IRS Fires 23 in Crackdown on Snooping

Because of widespread electronic snooping on taxpayers, the Internal Revenue Service has fired 23 employees, disciplined 349 others and counseled another 472 for unauthorized browsing through tax returns in the last two fiscal years, according to an internal IRS report released Tuesday.

Although the IRS has imposed a “zero-tolerance” policy for employees who snoop on taxpayers, the agency was harshly criticized for the relatively light punishment doled out in recent cases.

“If this kind of breach of privacy continues, it has the potential to threaten the very basis of our tax system,” said Sen. John Glenn (D-Ohio), who has introduced a bill to make unauthorized browsing of tax records by IRS employees a federal crime punishable by up to one year in prison.

In the past, IRS employees have been caught snooping on a variety of high-profile public figures, including Dolly Parton and President Clinton--and even looking at Elvis Presley’s old returns.

The snooping includes a substantial number of employees who look at their own tax records, which is forbidden by the IRS because of the potential for employees to change the data.

IRS officials said that their zero-tolerance policy does not mean that everybody who is caught violating policy is fired.

“There are mitigating circumstances,” said IRS spokesman Frank Keith. The agency strongly supports the legislation for new criminal penalties.

The snooping issue is only one measure of problems that the IRS is having protecting sensitive taxpayer information.

A General Accounting Office investigation released Tuesday showed that the IRS had lost 6,400 computer tapes earlier this year that contained data on tens of thousands of taxpayers, a reflection of serious weaknesses in its electronic and physical security systems.

GAO officials said that loss of the tapes showed sloppy handling of sensitive information and is part of a larger lack of discipline that it had uncovered in audits at five separate IRS facilities. At the IRS’ request, the GAO withheld disclosing of the most serious security breaches and where they occurred.

The GAO investigation, requested by Glenn, found instances of computer printouts containing taxpayer information that were left unattended in open areas of some facilities. It found that the IRS does not have plans for recovering electronic data lost in natural or other disasters. And it found that computer programmers have used actual taxpayer data to test new software, raising the possibility that the taxpayer records could be modified.

Keith said Tuesday that the tax agency has located 5,500 of the missing data tapes, leaving 900 still missing. Keith said that there is no evidence the remaining tapes have left IRS facilities.

But, Keith acknowledged, “there is more that we need to do to enhance security at the IRS. Nothing less than absolute security is acceptable when you are dealing with confidential taxpayer information.”

Despite two years of IRS efforts to curtail browsing, however, it is facing serious obstacles, including two recent federal court decisions that exonerated IRS employees who were caught perusing tax records.

A federal appeals court earlier this year threw out the conviction of former IRS employee Richard W. Czubinski, a former member of the Knights of the Ku Klux Klan, who admitted that he had browsed through tax records. Czubinski asserted that he was satisfying only his own curiosity and that he never disclosed the tax information to anybody, an act not covered by federal criminal statutes.

It was that case which prompted Congress to take up legislation hurriedly that would make any browsing a criminal offense punishable by up to one year in prison.

Glenn said in an interview Tuesday that he expects quick Senate approval of his bill and passage of a similar bill in the House, despite a rejection of the measure by the House last year.

“We cannot tolerate this browsing for prurient interest,” Glenn said. GAO investigators found that, while the IRS professes to have zero tolerance for browsing, the agency is grossly inconsistent in how it disciplines employees who violate the policy.

The internal IRS report shows that the number of employees investigated for snooping has been growing for the last three years, though the number of employees fired for the practice has been hovering around 1%. Just 2% to 8% of the employees investigated are exonerated, while the vast majority are either disciplined or counseled. The tax agency investigated 869 employees for snooping in fiscal 1995, 646 in 1994 and 522 in 1993.

When the issue of browsing was first disclosed two years ago, the IRS created the “Electronic Audit Research Log,” a system meant to monitor employees and prevent casual snooping.

An internal steering committee that runs that log issued a report last September which contained the disclosures on the investigations. Glenn released the report Tuesday.

Phil Brand, former IRS director of compliance and now a tax attorney at KPMG Peat Marwick in Washington, said that in many cases the IRS cannot fire employees because of tough civil service protections.

“People have appeal rights, and when they exercise those rights attorneys and unions get involved,” Brand said. “You are now in the hands of a third party.”