A recent audit completed by the Treasury Inspector General for Tax Administration found that the IRS made the choice to destroy 30 million paper tax documents.
The reason was because the agency cannot catch up on the backlogs of paper returns from the last two years.
Destroyed documents did not include tax returns.
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Taxpayers needed these documents to properly file their tax return.
This means documents normally used for post-processing compliance are no longer available.
Taxpayers accurately report their income with these documents.
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Destroyed documents included W-2s, 1099s, and 1098s.
The IRS cannot properly check the accuracy of returns or complete audits without these documents.
Legally, the IRS can request proof and copies from taxpayers.
The audit states that efforts to modernize the processing of paper tax returns has not been a success.
There were three recommendations from the TIGTA for the IRS
- Develop a service wide strategy that will prioritize all forms for e-filing
- Create a process to look into non-compliant corporate filers
- Develop a process to make sure penalties are consistently assessed against businesses that aren’t compliant with e-filing
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