House Majority Leader Dick Armey, R-Tex., criticized the IRS yesterday for disclosing confidential information which could end up costing taxpayers more than $1.3 million.
"It's my job today to hang another item of waste on the waste-o-meter," Armey said. "The Internal Revenue Service violated the privacy of 1,300 Arizona families by improperly disclosing confidential taxpayer information to a [certified public accountant] who had requested information for about 50 clients."
The IRS sent the accountant, who works in Tucson, Ariz., a computer printout with the requested information, but neglected to delete information for 1,300 other families that also appeared in the printout. Jodi Patterson, a spokeswoman for the IRS's Southwest District Office in Phoenix, said the personal information released was not current.
On April 7, Southwest District Director James J. Walsh sent a letter to affected taxpayers acknowledging the error, informing taxpayers of their right to sue the agency for damages resulting from the disclosure and offering each family a $1,000 administrative award for each disclosure.
"We recognized it was our error, and we wanted to make it easier to give them [the taxpayers] relief," Patterson said.
Each letter also contained a copy of the individual's confidential information that had been released.
In April, House Republicans unveiled the "waste-o-meter" to track wasteful government spending. The IRS incident brings the government waste tally to more than $13 billion, Armey said.
"The Internal Revenue Service has a responsibility to the American people to uphold the public trust. Instead, they violated that trust and are paying for it with the very money they are charged with collecting," Armey said.
The disclosure snafu could cost taxpayers up to $1.3 million if all 1,300 families decide to claim the $1,000 award for damages. If anyone decides to pursue the matter in court, the total cost to taxpayers could be higher.
Patterson said that as of yesterday, the agency had received 617 claims. She said each day brings fewer and fewer claims, and that some people have even called the office to decline the award, saying they didn't view the disclosure of their personal information as particularly damaging.
Patterson said that since January of this year, the IRS has held 20 disclosure training sessions for agency employees in Arizona, New Mexico and Nevada.
"We are taking this very, very seriously," Patterson said.