The IRS Requires Taxpayers to Keep Documentation for Years… But Can’t Do the Same

If you have ever been involved in an IRS dispute, you know that the agency expects you to maintain extensive documentation for years after filing your tax return. In many cases, you are required to keep documentation for three years… and sometimes much longer. All of this places a significant burden on average taxpayers who must find a way to organize and store this documentation for each year’s tax return. Of course, it’s even worse if you are audited – because failing to produce even the most trivial form of documentation can result in significant tax penalties.

That’s why it is so ironic that the IRS is unable, apparently, to document its own activities. There has been an ongoing dispute over alleged improper IRS targeting of political organizations, and while we are not taking sides politically, it’s shocking that the IRS is unable to produce key documentation to resolve this controversy.

A recent ABC News article reports:

The IRS said Friday that Lois Lerner’s computer hard drive was destroyed three years ago, ending any chance of retrieving her lost emails. In court papers, the IRS said the hard drive was destroyed after two sets of trained technicians tried to retrieve the data. The tax agency said it was standard procedure to destroy old data storage equipment that may have contained confidential taxpayer information.

The IRS says Lerner’s computer crashed in 2011, destroying an untold number of emails. At the time, Lerner headed the division that handles applications for tax-exempt status. Lerner is a central figure in congressional investigations into the handling of applications by tea party and other conservative groups. IRS Commissioner John Koskinen had told Congress that Lerner’s hard drive was recycled and presumably destroyed. Friday’s court filings confirmed it.

As part of a lawsuit, U.S. District Judge Reggie B. Walton ordered the IRS last week to explain what happened to the hard drive. Walton also wanted information about an inspector general’s investigation into the lost emails. Walton wanted to know the qualifications of computer experts conducting the investigation, and he wanted a projection on when the investigation will be complete.

Timothy Camus, a deputy inspector general for investigations, said in court papers that 11 special agents are on the case. However, he added, “It is not possible to give an estimated date of completion.” A Justice Department lawyer told Walton last week that there was no evidence Lerner intentionally destroyed her hard drive.

The IRS can’t produce important evidence in a legal matter because they no longer have the documentation necessary. Can you imagine if you attempted to explain your lack of documentation during an IRS audit this way? The IRS would slam you with penalties so quickly it would make you dizzy. And yet, when it comes to internal matters, the IRS can’t live up to the standards it expects from taxpayers.

If you’re facing an IRS dispute, we can help. Please contact us today and let us represent your interests in your IRS tax controversy.