IRS Having Trouble Keeping Taxpayer Files Secure, Watchdog Says

Shown here is a 2010 tax return form. (AP)

The IRS is having problems securing personal taxpayer data and is not doing enough to prevent "unauthorized users" from accessing that information, according to a new report.

The Government Accountability Office this past week warned that the IRS continues to suffer from a "material weakness" in information security.

While the report praised the IRS for encrypting more files and taking other steps to address the problem, the GAO said the agency is still at "increased risk of compromising confidential IRS and taxpayer information."

Specifically, the report said testing showed IRS systems "did not effectively prevent access from unauthorized users or excessive levels of access for authorized users."

One of the challenges cited was the fact that the IRS still receives many "hard copy" tax returns every year, despite an increase in electronic filings. With the heap of hard-copy returns comes the risk that documents could be lost or inappropriately disclosed.

The report said some sensitive data is also still not encrypted.