The IRS says it exposed some confidential taxpayer data on the website

WASHINGTON—The Internal Revenue Service accidentally posted information that is usually confidential about about 120,000 people before it discovered the error and removed the data from its website, officials said Friday.

The data comes from Form 990-T, which is often required for people with individual retirement accounts who earn certain types of business income within those retirement plans. This typically includes people whose IRAs are invested in primary limited partnerships, real estate or other income-producing assets, not those whose IRAs are invested exclusively in securities.

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The disclosures included names, contact information and financial information about the income within these IRAs. It did not include Social Security numbers, complete individual income information or other data that could affect a taxpayer’s credit, the Treasury Department determined, according to a letter the administration is sending to key members of Congress on Friday.

Like most individual tax returns to the IRS, these forms are supposed to be confidential. However, charities with so-called unrelated business income must also file Form 990-T, and those filings are supposed to be open to the public.

The IRS and Treasury blamed a human coding error that occurred last year when Form 990-T began being filed electronically. The non-public data was accidentally included in the public data and was all available for search and download on the organization’s website. The Wall Street Journal, which regularly analyzes nonprofit tax returns, downloaded at least some of the data before it was removed.

An IRS investigator discovered the mistake in recent weeks, sparking a broader investigation and leading to the data being removed. As required by federal law governing major information security incidents, the IRS notified Congress on Friday. Affected taxpayers will be notified in the coming weeks.

“The IRS continues to review this situation,” Anna Canfield Roth, Treasury’s deputy secretary for management, told lawmakers in a letter Friday. “The Treasury Department has directed the IRS to conduct an expedited review of its practices to ensure that the necessary safeguards are in place to prevent unauthorized data disclosures.”

The IRS has long struggled with aging IT systems and occasional disclosures of individual taxpayer information.

Last year, the news organization ProPublica released tax information for many of the wealthiest and highest-earning Americans, sparking investigations. So far, it is unknown where this data comes from.

Write to Richard Rubin at richard.rubin@wsj.com

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It appeared in the September 3, 2022 print edition as “IRS Says Exposing Some Taxpayer Data”.

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