Information security is an important consideration for any organization that depends on information systems and computer networks to carry out its mission or business. The dramatic expansion in computer interconnectivity and the rapid increase in the use of the Internet are changing the way our government, the nation, and much of the world communicate and conduct business. However, without proper safeguards, these developments pose enormous risks that make it easier for individuals and groups with malicious intent to intrude into inadequately protected systems and use such access to obtain sensitive information, commit fraud, disrupt operations, or launch attacks against other computer networks and systems. Further, the number of individuals with computer skills is increasing, and intrusion, or hacking, techniques are readily available and relatively easy to use. The rash of cyber attacks launched in February 2000 against major U.S. firms illustrates the risks associated with this new electronic age. Computer-supported federal operations are also at risk. Our previous reports, and those of agency inspectors general, describe persistent computer security weaknesses that place a variety of critical federal operations, including those at IRS, at risk of disruption, fraud, and inappropriate disclosure. This body of audit evidence led us, in 1997 and again in 1999 reports to the Congress, to designate computer security as a governmentwide high-risk area. It remains so today. How well federal agencies are addressing these risks is a topic of increasing interest in both the Congress and the executive branch. This is evidenced by recent hearings on information security, recent legislation intended to strengthen information security, and the President’s January 2000 National Plan for Information Systems Protection. As outlined in this plan, a number of new, centrally managed entities have been established and projects initiated to assist agencies in strengthening their security programs and improving federal intrusion-detection capabilities. In its role as the nation’s tax collector, IRS has a demanding responsibility in collecting taxes, processing tax returns, and enforcing the nation’s tax laws. IRS processes more than 150 million tax returns, accounts for approximately $1.9 trillion in collections, and pays about $185 billion in refunds to taxpayers annually. To efficiently fulfill its tax processing responsibilities, IRS places extensive reliance on interconnected computer systems to perform various functions, such as collecting and storing taxpayer data, processing tax returns, calculating interest and penalties, generating refunds, and providing customer service. Due to the nature of its mission, IRS collects and maintains a significant amount of personal and financial data on each American taxpayer. These data typically include the taxpayer’s name, address, social security number, dependents, income, source of certain types of income, and certain deductions and expenses. The confidentiality of this sensitive information is important because American taxpayers could be exposed to a loss of privacy and to financial loss and damages resulting from identity theft and financial crimes should this information be disclosed to unauthorized individuals. IRS’ e-file program offers taxpayers an alternative to filing traditional paper returns. With e-file, a taxpayer may file an electronic tax return (1) through a tax professional who is also an authorized IRS e-file provider, (2) through a personal computer to an e-file transmitter, or (3) over the telephone. The e-file program is beneficial because IRS receives tax and information returns in electronic form and does not have to manually enter data into its computer systems as it does with paper returns. IRS has asserted that data on electronic tax returns cost less to process and are more accurate than on paper returns, taxpayers receive refunds faster, and taxpayer privacy and security are assured. The number of individuals filing returns electronically is increasing. During 2000, IRS reported that over 35 million individual taxpayers, about 20 percent more than the previous year, filed their returns electronically. The number of e-file individual returns represented about 28 percent of all individual returns projected to be filed during 2000. The IRS Restructuring and Reform Act of 1998 established a goal that 80 percent of all tax and information returns be filed electronically by 2007. In an attempt to meet this goal, IRS has aggressively marketed the e-file program and has authorized private firms and individuals to be its e-file trading partners. These partners include electronic return originators, who prepare electronic tax returns for taxpayers, and transmitters, who transmit the electronic portion of a return directly to IRS. Except for taxpayers who file electronic returns using telephones, IRS does not allow individual taxpayers to transmit their electronic tax returns directly to the agency. Electronic filers must use the services of an IRS trading partner. The Director, Electronic Tax Administration, is responsible for overseeing IRS’ electronic tax programs, including e-file, and for improving taxpayer awareness of electronic tax administration products and services. The Chief Information Officer has overall responsibility for developing, operating, and securing IRS information systems including those used for electronic filing. The Director, Submission Processing, is responsible for processing electronically filed tax returns. Computer access controls are key to ensuring that only authorized individuals gain access to sensitive and critical agency data. They include a variety of tools, such as telecommunications and network control devices, including secure dial-in and firewalls, which can be used to prevent or limit inappropriate access to information system resources; passwords, intended