Just a few weeks into the 2015 IRS tax filing season, we are already learning that the IRS has been hacked and important personal information of more than 100,000 Americans stolen.
The IRS announced this week that criminals hacked into the agency’s digital systems in an attempt to steal data so that they could claim fraudulent refunds, which they did massively last year.
Thieves attempted use more than 464,000 social security numbers stolen elsewhere to generate new electronic filing PINs. Only 101,000 of those social security numbers were used successfully the IRS is reaching out to those taxpayers affected by mail. Snail mail is the primary way that the IRS contacts taxpayers.
So finally, the IRS caught an attack before a lot more damage could be done. Let’s hold the applause. Even if they are taking cyber security more seriously, a hundred thousand Americans now have a major headache to worry about: fraudulent returns being submitted with their information that they won’t find out about likely until they file their taxes.
Tax preparers are now on alert as the Washington Post reports:
At least two tax software providers have also alerted taxpayers of attacks where criminals took over online accounts and gained access to sensitive tax data. The most recent incident came from TaxSlayer, which notified 8,800 people that their accounts may have been accessed by thieves using stolen usernames and passwords. Another tax software provider, TaxAct, reported a similar attack in January where criminals used stolen usernames and passwords to access information from 450 tax accounts, though the company detected suspicious activity on roughly 9,000 accounts.
Tax officials said before the start of the filing season that they would be on guard against tax-related identity theft, which proved to be a growing issue last year. The IRS dealt with a separate attack on its “Get Transcript” feature in 2015, where criminals attempted to steal tax return information from as many as 610,000 taxpayers.
The number of identity theft complaints filed with the Federal Trade Commission surged by nearly 50 percent in 2015 from the year before, primarily because of tax fraud, the agency said.
This is the second major headache for the IRS which had to stop processing tax returns recently because of glitches with its website. The processing system unexpectedly stopped working for about a day before IRS officials were able to get it back up and running. This system failure is allegedly unrelated to the recent attacks, although I don’t know if the IRS can confirm that with certainty.
Once again, the IRS is not inspiring any trust in their ability to protect the private information we are forced to hand over to them. A watchdog report also found that the IRS gave out $46 million in fraudulent tax refunds due to lax oversight and failing internal processes which opened the door to scammers.
News was leaked recently that the IRS plans to shift all of their customer service functions online and away from phones. They plan to create accounts for 150 million individual taxpayers and 11 million business. If they can’t protect their online systems why should we trust that this shift to digital customer service delivery will be any better for taxpayers?
There are reasons American can’t stand big government. The IRS is central to that. We hand our hard-earned cash to the IRS each paycheck and in April (for some tax filers) without choice. Meanwhile, the IRS makes us sitting ducks for identity theft and we are stuck with the bills, damaged credit, and financial woes for years to come.