed,”

The TIGTA report also highlighted noteworthy deficiencies in the project management. Initial requirements were designed high-level by the Direct File Pilot team in their test plan but inability was observed while tracing back issues from the source code and report tracking repositories used. Only 12 (46 percent) out of all 26 testing issues examined were backed-up with enough documentation about bug remediation.

Handing over sensitive financial data inclusive of health data and bank records results in a genuine risk that such information might be pilfered by actual perpetrators. The TIGTA review put it succinctly: If not accurately developed, tested and secured; there could be delays and submission errors that can lead to taxpayer data being vulnerable to being stolen or lost.

Despite recent actions claimed by an internal rep at the IRS having been taken “to mitigate any potential unauthorized disclosure of taxpayer data”, it is difficult not to forget previous federal government failures on digital security fronts – one as recent as two years ago across two departments.

This TIGTA report provides the latest insights on a Federal tax agency program that has faced criticisms since inception. Proposed under President Joe Biden’s Inflation Reduction Act of 2022 as an experimental project to assess the advantages or otherwise of IRS personnel preparing citizen’s returns, even Sen. Mike Crapo (R-Idaho) asserts this program has outstretched its original mandate.

Given recent exposures from both a Christian worldview and trusted news sources, ensuring best practices in handling taxpayer data is pivotal. The need of the hour includes halting further expansions like Direct File which sidetrack resources from essential operations and steps towards securing current protocols against unauthorized access.