Warning to IRS from GOP: Destruction of Taxpayer Filings is ‘Ripe for Congressional Oversight’

GOP members on the House Ways and Means Committee have asked the Internal Revenue Service (IRS) to keep all taxpayer documents related to its 2021 destruction of millions of taxpayer filings, indicating a more wide-reaching congressional inquiry is coming if Republicans take control of the House of Representatives after the November midterms.

During President Biden’s first months in office, the IRS destroyed 30 million “information returns” that were paper-filed. Small business owners and other businesses submitted the paper filings to inform the federal government of various transactions. According to the IRS, “software limitations” prevented how those returns were processed, and it was decided the filings should be destroyed.

The IRS insists that taxpayers won’t be penalized because of its decision. Still, tax experts are outraged that the federal institution decided to destroy documents that preparers took the expense and time to file. Republicans have demanded more information about what led to the disposal of the documents.

The IRS has refused to provide the decision memorandum that laid out the rationale for destroying the paper files. This week, Republicans asked for a copy of the memo in a letter to Charles P. Rettig, the IRS commissioner.

“Committee Republicans have repeatedly sought this document and information,” wrote Oversight Subcommittee Ranking Member Tom Rice, Republican from South Carolina, and Kevin Brady, R-Texas, Ways and Means Ranking Member. “The Administration’s refusal to respond to the Committee, engage in a substantive discussion with staff about the request, and ultimately deny access to the decision memorandum obstructs the Congress’ important role to conduct oversight.”

GOP demands turnover of IRS decision memo

Although the IRS has said it destroyed the paper filings because of software limitations, members of the GOP have argued that the failure to hand over the decision memo has raised suspicions that other factors may be at play leading up to the move.

In May, the Internal Revenue Service told Republicans releasing the decision memo could pose a “significant risk to the agency,” a position Rice and Brady rejected this week. “This blanket refusal from the IRS based on a perceived risk to the agency is unacceptable,” wrote Brady and Rice. “Congressional oversight does not stop whenever the executive branch identifies a perceived risk.”

Recently, Democrats on the Ways and Means Committee rejected a resolution of inquiry by the GOP, which would have served as a formal request from the House for the decision memo. However, Rice and Brady indicated in the letter that Republicans would continue to press the issue next year if the party takes control of Congress in the November midterms.

“Although Democrats voted to unfavorably report the ROI, Republicans remain committed to our duty to conduct oversight of the agency’s processing and destruction of the paper-filed returns. The decision to destroy information returns diligently prepared by millions of American taxpayers is ripe for congressional oversight,” added Brady and Rice.
The letter from the committee members requested the IRS collect and preserve any records related to the destruction of taxpayer files and asked the agency to respond to the letter by November 3.

The IRS said in May that in 2020, it processed 3.2 billion information returns, with only 1% being destroyed. According to the agency, it prioritized issuing refunds to taxpayers over inputting a small amount of information submitted on paper while emphasizing that the decision shows “significant issues posed by antiquated IRS technology.”