"I'm worried that just as clothes dryers have the knack of making socks disappear, the federal government has discovered a core competency of losing computers," Grassley said. "This inventory control problem is serious and must be addressed. It involves tax dollars and potentially confidential taxpayer information and data related to national security and criminal investigations."
Grassley's comments came as new information was reported about missing computer equipment at the Internal Revenue Service. An audit released today by an Inspector General at the Treasury Department reveals that the IRS cannot account for thousands of computers used by volunteers in a tax assistance program and the IRS did not make sure taxpayer information was removed from these computers after last year's filing season.
In a letter to the IRS commisioner, Grassley asked to be informed of corrective actions and offered to help with necessary legislative changes to maintain the integrity of these programs which assist lower-income taxpayer and senior citizens.
In a separate letter to the director of the Office of Management and Budget, Grassley called for aggressive action to control government inventory purchased with taxpayer dollars, along with the sensitive information, related both to national security and individual privacy, contained on government computers. During the last month, Inspectors Generals have found thousands of missing computers at federal law enforcement agencies.
The Treasury Inspector General for Tax Administration Report can be found on Grassley's website, http://grassley.senate.gov
Copies of Grassley's letters to Commissioner Rossotti and Director Daniels follow here:
August 15, 2002
The Honorable Charles O. Rossotti
Commissioner
Internal Revenue Service
1111 Constitution Avenue, Northwest
Washington, DC 20224
Dear Commissioner Rossotti:
Today, the Treasury Inspector General for Tax Administration (TIGTA) released an audit report that focuses on Internal Revenue Service (IRS) computer equipment loaned for use in Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs. As you know, the report reveals, among other things, that IRS 1) cannot physically account for computers provided to volunteers and 2) did not ensure that taxpayer e-file data was removed from volunteer computers at the end of the 2001 filing season.
TIGTA's conclusions are disturbing, to say the least. From my read of the audit report, it appears that IRS neither knows how many computers in total it loaned to VITA and TCE volunteers nor the disposition of the computers it does know it loaned to the same volunteers. As far as I can tell, potentially thousands of computers in the VITA/TCE program are unaccounted for.
The fact that IRS cannot account for this equipment is troubling, particularly given that, and I quote the TIGTA report here, "Every year since 1983 the IRS has reported a material weakness with respect to its inventory controls in its Annual Assurance Statement to the Department of the Treasury."
I appreciate that the IRS has agreed to the recommendations by TIGTA but I am concerned that words are matched by deeds. TIGTA's report notes that these problems are not new and previous TIGTA reports highlighted the issue, made suggested corrections and the IRS has not acted:
Concerns regarding the removal of taxpayer information from volunteer computers were raised in a prior TIGTA audit report ["Persistent Physical Security Vulnerabilities Should be Corrected to Better Protect Facilities and Computer Resources" (July 2001)]. Specifically, TIGTA reported the potential for unauthorized disclosure of taxpayer data if the taxpayer information is not properly removed. In its response, the IRS' SPEC management agreed that all computers must be cleared of all tax return information at the end of the filing season and planning to provide further instructions to its territory managers requiring the removal of the information.
To date, this has not been done and the same conditions exist; however, the significance is further exacerbated with the inability of the IRS to account for computers provided to the VITA/TCE program. (P. 9 emphasis added).
In your response to this report you provide various corrective actions. I would ask that you please inform my office when those corrective actions are performed.
I also extend to you my offer of assistance if there are statutory changes that would assist the IRS in addressing this matter ? specifically as it relates to the provision of computers to the VITA/TCE programs. These programs are important to hundreds of thousands of low income taxpayers and seniors and it is important that any clouds of concern be removed.
Should members of your staff have any questions about the follow up request, please encourage them to contact either Dean Zerbe or Robert Kerr of my Finance Committee staff.
Sincerely,
Charles E. Grassley
Ranking Member
August 15, 2002
The Honorable Mitchell E. Daniels, Jr.