to authenticate authorized users; and encryption, which can be used to keep the contents of a message or data file confidential if security is breached. IRS did not adequately safeguard tax return data on e-file computers. Our tests, conducted in May 2000, showed that access controls over IRS’ electronic filing systems were not effective in adequately reducing the risk of intrusions and misuse of electronically filed taxpayer data. We demonstrated that unauthorized individuals, both internal and external to IRS, could have viewed and modified electronically filed taxpayer data on IRS computers. For example, we were able to access a key electronic filing system using a common handheld computer. We identified weaknesses that, if exploited during the 2000 tax filing season, could have allowed unauthorized individuals to have viewed, copied, or modified files containing electronically filed tax return data before they were sent to the IRS mainframe computer for further processing and to have viewed, altered, deleted, or redirected network traffic. In summary, during the 2000 tax filing season, IRS did not effectively restrict external access to its computers supporting the e-file program. A firewall and similar perimeter defenses are an organization’s first line of defense against outside intrusion. However, IRS had not installed effective perimeter defenses to protect its e-file computers. IRS did not securely configure the operating system on its e-file computers. We demonstrated, for example, that the operating system permitted the use of several risky and unnecessary services that could have aided an intrusion attempt. IRS did not implement adequate password management and user account practices on its e-file computers. We identified serious weaknesses in IRS’ controls over the confidentiality and complexity of its passwords and in the administration of its user accounts. For example, we were able to guess many passwords based on our knowledge of commonly used passwords. We also found user-IDs and passwords that were posted in clear view on a monitor in an unsecured area at one IRS data processing facility. Poor password management and user account practices increased the risk that unauthorized individuals could determine password and user account combinations to gain unauthorized access to IRS e-file systems. IRS did not sufficiently restrict access to computer files and directories containing tax return and other system data. We determined that certain e-file system users with no need for access to electronically filed tax return data could have viewed and modified that data, contrary to IRS’ “need to know” policy. In addition, we determined that all system users had the capability to modify numerous files on e-file computers, including sensitive data and system files, leaving those files much more susceptible to inadvertent or deliberate unauthorized modification. IRS did not encrypt tax return data while the data were stored on e-file computers. The Internal Revenue Manual requires that cryptography be used for protecting information systems from the threat of intruders gaining access by way of remote telephone systems, a threat applicable to e-file computers. IRS did not ensure the protection of sensitive business, financial, and taxpayer data on other critical systems in its servicewide network during the 2000 tax filing season. Weak controls over internal IRS networks could have allowed intruders to use e-file computers to gain unauthorized access to other IRS systems. Certain network control devices—largely intended to protect other internal IRS computer systems from unauthorized access— were not effectively configured or deployed to prevent such intrusions. For example, IRS personnel “turned off” (bypassed) the network control devices in order to speed up the processing of electronic tax returns. However, these actions exposed other systems attached to IRS’ wide area network to unauthorized access. Along with the results of our computer control reviews at several IRS facilities, we determined that control weaknesses over other IRS networks and systems increased the risk of successful intrusions into those other systems. Even strong controls may not block all intrusions and misuse, but organizations can reduce the risks associated with such events if they take steps to promptly detect intrusions and misuse before significant damage can be done. Documenting and analyzing security problems and incidents are effective ways for organizations to gain a better understanding of threats to their information and operations and of the costs of their security-related problems. Such analyses can pinpoint vulnerabilities that need to be addressed to help reduce the risk of similar intrusions and misuse. While IRS stated that it did not have evidence that intruders accessed or modified taxpayer data on its e-file systems, its capabilities for detecting intrusions and misuse resulting from the exploitation of vulnerabilities on e-file systems during the 2000 tax filing season were not adequate. IRS did not record certain key events in system audit logs, did not regularly review those logs for unusual or suspicious events or patterns, and had not deployed software to facilitate the detection and analysis of logged events. For example, IRS did not recognize or record much of the activity associated with our test activities. These serious access control weaknesses existed because IRS had not taken adequate steps during the 2000 tax filing season to ensure the ongoing security of electronically transmitted tax return data on its e-file systems. For example, IRS had not followed or fully implemented several of its own information security policies and guidelines when it developed and implemented controls over its electronic filing systems. It decided to implement and operate its e-file computers before completing all of the security requirements