Editorial: Oops - file not found

Friday, Oct. 19, 2007 | 8:23 a.m.

The Internal Revenue Service is losing money because it can't keep track of taxpayer files, Congress' watchdog agency recently reported.

The Government Accountability Office found the IRS regularly loses paper case files, which costs the government - and taxpayers - time and money. The report noted cases in which the IRS went to court to collect back taxes and lost because it couldn't produce the paperwork it needed as proof.

It would be expected that the IRS might lose some paperwork considering the size of the operation. The problem is the rate at which paper case files disappear. The GAO reported the IRS could not produce 10 percent to 14 percent of the paper files it requested. The report also said the Treasury Department's inspector general made random requests for IRS files and received only about one in five requested.

The GAO reported that when the IRS loses files , it often puts the onus on the taxpayers , demanding that they resubmit paperwork the agency lost, creating what the GAO called an "unnecessary taxpayer burden."

Sen. Chuck Grassley, R-Iowa, the ranking member of the Finance Committee and a longtime critic of the IRS, said this was "not a new problem" and said the report should embarrass the IRS.

"If the tables were turned, and it was the taxpayer losing his records, the IRS would have zero tolerance," said Grassley, who with Finance Committee Chairman Sen. Max Baucus, D-Mont., requested the GAO report. "When it's the IRS losing taxpayer records, it appears to be just another day at the office."

That is inexcusable, and Congress should make sure that changes.