GAO: Security problems with e-tax filing system

WASHINGTON (CNN) -- Security holes were found in the "e-file" electronic tax filing system used by millions of people to send last year's returns to the Internal Revenue Service, according to a report prepared for Congress.

The General Accounting Office wrote that "the IRS did not implement adequate computer controls to ensure the security of its electronic filing systems" during last year's tax filing season.

About 35 million individual taxpayers last year filed their federal returns electronically.

The GAO said the IRS has since developed and implemented corrective action plans to boost security for 2001 tax filings, when even more people are expected to use e-file.

The report was requested by Sen. Fred Thompson, R-Tennessee, chairman of the Governmental Affairs Committee, who issued a statement saying the weaknesses could have allowed unauthorized people to gain access, view, and possibly modify taxpayer data.

There was no evidence in the report of any malicious security breach. But the GAO suggested the IRS might not have detected intruders, since it failed to note much of the testing activity by the GAO's investigators as they broke in.

The report said investigators were able to access a key electronic filing system using a common handheld computer.

Among the reports' findings were that the IRS had not adequately blocked outsiders from accessing e-file computers, had not securely configured e-file's computer operating systems, and had decided against scrambled or encrypted filing data that would have provided better security.

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