Taxpayer Data at Risk as IRS Outsources Processing: Watchdog (1)

The IRS is putting taxpayer information at risk with its plan to outsource some of its paper processing to contractors, the taxpayer advocate said in her annual report Wednesday.

The push to farm the work out to private companies is part of the Treasury Department’s broader zero-paper initiative, a bid to shrink the amount of paper the agency handles. About 11 million individuals still file on paper.

The IRS entered into contracts with several companies to scan returns using optical character recognition technology, which converts paper-filed tax returns into digital, machine-readable formats, National Taxpayer Advocate Erin Collins said in her ...