Is Your Social Security Number Safe?

Identity theft is rampant. It hijacks weeks and months out of victims' lives to rectify the consequences. And it costs untold losses in productivity. So it's not exactly comforting to discover that two newly implemented IRS computer systems potentially expose taxpayers' information to security and privacy hazards, according to an AP article published in today's Los Angeles Times.

A report issued by the office of the Treasury Inspector General for Tax Administration indicates that Internal Revenue Service officials failed to resolve the identified weaknesses in the programs before having activated them. According to the AP article, Inspector General J. Russell George said it was "very troublesome" that the IRS "was aware of, and even self-identified, these weaknesses" without addressing them.

Already in partial use, the two computer systems will cost U.S. taxpayers nearly $2 billion. One of the systems has "processed about 20% of the 142 billion tax returns filed," according to the AP.

The inspector's report said the problems raise the likelihood that taxpayer data and systems configurations could be illegally accessed and maliciously abused, manipulated, or hacker-attacked, or that information could be accidentally deleted or lost, without detection or effective restoration.

The IRS has said it "had implemented many of the inspector general's recommendations and taken steps to improve security. It stressed that no taxpayer data had been compromised and numerous security safeguards were in place." But is this true? Will the inspector general's office re-evaluate the systems, and when?

And, yet, the AP piece didn't address any of the following basic questions: Who in Congress was responsible for approving the funding of such poorly programmed systems? How does the IRS justify its need for these new systems? Which companies designed the systems?

As far as innovation journalism goes, the AP article is reactive rather than pro-active. And was a lack of resources the reason why the L.A. Times didn't cover the story themselves? So how likely is it that traditional journalists will follow up on this story? It's also a situation that pits the convenience of technology against human and bureaucratic fallibility. No surprise, the right kind of innovation is slow to make a dent in bureaucracies. But it will be interesting to see successful, reliable and cost-effective examples of tech innovation in the future, as "makeovers" applied to outmoded institutional systems. And what better (or more challenging) place to succeed than with the IRS and an overly complex national tax structure?

- Misako M.