OK here is the IRS's story:
It would cost $10M to upgrade the servers to store all e-mails
They made daily backups of the servers, but were recycling the tapes every 6 months.
After May 2013 they stopped recycling and started long term storage at a cost of $200K/ year.
When the employee mailbox was full, the employee would move emails to an archive on the local machine.
The employees were supposed to be printing out the emails to meet the record keeping requirement.
Lois must not have been printing the emails, and her hard drive crashed destroying her archive.
They went machine to machine to recover her emails from other employees hard drive archives. Hence no outside emails.
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Questions I have I have not been able to find the answers to.
What version of Exchange was running on the servers? if it was 2007 or newer, they are either configured wrong or the emails would still be on them in a server archive (If I understand exchange 2007 correctly) Then again they hope to finish the upgrade to windows 7 by September.
Note 8 implies she had 6103 (taxpayer) information on her home computer on her personal email account. Pretty sure that is a no-no (Doing government stuff on a personal email account dodging the record keeping requirements is what got Karl Rove in trouble)
Maybe the NSA should start backing up data for other government agencies? The idea of storing archives on local machines that are not backed up and depending on the employee to print out the emails is, well, kinda Tom Thumb IMHO
Link to PDF:
http://taxprof.typepad.com/files/irs-description.pdf