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Audit of IRS FOIA requests shows missteps, growing backlog

A fiscal year-end audit of how the IRS handles Freedom of Information Act requests said that while the agency has made improvements, it still released private taxpayer information it shouldn’t have, and its backlog of FOIA cases is growing.

The Sept. 15 report from Michael McKenney, the Treasury Department's deputy inspector general for audit, said the IRS may have violated taxpayers' rights to receive requested information in 11.7 percent of the cases it reviewed.

"Although the IRS properly released thousands of pages” of documents requested under FOIA, "taxpayer rights may have been violated because these information requests had some information erroneously withheld,” McKenney's report said.

The IRS can withhold information from FOIA requests if the agency believes the information would interfere with an enforcement or legal proceeding, violate a taxpayer’s privacy or disclose the identity of a confidential source used in the course of an investigation.

McKenney’s investigators also said that while the FOIA backlog has "increased for the third straight year,” auditors determined that the IRS was still able to respond in a timely fashion to the bulk of the FOIA requests it received.

The IRS is currently facing two high-profile FOIA battles over Donald Trump's personal tax returns.

One, filed in August by the Democratic Coalition Against Trump super PAC said that "there is a strong public-interest case" that the IRS should release "all correspondence between Donald Trump and the agency." 

Last week, VICE News sued the IRS because the agency denied its FOIA request for Trump's tax returns.

In a statement, the news service said it wanted "any and all requests by law enforcement agencies for copies of ...Trump's individual tax returns" and "any and all records mentioning or referring to requests by law enforcement agencies for copies of individual tax returns."

Under the Internal Revenue Code, information individual taxpayers provide on their annual tax returns is confidential and is not supposed to be disclosed to outside parties, except in rare circumstances.

Taxpayers can, however, request information about their returns or designate someone, such as their accountant, to request and receive specific documents and information.

McKenney’s report said that while there are no "statutory time frames within which the IRS must respond to taxpayers’” FOIA requests for this type of information, the IRS requires its own personnel to provide a "status report” if the request can’t be completed within 30 business days.

The inspector general’s investigators said 16.4 percent of the information requests they reviewed exceeded the 30-day status update deadline.

The IRS told investigators the delays were likely due to "an oversight by the caseworkers when completing their reviews."

The report also said that, in two cases from its review sample, it discovered IRS FOIA specialists had "inadvertently disclosed sensitive taxpayer information.”

Investigators also reviewed a sample of FOIA requests for information on applications for tax-exempt status and nonprofit tax returns.

The inspector general’s report said "the information requests were processed timely and did not find any sensitive information that was inadvertently disclosed.”

In fiscal year 2015, the IRS received more than 18,000 FOIA requests on nonprofits, and took an average of 260 calendar days to respond.

In fiscal year 2016, the number of nonprofit FOIA requests fell to 4,540, and the average time to process those requests fell to 66 calendar days.

The IRS has faced a storm of criticism in recent years for targeting conservative organizations seeking nonprofit status and subjecting them to more rigorous examination of their applications.

House Republicans sought to impeach IRS Director John Koskinen for obstructing an investigation into such targeting and other perceived lapses, but agreed last week to delay a floor vote on impeachment until after the November elections.

The inspector general’s report made no recommendations to the IRS on how to improve compliance or reduce the FOIA backlog.

Edward Killen, the IRS’s privacy director, said that the IRS processed and released “hundred of thousands of pages during each fiscal year,” and that the inspector general identified "only 124 pages” that had errors out of more than 15,000 it examined.