Director
Office of Management and Budget
705 Seventeenth Street, Northwest
Washington, DC 20503
Dear Mr. Daniels:
I am writing to bring to your attention what now appears to be a government-wide problem: lost, stolen or missing computers.
In recent days we have seen Inspectors Generals' reports of the Federal Bureau of Investigation (FBI) and Customs Service having thousands of computers that are lost, stolen or missing. Earlier in the summer we learned in another Inspector General report that the Internal Revenue Service (IRS) had approximately 2,300 computers that were lost or stolen. I'm worried that just as dryers have the knack of making socks disappear the federal government has discovered a core competency of losing computers.
Today, we have another Inspector General report with another finding that thousands of computers are unaccounted for and in addition that sensitive taxpayer information may be in jeopardy. The Treasury Inspector General for Tax Administration (TIGTA) reports that the IRS cannot account for the thousands of computers that they have provided to Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs. Over 6,600 desktop and laptop computers are provided to VITA/TCE cites.
Unlike previous reports that could at least cite the number of computers lost or stolen, this report states that the situation is so poor that the IRS does not even know how many computers are missing:
The IRS developed the Information Technology and Asset Management Systems (ITAMS) to control its computer inventory in March 2001. The ITAMS database is the IRS' system of record for computer inventory control. (P. 3)
We performed a random match of 41 computers (with estimated acquisition costs from $1,082 to $3,565) from 10 listings of computer equipment obtained by SPEC [Stakeholder Partnerships, Education and Communication - - the entity that runs VITA/TCE] . . . and found that 38 (93 percent) of the 41 computers sampled were not on the ITAMS. (P. 6)
Without adequate internal controls, the computers could be lost or stolen without any knowledge by SPEC. (P. 7)
While the loss of computers is of great concern, the IRS admits that the real cost is the "value and sensitivity of the files included on the computers and their critical importance to the IRS' mission." (P. 4)
The VITA/TCE program provides valued taxpayer assistance to many low-income taxpayers as well as seniors. Thus, it is particularly disturbing that sensitive taxpayer information that was on these computers was not adequately protected. Again, the situation is so bad that TIGTA cannot even determine the number of the 1.1 million tax returns prepared under VITA/TCE in Filing Season 2001 that may be in jeopardy:
Because the location of the computers is not always included on the ITAMS and the fact that computers were not always added to the ITAMS, we could not determine the number of taxpayers whose e-file data may not have been adequately protected by the IRS from unauthorized disclosure or misuse. Information on tax forms is regarded as a prime target for identity thieves, including names, social security numbers, income, employment and bank details. (P. 9, emphasis added)
I am particularly frustrated that this problem of taxpayer information was highlighted in an earlier TIGTA report and that nothing was done in response to TIGTA recommendations to protect taxpayer information.
This most recent report highlights what appears to be a disturbing trend of government coming up short as stewards of the taxpayers money. Fortunately, Inspector General reports show that there are a few government agencies that have been exemplary in accounting for taxpayer money. Clearly, it is possible for government agencies to account for their computers.
I appreciate your good work at the Office of Management and Budget (OMB) to bring government credit card abuse under control and to consider action that will force those responsible for delinquent accounts to make good on such accounts personally. Additionally, I understand that OMB is working to improve government-wide policy with respect to relocation expenses. As you know from past correspondence, I have been troubled by earlier reports that revealed highly inappropriate use of government credit cards and questionable management of relocation expenses.
I know that your position naturally attracts criticism but I would say that I am very pleased with OMB's aggressive efforts to address these problems of government waste and fraud that I have brought to the public attention. I encourage you to similarly direct a government-wide effort to address the inability of agencies to account for the computers they have purchased with the taxpayers' money.
Thank you for your time and courtesy.
Cordially yours,
Charles E. Grassley
Ranking Member
cc: Chairman Baucus