INTERNAL REVENUE SERVICE

10
Data Security
Who has access to your tax data?
Nikki Davis

Abstract

In this tax season, when billions of dollars and tons of personal information is relayed to and from the government, it's more than disconcerting to hear that the Internal Revenue Service is still struggling to keep private information secure.

The purpose of my study is to improve the safeguard of taxpayers’ data at the Internal Revenue Service. Due to the fact that firewalls are in place and transaction monitoring is also in place; yet, taxpayers’ data is still being exploited. It seems that the problem lies in the character of some of the employees. It is not such much that the background checks are not in depth, they are not expeditious. It may take up to 3 years to perform a full background check.
What is Data Security Data is the raw form of information stored as columns and rows in our databases, network servers and personal computers. This may be a wide range of information from personal files and intellectual property to market analytics and details intended to be top secret. Data could be anything of interest that can be read or otherwise interpreted in human form. Data security is the means of ensuring that data is kept safe from corruption and that access to it is suitably controlled. Thus data security helps to ensure privacy. It also helps in protecting personal data. In simple terms, data security is the practice of keeping data protected from corruption and unauthorized access. The focus behind data security is to ensure privacy while protecting personal or corporate data. A sound data security plan is built on five key principles:
Take stock. Know what personal information you have in your files and on your computers. Scale down. Keep only what you need for your business.
Lock it. Protect the information in your care.
Pitch it. Properly dispose of what you no longer need.
Plan ahead. Create a plan to respond to security incidents.
Internal Revenue Service History The roots of IRS go back to the Civil War when President Lincoln and Congress, in 1862, created the position of commissioner of Internal Revenue and enacted an income tax to pay war expenses. The income tax was repealed 10 years later. Congress revived the income tax in
1894, but the Supreme Court ruled it unconstitutional the following year.
16th Amendment
In 1913, Wyoming ratified the 16th Amendment, providing the three-quarter majority of states necessary to amend the Constitution. The 16th Amendment gave Congress the authority to enact an income tax. That same year, the first Form 1040 appeared after Congress levied a 1% tax on net personal incomes above $3,000 with a 6 percent surtax on incomes of more than
$500,000. In 1918, during World War I, the top rate of the income tax rose to 77 percent to help finance the war effort. It dropped sharply in the post-war years, down to 24 percent in 1929, and rose again during the Depression. During World War II, Congress introduced payroll withholding and quarterly tax payments.
A New Name
In the 50s, the agency was reorganized to replace a patronage system with career, professional employees. The Bureau of Internal Revenue name was changed to the Internal
Revenue Service. Only the IRS commissioner and chief counsel are selected by the president and confirmed by the Senate.
Today’s IRS Organization
The IRS Restructuring and Reform Act of 1998 prompted the most comprehensive reorganization and modernization of IRS in nearly half a century. The IRS reorganized itself to closely resemble the private sector model of organizing around customers with similar needs.
Security Issues at the IRS Some of the security issues faced by the Internal Revenue Service are the use of exploitation of individual tax data for personal gain, tax data browsing for personal reasons and the usage of taxpayer data to render personal favors. I found a case where a former Memphis IRS employee has been indicted on charges of filing false tax returns and stealing data from the agency. MEMPHIS — An Internal Revenue Service employee in Memphis has been indicted on charges of filing false tax returns and stealing data from the agency. The U.S. attorney’s office said in a news release today that Farrah Jones of Memphis, who was hired as a tax examining technician in 2001, used the data for returns she filed for herself and others. Prosecutors said Jones obtained dependent information from IRS files and used the data on tax returns she prepared, knowing that the taxpayers were not entitled to claim these dependents. This allegedly occurred for a year ending in February 2007. She was arrested Thursday and released on $5,000 bond.

Another issue is browsing where taxpayer data is researched for personal purposes i.e. revenge or other actions. UNAX is the code of conduct concerning unauthorized access. There are many UNAX violations case pending today. One case in particular is about s former employee who looked up data on celebrities and his neighbor just for the sake of doing it.
SAN FRANCISCO (MarketWatch) -- An IRS employee was sentenced Wednesday to three years' probation for taking a look at the tax files of almost 200 people, including famous actors, local sports celebrities, and his own next-door neighbor.
John Snyder, a 56-year-old tax agent in Covington, Ky., also must pay $1,000 and complete 60 hours of community service for sneaking a peek at the records of actors including Kevin Bacon, Alec Baldwin, Sally Field, Chevy Chase, Vanna White and Randy Quaid, plus sports figures such as Cincinnati Bengals coach Marvin Lewis and some former Cincinnati Reds players.
Snyder also checked up on five less-famous people, including his next-door neighbor, according to a release from the U.S. Attorney's Office in the Eastern District of Kentucky.
When asked what Snyder intended to do with the information gleaned from people's private tax records, Kyle Edelen, a spokesman for the U.S. Attorney's Office, said he doesn't know.

IRS workers are allowed to access the agency's database of personal tax information for work purposes only. The Treasury Inspector General for Tax Administration (TIGTA) and the IRS take the security of taxpayer data very seriously. TIGTA uses a computer-based detection program that analyzes access to tax accounts, and identifies those with potential unauthorized access (UNAX) issues. “Cases with confirmed UNAX issues or any other potential criminal violations are forwarded to TIGTA field offices for further investigation,” Russell said. TIGTA also receives allegations from taxpayers and other IRS employees. Individuals found to have committed UNAX violations are subject to federal prosecution, termination of employment, or other disciplinary action.
Another issue is taxpayer data is being used to render personal favors i.e. expediting refunds. This case scenario happens constantly so no one case record is needed.
Proposed Solution All these issues open individuals and companies to cyber-espionage — a growing concern. And they underline an issue that all companies must deal with: the need to implement a consistent approach to improving data security. The proposed solution to the above issues lies in the background investigations and the screening of potential employees. Who has access to your tax data? Many people with questionable character and low integrity are being employed by the Internal Revenue Service on a daily basis. Sometimes, the background checks do not come back until after a person has been employed for almost a year. That individual had an entire year to access personal data and damage the taxpayer’s life. The IRS is implementing STEP (Student Temporary Employment Program) this summer in several states. The minimum requirements for this program are students who are at least 16 years of age; currently enrolled or accepted as a degree seeking student with half-time or more academic course load at an accredited high school, college university, technical or vocational school; and must have a minimum 2.0 cumulative GPA. This is basically telling me that anyone in high school can have access to my tax data and yours. So, who has access to your tax data?

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[ 2 ]. http://www.spamlaws.com/data-security.html
[ 3 ]. http://en.wikipedia.org/wiki/Data_security
[ 4 ]. www.ftc.gov/infosecurity/
[ 5 ]. http://www.irs.gov/irs/article/0,,id=149200,00.html
[ 6 ]. http://www.knoxnews.com/news/2010/mar/11/irs-staffer-indicted-data-theft-filing-false-retur/
[ 7 ]. http://www.marketwatch.com/story/story/print?guid=786BACBD-C58F-481B-AE31-28C2101E7CF6