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IRS Promises Destruction of Tax Forms Won’t Lead to Penalties

May 12, 2022, 10:33 PM

Taxpayers won’t be subject to penalties as a result of the IRS’s destruction of millions of paper-filed tax forms last year, the agency said in a statement Thursday.

“There were no negative taxpayer consequences as a result of this action,” the agency said. “Taxpayers or payers have not been and will not be subject to penalties resulting from this action.”

The statement comes after the Treasury Inspector General for Tax Administration prominently mentioned in a report issued Monday that the IRS had destroyed about 30 million paper-filed information returns in March 2021, prompting outrage from tax professionals. TIGTA initially reported about the destruction of the forms in September.

The IRS uses information returns to check taxpayers are reporting their income accurately. The agency said it processed 3.2 billion information returns in 2020.

“99% of the information returns we used were matched to corresponding tax returns and processed,” the IRS said. “The remaining 1% of those documents were destroyed due to a software limitation and to make room for new documents relevant to the pending 2021 filing season.”

The IRS added the agency expects to process all paper information returns received last year and this year.

To contact the reporter on this story: Naomi Jagoda at njagoda@bloombergindustry.com

To contact the editor responsible for this story: Patrick Ambrosio at PAmbrosio@bloombergindustry.com; Butch Maier at bmaier@bloombergindustry.com

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