September 21,2023

Senate Finance Republicans: IRS Document Destruction Harmed Taxpayers

Senators request new information and responses to unanswered questions on destruction of 30 million unprocessed tax returns

Washington, D.C.—Following reports that provide troubling evidence of taxpayers who were directly harmed by the Internal Revenue Service’s (IRS) destruction of 30 million unprocessed tax returns, U.S. Senate Finance Committee Republicans, led by Ranking Member Mike Crapo (R-Idaho), are demanding information from the IRS on new and previously unanswered questions. 

From the letter:

Recently reported information demonstrates the Internal Revenue Service’s (IRS) March 2021 decision to destroy 30 million unprocessed tax year 2019 taxpayer information returns has indisputably harmed taxpayers. 

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For example, one of the recent reports provides troubling evidence of specific taxpayers who were directly harmed by the destruction of these information returns.  For these taxpayers, the IRS denied their earned income tax credit (EITC) claim based upon the mistaken belief that the taxpayers had insufficient earned income.

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Meanwhile, the IRS still officially maintains that ‘[t]here were no negative taxpayer consequences as a result of this action.’

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[However], it appears that ‘relief’ was not provided by the IRS to at least some, and potentially thousands of, taxpayers who claimed the EITC in 2019; the destruction of these unprocessed information returns was unnecessary and its direct and indirect harm is disproportionate to whatever storage costs the IRS would have incurred; to date, the IRS is systemically denying/challenging EITC claims that rely upon income reported by these destroyed information returns rather than evaluating documentation in each case; and the IRS has not responded to diverse substantive issues arising from this episode.

In addition to the unanswered questions from a previous request for information in May 2022, the senators request new information from the IRS on the impact the document destruction had on taxpayers, especially low-income taxpayers who claimed the earned income tax credit (EITC).

Read the full letter, signed by all Finance Committee Republican members, here.

Background: According to the Treasury Inspector General for Tax Administration (TIGTA), in March 2021, the IRS intentionally destroyed 30 million unprocessed taxpayer information returns due to its paper processing backlog.  While the IRS claimed there were no negative consequences as a result of this action, Finance Committee Republicans raised concerns with the agency, and asked about the potential ramifications for taxpayers.  Now, recent news reports suggest the IRS’s destruction of information likely led to several negative consequences, including the unwarranted and onerous examination of many hardworking taxpayers and denial of tax benefits they are entitled to, in some cases for multiple years.  These persons would not be helped by future changes to IRS enforcement efforts, including reducing enforcement with respect to returns claiming the EITC.