IRS Destroyed 30 Million Taxpayer Docs–Republicans Demand Explanation

Republicans say the IRS has stonewalled efforts to learn more over the past year

Committee chairman Rep. Jason Smith (R-Mo.) arrives for a House Ways and Means Committee hearing on Capitol Hill in Washington on March 10, 2023. (Drew Angerer/Getty Images)

Republicans on two major congressional panels responsible for oversight are demanding answers from the Internal Revenue Service (IRS) about its decision to destroy more than 30 million taxpayer documents.

In a letter to IRS Commissioner Daniel Werfel, House Ways and Means Committee Chairman Jason Smith (R-Mo.) and Ways and Means Subcommittee on Oversight Chairman David Schweikert (R-Ariz.) reiterated a past request for a memorandum detailing the reasoning behind the 2021 decision (pdf).

That year, the agency destroyed more than 30 million unprocessed paper-filed tax returns. Despite repeated attempts by the Ways and Means Committee—the top panel on oversight for the IRS—to learn more about the decision, the Republican chairmen said, the IRS has been uncooperative.

“We write to reiterate and renew the Committee’s multiple requests that the Internal Revenue Service (IRS) provide to the Committee on Ways and Means a copy of the decision memorandum detailing the recommendation to destroy 30 million unprocessed, paper-filed informational returns in March 2021,” they wrote, citing how they “repeatedly sought” to obtain the same information from Doug O‘Donnell, Mr. Werfel’s predecessor, but faced stonewalling from the agency and Mr. O’Donnell.

Internal Revenue Service (IRS) commissioner nominee Daniel Werfel testifies before the Senate Finance Committee during his nomination hearing in Washington on Feb. 15, 2023. (Kevin Dietsch/Getty Images)

“The Biden Administration’s refusal to respond to the Committee, engage in a substantive discussion with staff about the request, and ultimately deny access to the decision memorandum obstructs Congress’s ability to conduct our important oversight responsibilities.”

The Republicans added, “The decision to destroy information returns diligently prepared by millions of American taxpayers demands congressional oversight.”

They also said it “raises the question of whether information reporting should be scaled back to reduce the burden placed on taxpayers in reporting information the IRS does not even use.”

The allegations came to the committee’s attention on May 4, 2022, over a year after the incident, following the publication of a Treasury Inspector General for Tax Administration (TIGTA) oversight report (pdf).

In the report, TIGTA revealed the destruction of the documents in March 2021, blaming the COVID-19 pandemic for overwhelming the agency’s ability to process the returns.

At the onset of the pandemic, the report said, the IRS closed its Tax Processing Centers for the duration of March and April 2020. When the agency returned, a “significant backlog of paper-filed individual and business tax returns that remain unprocessed” had built up.

At that point, management at the IRS released a memorandum ordering employees to destroy nearly 30 million of these backlogged documents. The IRS cited system limitations that wouldn’t allow older documents to be processed in their comments to TIGTA.

‘Significant Risk to the Agency’

Approximately two weeks later, on May 17, the Ways and Means Committee requested an explanation of the decision. Within 24 hours, that request was rejected with the explanation that releasing further details would impose a “significant risk to the agency.”

The Republican chairmen characterized this as an “alarming, blanket refusal ... based on a perceived risk to the agency,” which they called “unacceptable.”

“Congressional oversight does not stop whenever the executive branch identifies a perceived risk,” Mr. Smith and Mr. Schweikert wrote.

The IRS, they said, should have sought to accommodate the panel’s request despite their concerns. But they said the agency “made no offer of an accommodation, nor did it offer to discuss a possible resolution to the matter.”

Internal Revenue Service (IRS) building in Washington on June 28, 2023 (Madalina Vasiliu/The Epoch Times)

The next month, the Republicans sent another letter to the agency, again requesting a copy of the memorandum and seeking information on how the decision to destroy so many documents would affect taxpayers and the efforts the IRS was making to improve its processes.

In July 2022, Republicans on the panel, then in the minority, filed a congressional Resolution of Inquiry directing the Treasury Secretary to provide Congress with a copy of the March 2021 memo. However, the measure was voted down by the Democrat majority on Ways and Means.

In October, unable to move forward with an investigation into the matter while they remained in the minority, Republicans sent a letter to the IRS commissioner instructing the agency to retain all pertinent documents about the decision.

The Republicans wrote, “Despite the Administration’s inadequate response to our initial requests, we expect the IRS to provide a response to the questions and respond to the request for the IRS decision memorandum previously requested by the Committee.”

The chairmen gave Mr. Werfel until 5:00 p.m. on Aug. 8 to reply to the letter and provide the requested memorandum.

The letter comes as the IRS continues to dominate the headlines for its role in an investigation into the finances of Hunter Biden, President Joe Biden’s son.

Mr. Biden has been accused of accepting millions of dollars from sources in Ukraine, Romania, and China, both in the form of cash and lavish gifts, which he failed to report to the IRS.

In June, Mr. Smith revealed allegations from an IRS whistleblower claiming that Mr. Biden had received “preferential treatment” throughout the course of the investigation, including through the form of intervention by both IRS and Department of Justice officials to protect the Bidens.

The IRS did not immediately return a request for comment.