for certification and accreditation. Also, IRS had not fully implemented a continuing program for assessing risk and monitoring the effectiveness of security controls over its electronic filing systems. IRS’ senior management moved promptly to address the access control weaknesses related to electronic filing. In meetings with senior IRS management and technical staff, we alerted IRS to significant security vulnerabilities identified by our testing that warranted immediate remediation. This interaction was productive. IRS developed corrective action plans that identified the specific actions required to improve the security over e-file computers and IRS internal networks. According to IRS officials, they have completed most of the planned improvements, including correction of the critical vulnerabilities, in time for the 2001 tax filing season. IRS officials stated that they have revamped the e-file system architecture, installed effective perimeter defenses, improved their configuration management practices, strengthened password controls, reconfigured the operating systems of e-file systems, established a process to identify excessive file permissions, added intrusion-detection capability, and made certain management changes. IRS stated that its actions demonstrate that it has taken a systematic, risk- based approach to correcting these weaknesses. Such an approach is important in helping to ensure that improvement efforts are effective and appropriate. It is also important that these actions to strengthen technical controls be supported by improvements in the way IRS continually manages information security. As part of our normal follow-up review of IRS’ implementation of the recommendations contained in this report, we will test the effectiveness of IRS’ recent improvement actions. Application controls should be designed and implemented to help ensure the reliability of data processed by the application. Such controls help make certain that transactions are valid, properly authorized, and completely and accurately processed. IRS believes that electronically filed tax returns are more accurate than paper returns for several reasons. For example, commercial software used by taxpayers to prepare electronic returns contains mathematical formulas and edit routines that can help to reduce computational errors on returns. Electronic returns also eliminate the data entry errors associated with typing paper return data into IRS’ tax processing systems. In addition, IRS has implemented many application controls that were designed to enhance the reliability of data processed by e-file computers. However, we identified additional opportunities to strengthen application controls for IRS’ processing of electronic tax return data. These opportunities are discussed below. A key control relating to the authenticity and accuracy of a tax return is the taxpayer’s signature and certification that the return is true, correct, and complete to the best of the taxpayer’s knowledge and belief. IRS requirements state that taxpayers who file tax Form 1040 electronically must submit this signature and certification to IRS on Form 8453. Certain taxpayers participating in an IRS pilot program may use an IRS-provided personal identification number to authenticate their electronically filed return in lieu of submitting Form 8453. IRS processed electronic tax returns and paid refunds even when it did not receive a signed Form 8453 or when a personal identification number was not used to authenticate the return. This practice is inconsistent with the IRS practice of withholding payments for refunds claimed on unsigned paper returns. Agency statistics through August 24, 2000, showed that IRS did not receive Forms 8453 for almost 1.2 million—about 3 percent—of tax returns filed electronically during the 2000 tax filing season and that about 93 percent of electronically filed returns were entitled to a refund or had no balance due. According to IRS, the average refund issued for the 1999 tax filing season for on-line filers was $2,041, and for practitioner-prepared electronic returns, $1,910. Based on these statistics, IRS paid refunds of about $2.1 billion on electronic tax returns that were not authenticated by taxpayers as of August 24, 2000. Further, according to agency criminal investigators, the absence of a signed Form 8453 may preclude perjury prosecutions against taxpayers who provide false information on electronic tax returns. Unless electronic returns are supported with a signed Form 8453 or a personal identification number before paying claimed refunds, IRS is vulnerable to paying improper refunds based on unauthenticated electronically filed tax returns. Another control activity involves identifying erroneous data at the point that it enters the application system, or at some later point in the processing cycle. This is accomplished through a process called data validation and editing. Programmed validation and edit checks are key to this process and are generally performed on transaction data entering the system (before the master files are updated) and on data resulting from processing. We identified several instances in which an e-file system did not detect erroneous or invalid data in our test transactions. For example, an e-file system did not detect several arithmetical errors and inconsistent data or amounts between related data fields on the Form 1040 and the attachments. As a result, there was an increased risk that IRS did not detect certain erroneous or inconsistent data on electronically filed tax returns. An essential control for ensuring the integrity of a computer application is to prevent software programmers and developers from having access to the application in the production environment. Denying such access to software programmers and developers can help to reduce the risk of unauthorized changes to production programs and data. However, a