Could the loss of data from the huge Internal Revenue Service master files cause a financial meltdown in this country? That’s what some experts are pondering as the U.K. mops up the mess left in the wake of the disappearance of two password-protected CDs containing the country’s entire database of child benefit recipients — 25 million people. The breach, which happened when a third-party delivery company lost the discs, affected four out of 10 people in the U.K., the largest relative segment of a country’s population involved in a privacy violation ever publicly disclosed.

The data loss happened in October, but wasn’t widely reported until Nov. 20, and news coverage of the event was overshadowed in the U.S. by Thanksgiving week events.

A loss of that scale could have taken place within the IRS, “and we don’t know about it,” says Gartner Inc. analyst and longtime World Bank executive Avivah Litan. Over the last several years, potentially hundreds of laptops containing sensitive information have disappeared at the IRS, according to an audit reported earlier this year by the Treasury Inspector General for Tax Administration.

Like the U.K.’s HM Revenue & Customs office, the IRS maintains not just names, addresses, Social Security numbers and other personal information for individuals, but also banking details for use in direct deposit of tax refunds. Of the 128 million individual tax returns filed in the 2007 filing season, 46% requested direct deposit refunds. Likewise, the bulk of the $2 trillion processed by the agency in a year are collected via automated banking. That translates to a lot of personal and banking details maintained by the IRS.

Litan says that overall the government has been the “most behind as a sector” in the area of data protection — “certainly behind the financial services sector.” In fact, she points out, most agencies are late in submitting project plans for how they’ll protect personally identifiable information, as mandated by a 2007 memorandum issued by the Office of Management and Budget.

“It’s not that proscriptive yet,” she says.