The IRS's decision to destroy around 30 million unprocessed paper information returns to reduce its backlog during the pandemic was deemed to be reasonable by the Treasury Inspector General for Tax Administration (TIGTA) in a recently issued audit.

The IRS took the action in March 2021 after determining in October 2020 that it could not process all tax year 2019 paper-filed information returns by the end of the year, given other priorities, such as processing the 13.5 million backlogged tax returns to ensure that taxpayers received refunds and other outstanding tax-related benefits.

The action prompted demands for an investigation from some members of Congress and the tax professional community, Accounting Today reported, resulting in this audit.

“Given the events of 2020, the IRS is moving to expand its paper-filed information return processing capacity to include prior year filings,” the report read. “By not completing processing of the paper-filed information returns, these returns would not have been searchable and storing them would have added no value to the IRS's systemic matching compliance activities."

TIGTA also noted that the IRS destroyed these unprocessed information returns, using existing procedures for sensitive document destruction as classified waste, after obtaining opinions from the Office of Chief Counsel and the Records Office.

TIGTA recommended that the IRS coordinate with the shred contractor and implement the use of lockable bins for all classified waste at the Austin, Tex., Tax Processing Center, which the IRS did. IRS management also updated procedures to ensure that classified waste currently in unlocked bins remains in the secure extraction area until employees transfer the contents to a lockable container.

"The impact of the pandemic and its aftermath significantly affected our operations and illuminated many areas where improvements are needed," wrote Kenneth Corbin, commissioner of the IRS's Wage and Investment Division, in response to the report, Accounting Today reported. "We are committed to reducing our reliance on paper processes to the greatest extent possible, and improving the effectiveness and efficiency of tax administration for the benefit of all taxpayers."