software developer was capable of viewing and modifying taxpayer data on production e-file computers during the 2000 tax filing season. In addition, software development tools were installed on those computers. As a result, there was an increased risk last year that the software developer could have introduced unauthorized programs, made unauthorized changes to production programs, and viewed or modified electronically filed taxpayer data on e-file computers. Taxpayers who electronically file tax returns may not have been aware that transmitters could view and modify taxpayers’ electronic tax return data and that such data are transmitted to IRS in clear text. Transmitters have this level of access because IRS decided (1) not to allow taxpayers to file most electronic returns directly with IRS, (2) to require taxpayers who elect to file electronically to use the services of third-party transmitter, and (3) not to accept electronic tax returns in encrypted form. Also, taxpayers may not have been aware of other risks related to electronic filing. Links provided on the IRS Web site to certain IRS trading partners emphasized the use of state-of-the-art encryption when electronic filers send tax information over the Internet to IRS trading partners, but these links did not disclose that the trading-partner-to-IRS portion of the data transfer was sent in clear text. Thus, taxpayers who prepared their electronic tax returns and sent the returns in an encrypted form to a transmitter for transmission to IRS may not have known that the transmitter could have viewed, modified, or copied their tax returns, or that their returns were transmitted to IRS in clear text. Similarly, taxpayers who used the services of an electronic return originator to prepare their electronic returns may not have realized that their returns were sent to IRS in clear text or that the electronic return originator may have sent their returns to a transmitter for transmission to IRS. As a result, taxpayers may not have been fully informed as to which businesses and individuals could have viewed, modified, and copied the personal and financial data contained on their electronically filed tax returns. IRS did not adequately inform taxpayers of other risks related to filing electronic tax returns. Although IRS noted that it did not endorse the products, services, or privacy or security policies of its electronic filing trading partners, IRS asserted in promotional materials on e-file that the security and privacy of tax return data filed electronically was “assured.” However, the security and privacy of such data were subject, in part, to the (1) effectiveness of the transmitters’ security controls over their computing environments and (2) character of the transmitters’ employees who had access to the taxpayer data. IRS had no assurance about the security of transmitter systems that contained or transmitted tax return data to IRS’s e- file systems, including whether users of such systems were properly authorized, and had only limited assurance about the character or background of the transmitters. Other than providing guidance about protecting certain passwords, IRS did not prescribe minimum computer security requirements for transmitters and did not assess or require an independent assessment of the effectiveness of computer controls within the transmitters’ operating environment. IRS monitored transmitters for compliance with the applicable revenue procedure and e-file program requirements. According to IRS, monitoring may have included reviewing e-file submissions, investigating complaints, scrutinizing advertising material, visiting offices, examining files, observing office procedures, and conducting annual suitability checks. However, IRS did not assess computer security over transmitters’ computer systems as part of its monitoring efforts. In addition, although IRS stated it performed an annual suitability check of its trading partners, including e-file transmitters, most were not subjected to criminal background or fingerprint checks. The Treasury Inspector General for Tax Administration reported in September 1999 that although IRS improved the 1998 suitability screening process, the overall process was not completely successful in preventing inappropriate e-file trading partners from participating in the e-file program. For example, IRS had approved individuals to be e-file trading partners who had unpaid tax liabilities, filed tax returns late, filed false tax returns, or had been assessed Trust Fund Recovery penalties. Importantly, however, transmitters and electronic return originators may be subject to criminal or civil penalties if they improperly disclose or misuse tax return information. A number of serious control weaknesses in IRS’ electronic filing systems placed personal taxpayer data in IRS’ electronic filing systems at significant risk of unauthorized disclosure, use, and modification during last year’s tax filing season. IRS recognized the importance of promptly addressing these weaknesses and stated that it has taken steps to correct them prior to the current tax filing season. Ensuring that ongoing controls over electronic filing are effective requires top-management support and leadership, disciplined processes, and consistent oversight. IRS’ efforts to achieve the goal that 80 percent of all tax and information returns be filed electronically by 2007 must be balanced with the need to adequately ensure the security, privacy, and reliability of taxpayer and other sensitive information. Failure to maintain adequate security over IRS’ electronic filing systems could erode public confidence in electronically filing tax returns, jeopardize IRS’ ability to meet the 80 percent goal, and deprive IRS of the many benefits that electronic filing offers. The following recommendations are based on information security weaknesses identified during last year’s 