IRS is Latest Federal Agency to Lose Laptops

Another big batch of government computers has gone missing, this time at the Internal Revenue Service, and they could hold private taxpayer data such as Social Security numbers and bank account information.

An audit released Thursday shows the IRS is unable to account for an unknown number of the 6,600 laptop and desktop computers loaned to volunteers who assist low-income, disabled, non-English speaking and older people with their tax returns.

The audit follows similar reports that the Customs Service had lost track of some 2,000 computers and that the Justice Department was unable to find 400. An audit this summer of other IRS programs indicated 2,300 computers were missing.

Sen. Charles Grassley of Iowa, senior Republican on the Senate Finance Committee, said in a letter to the White House that the latest disclosure cries out for a "government-wide effort" to prevent computers from being lost, stolen or misplaced.

"I'm worried that just as dryers have a knack of making socks disappear, the federal government has discovered a core competency of losing computers," Grassley wrote White House budget chief Mitch Daniels.

John Dalrymple, commissioner of the IRS Wage and Investment Division, said the agency's management "recognized that inadequate internal controls and accountability over computers were areas that needed dramatic improvement."

The latest audit, from the Treasury Department's tax inspector general, examined computer equipment loaned by the IRS in 2001 for the Volunteer Income Tax Assistance and Tax Counseling for the Elderly program. About 1.1 million returns were prepared under the two programs, including 700,000 that were filed electronically.

Auditors could not account for 93 percent of computers when doing a random check of a central IRS inventory database. While that does not automatically mean the computers were lost or stolen, there is no way to be certain.

Even more troubling is that missing computers could private taxpayer data. "Information on tax forms is regarded as a prime target for identity thieves," the audit says.

In addition, the IRS could not guarantee that such information had been removed from the computer hard drives at the end of April as required.

In response, IRS officials said an inventory and consolidation of the equipment should be completed by July 2003 and that instructions have already been issued to managers to make sure taxpayer files are deleted. The agency promised a list of other improvements, some begun before the audit was made public.

Despite the agency's pledge to do better, Grassley noted that the IRS has not always taken corrective actions recommended by previous audits. "I am concerned that words are matched by deeds," Grassley said in separate letter to the IRS asking for notification when various actions are completed.