IRS Destroys Millions of Tax Documents, GOP Lawmakers Seeking Answers

Rep. James Comer (R-Ky.) speaks during a committee meeting on Capitol Hill, in Washington on Sept. 30, 2020. Alex Edelman-Pool/Getty Images

Two Republican lawmakers, James Comer (R-Ky.), ranking member of the House Committee on Oversight and Reform, and Nancy Mace (R-S.C.), ranking member of the Subcommittee on Civil Rights and Civil Liberties, have written a letter asking the Internal Revenue Service (IRS) to explain the destruction of 30 million paper-filed tax documents last year.

“Committee Republicans are concerned that the destruction of these documents might slow down already inefficient processing procedures and hurt American taxpayers left unaware that the IRS destroyed documents already entrusted into its care,” the lawmakers wrote, according to the letter shared with Fox Business. “It appears that the IRS may now demand that taxpayers provide duplicate copies of information previously destroyed by the IRS.”

A report (pdf) released on May 4 by the Treasury Inspector General for Tax Administration (TIGTA) stated that the “continued inability” of the IRS to process backlogs of paper-filed tax returns led to the agency destroying the estimated 30 million documents in March 2021.

Destroyed documents include IRS forms W-2, 1098, and 1099, which are used to verify taxpayer information such as income. At the time, the IRS insisted that the destruction of the documents had “no negative taxpayer consequences,” since they had been submitted by third parties. The agency also said that no taxpayer was, or would be, subject to any penalty due to this action.

However, Republican lawmakers argue in the letter that the destruction of the documents might make it difficult for the IRS to accurately screen tax returns and might also affect tax audits.

Mace and Comer asked IRS Commissioner Charles Rettig to provide all details regarding the destruction of the documents, the legal authority the IRS relied upon to perform the action, and how the agency plans to integrate recommendations made in the TIGTA audit.

The incident attracted calls for Retting’s resignation from lawmakers such as Rep. Bill Pascrell (D-N.J.), who criticized the agency’s response.

“The manner by which we are learning about the destruction of unprocessed paperwork is just the latest example of the lackadaisical attitude from Mr. Rettig. This latest revelation adds to the public’s plummeting confidence in our unfair two-tier tax system,” Pascrell said in a May 13 statement.

“There needs to be real accountability. President Biden must replace Mr. Rettig immediately and also nominate a Chief Counsel for IRS.”

Due to the COVID-19 pandemic, the IRS faced an unprecedented amount of work in the 2021 filing season. The agency kicked off this year with more than 8.4 million unprocessed individual tax returns and transactions, according to a preliminary report by TIGTA.

Last month, Rettig testified in the Senate that his agency was taking all steps to reduce the backlog by the end of 2022, promising to start next year with a “healthy level” of inventories.