The IRS may have misplaced your tax data. It’s not the first time it’s been called careless

If you’re one of the 62 million Americans who do their taxes on their own using a site like Turbo Tax or H&R Block, you’re probably pretty familiar with that fleeting “what if” concern that you missed something, and that in turn, the IRS might be coming for you. But the IRS screwing up your taxes? That’s not typically at the top of our worry list. But maybe it should be.

According to a new watchdog report, the IRS may have lost millions of sensitive individual and business tax records. That includes data from the fiscal year 2010 that should have been transferred from a facility in California, which closed its doors, to its Kansas City processing center. It also lost thousands of records that were stored in an Ogden, Utah, facility.

This week, the Treasury Inspector General for Tax Administration (TIGTA) detailed the incidents in an alarming report. According to TIGTA, “significant deficiencies” were discovered in the IRS’s “safeguarding, accounting for, and physical storage of its microfilm backup cartridges.” The report said it found seven empty boxes at the facility in Ogden, Utah, which were supposed to contain 168 microfilm cartridges holding up to 2,000 images each. The location of the cartridges was unknown, and TIGTA noted that the vendor responsible for creating cartridges went out of business in 2018, which may have contributed to the problem.

It also noted that tax information was being stored in open-shelving areas of the warehouse, where access was not limited, and that some data could not be retrieved because it was damaged due to improper storing procedures. “The personal taxpayer and tax information included on these backup cartridges is key information that can be used to commit tax-refund fraud identity theft,” the report said. (Fast Company has reached out to the IRS for comment.)

Thirteen recommendations were made in the report, including feedback about storing and preserving the cartridges, such as temperature control. It also mentioned maintaining microfilm request logs and protocols on inventories. The report noted that annual inventories at the Austin, Kansas City, and Ogden Tax Processing Centers have not been performed. Management at the facilities couldn’t even give information about when an inventory had been performed last.

In a response to the jarring report, IRS Wage and Investment Commissioner Kenneth C. Corbin said underfunding of the agency meant employees who were responsible for the whereabouts of the cartridges had been redirected to other duties, Politico reported. He also reportedly expressed confidence that as documents continue to be processed, “the remaining cartridges will be incorporated.”

The new report is staggering, but it isn’t the first time the IRS has been accused of being careless with delicate U.S. tax data. In 2021, during the height of the pandemic, TIGTA revealed that the agency destroyed data for around 30 million payers. Tax professionals felt the incident damaged the reputation of the IRS.