The IRS accidentally published 112,000 taxpayer data records twice in November due to a technical problem earlier this year.
According to reports, the problem was the fault of a third-party contractor that the IRS had employed to handle a database.
Tax Payers’ Records Leaked
The incident involves the upload of 990-T forms that contain private information used by tax-exempt entities, like government entities and retirement accounts, to pay income tax on income that originates from specific investments or that is unrelated to their exempt purpose, according to the letter sent to congressional leaders.
The Tax Exempt Organization Search (TEOS), according to the IRS, made certain Form 990-T data widely accessible for download in September 2022 even though it wasn’t supposed to be. At the time, the files were erased, and a subsequent update was intended to replace them.
This time, a contractor uploaded the files instead of adding new ones, making sure the forms were set up to be kept secret. Additionally, the contractor updated earlier files in the database with the original data. The contractor did not remove the old files from its database after receiving the corrected information from the IRS on November 23.
The IRS was unaware that the files were once again available on their website until a third-party researcher notified them. The IRS subsequently gave the contractor instructions to get rid of them immediately.
Read more: Child Tax Credit and IRS financing will be major challenges in 2023; Here’s why!
IRS Reveals Confidential Tax Return Data
Meanwhile, millionaire entrepreneur and investor Kenneth Griffin have recently launched a lawsuit against the IRS, claiming that the agency violated his right to privacy by disclosing private information from his tax return to the investigative journalism outlet Pro Publica.
His complaint states that the company knowingly and intentionally did to take the necessary precautions to protect Mr. Griffin’s tax return information by implementing proper administrative, technical, and/or physical safeguards over its records system.
The complaint further asserts that some employees took advantage of the absence of proper security by disclosing the material to Pro Publica. Griffin wants, inter alia, $1,000 in damages for each and every time his tax return information was disclosed without his permission.
Read more: Retirement withdrawals: How to avoid the IRS 50% penalty