2000 tax filing season. As noted in this report, IRS has acted to correct critical weaknesses prior to the 2001 tax filing season. We will assess the effectiveness of these corrective actions as part of our normal follow-up review. We recommend that the IRS Commissioner direct the Chief Information Officer to complete efforts to implement an action plan for strengthening access controls over IRS electronic filing systems and networks. To assist in this effort, we have provided technical recommendations that addressed specific access control weaknesses that IRS should address as part of its efforts. Because of the significance of the electronic filing systems to the future operations of IRS, we also recommend that the Chief Information Officer periodically report to the Commissioner on progress made to implement this action plan and on the results of efforts to continually monitor the risks and effectiveness of security controls over IRS electronic filing systems and electronically filed taxpayer data. We also recommend that the IRS Commissioner direct the Chief Information Officer to complete actions required for the certification and accreditation of an fully implement procedures to assess risks and monitor the effectiveness of security controls over IRS’ electronic filing systems on an ongoing basis; enhance the edit and data validation routines in an e-file system to detect erroneous or invalid data on electronically filed tax returns; and improve the integrity of the e-file production environment by removing software development tools from the production environment, if feasible, or restricting access to the tools to the minimum number of users who require it and disallowing developers access to production environments and taxpayer data. We recommend that the Commissioner direct the Director of Submission Processing to implement an alternative means for taxpayers to authenticate electronically filed returns or to strengthen procedures for receiving signed Forms 8453 for electronically filed tax returns. We recommend that the Commissioner direct the Director of Electronic Tax Administration to provide notice to taxpayers concerning (1) transmitter access to electronic tax return data in clear text and (2) electronic transmission of tax returns to IRS in clear text. In commenting on a draft of this report, the Commissioner of Internal Revenue stated that the report accurately identified areas that needed strengthening during last year’s filing season and that IRS initiated timely actions to strengthen important security controls when the audit findings were brought to its attention. He further indicated that IRS has completed actions for correcting all of the critical access control vulnerabilities we identified and for certifying the systems. As a result, the Commissioner stated, the electronic filing systems now satisfactorily meet critical federal information security requirements to provide strong controls to protect taxpayer data and that taxpayers can feel safe and secure using e-file during the 2001 filing season. The Commissioner added that the report’s findings and GAO’s assistance have been instrumental in supporting IRS’ continuing efforts to improve its computer security capabilities. The Commissioner’s written response indicated that it has taken or will take appropriate steps to implement eight of our nine recommendations. IRS’ Director of Security Evaluation and Oversight stated orally that IRS has taken corrective action to resolve the final recommendation. We will assess the effectiveness of IRS’ corrective actions as part of our normal follow-up review on recommendations. In addition to responding to our recommendations, the IRS Commissioner provided additional comments about IRS’ security program, our report, and other controls over electronic filing. We addressed these comments in appendix II. As agreed with your office, unless you publicly announce the contents of this report earlier, we will not distribute it until 30 days from the date of this letter. At that time, we will send copies to Senator Joseph Lieberman and other interested congressional committees. We will also send copies of this report to the Honorable Paul H. O’Neill, Secretary of the Treasury; the Honorable Charles O. Rossotti, Commissioner of Internal Revenue; and the Honorable Mitchell E. Daniels, Jr., Director of the Office of Management and Budget. Copies will be made available to others upon request. If you have questions about this report, please contact me at (202) 512-3317 or by e-mail at DaceyR@gao.gov. Key contributors to this assignment were West Coile, Hal Lewis, Karlin Richardson, and Gregory Wilshusen, (202) 512-6244, WilshusenG@gao.gov. Our objective was to assess the effectiveness of key computer controls that were designed to ensure the security, privacy, and reliability of IRS’ electronic filing systems and electronically filed taxpayer data. To accomplish our objective, we applied appropriate sections of our Federal Information System Controls Audit Manual (GAO/AIMD-12.19.6), which describes our methodology for reviewing information system controls that affect the confidentiality, integrity, and availability of computerized data. To assess the security over IRS’ electronic filing systems and privacy of electronically filed taxpayer data, we tested the effectiveness of key computer access controls over electronic filing systems, reviewed IRS policies and procedures, researched prior reports by IRS’ Internal Audit and the Treasury Inspector General for Tax Administration, interviewed system administrators and program officials, assessed the design and architecture of e-file systems, and examined the operating system configuration and control implementation for electronic filing systems’ host computers and network servers, routers, and control devices. In addition, we attempted to exploit identified control weaknesses to verify the