Ordinarily, the taxpayer has the burden of proving a tax return is accurate. But when the IRS has to produce documents, its record-keeping practices are lacking. The Treasury Inspector General for Tax Administration (TIGTA) released a report on July 13, 2017, that found that the IRS' electronic record retention policies do not comply with certain Federal requirements that records remain retrievable and usable for the time period needed. For example, e-mail messages are not automatically archived for all IRS employees, and the manual methods used to counteract this gap are inadequate when computer hard drives are destroyed or damaged as media storage policies and tools change.
Federal agencies must be able to produce records within 20 business days in response to Freedom of Information Act (FOIA) requests, inquiries made by members of Congress, and in response to information requests made during the discovery phase of litigation. For about a third of all FOIA responses, the average closing time for a records request was 51 days -- more than twice the required closing time. Some records requests took significantly longer to produce, even up to two-and-a-half years. Many of the delays were a result of scattered storage and inconsistent record-keeping processes.
TIGTA made five recommendations regarding how the IRS can document and improve its records retention policies and practices in future. To read the full report, click here.