vulnerabilities they presented. We also met with officials at IRS national offices to discuss the possible reasons for the vulnerabilities we identified and their plans for future improvement. To assess the reliability of electronically filed tax return data processed by e-file systems, we examined controls designed to ensure that electronically filed tax return data were valid, properly authorized, and accurately and completely processed. In addition, we reviewed IRS policy and procedures; examined application system documentation; interviewed system and security administrators, users, and officials at selected IRS facilities; observed procedures and controls in place; examined transaction source documents and control documents; processed test transactions and assessed results; and inspected application logs and reports. We also assessed IRS’ information system general controls and their impact on these applications. We performed our review at several IRS facilities and at our headquarters in Washington, D.C., at various times from July 1999 through August 2000, in accordance with generally accepted government auditing standards and our Federal Information System Controls Audit Manual. 1. We have previously reported that although IRS has made significant strides in improving computer security at certain facilities, an effective computer security management program had not yet been fully implemented across the service. 2. We agree that the report does not focus on the likelihood of the threats occurring and focuses on the risks associated with the threats. However, we do not believe the report’s message unreasonably promotes undue concern about the risks associated with electronic filing. In our view, we are presenting the facts about certain risks that accompany electronic filing−risks that may or may not be present in paper filing, and risks that the public is entitled to know. Because of its role as the nation’s tax collector, IRS’ computer systems may be a target for certain individuals or groups. Our tests, which successfully identified and exploited weaknesses in IRS’ e-file computers, were not sophisticated. It is important to note that IRS immediately recognized the seriousness of the weaknesses we identified and said it has taken prompt action to correct all of the critical vulnerabilities. 3. We neither state nor imply that sending data unencrypted over public switched networks is an unacceptable risk. However, we continue to believe that the risk of unauthorized disclosure is greater when electronic tax returns are transmitted in clear text than in encrypted text. It is important to note that IRS regulations require encryption and secure dial-in for remote access from the public switched telephone network to any IRS system that contains sensitive data. 4. As noted in the report, although IRS did not have evidence that intruders accessed or modified taxpayer data on its e-file systems, its capabilities for detecting intrusions and misuse resulting from the exploitation of vulnerabilities on e-file systems during the 2000 tax filing season were not adequate. 5. The Treasury Inspector General for Tax Administration reported in September 1999 that although IRS improved the 1998 suitability screening process, the overall process was not completely successful in preventing inappropriate e-file trading partners from participating in the e-file program. 6. We recognize in the report that IRS performs annual suitability checks and monitors its trading partners. However, we continue to believe that taxpayers have a right to know that IRS does not subject most of its trading partners to criminal background or fingerprint checks and does not assess computer security over transmitters’ computer systems as part of its monitoring efforts. 7. We do not believe that “total assurance” is necessary, only full disclosure. At the time IRS asserted on its Web page that taxpayers’ “privacy and security are assured,” we identified serious access control weaknesses over IRS electronic filing systems that could have allowed unauthorized individuals to view and modify taxpayer data. Further, IRS had no assurance about the effectiveness of computer controls within the transmitters’ operating environments—environments that affect the privacy and security of electronically filed tax return data. We believe that IRS should inform taxpayers of the risks as well as the benefits of filing electronic tax returns so they can make informed decisions on the tax filing method that is appropriate for them. The first copy of each GAO report is free. Additional copies of reports are $2 each. A check or money order should be made out to the Superintendent of Documents. VISA and MasterCard credit cards are accepted, also. 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Summary: A number of serious control weaknesses in the Internal Revenue Service's (IRS) electronic filing systems placed personal taxpayer data in IRS' electronic filing system at significant risk of unauthorized disclosure, use, and modification during the 2000 tax filing season. IRS recognized the importance of promptly addressing these weaknesses and stated that it has taken steps to correct them prior to the current tax filing season. Ensuring that ongoing controls over electronic filing are effective requires top-management support and leadership, disciplined processes, and consistent oversight. IRS' efforts to achieve the goal that 80 percent of all tax and information returns be filed electronically by 2007 must be balanced with the need to adequately ensure the security, privacy, and reliability of taxpayer and other sensitive information. Failure to maintain adequate security over IRS' electronic filing systems could erode public confidence in electronically filing tax returns, jeopardize IRS' ability to meet the 80 percent goal, and deprive IRS of the many benefits that electronic filing offers.