IRS Data Breach Results in Thousands of Fraudulent Tax Returns
On Tuesday, May 26th, 2015, the IRS disclosed that a data breach of its online Get Transcript application occurred when sophisticated hackers attempted to access over 200,000 personal tax accounts. More importantly, however, an IRS investigation found that of the 200,000 attempts, the hackers were successful in stealing personal financial information for 104,000 people. Subsequently, 15,000 of the accounts were used to claim fraudulent tax refunds.
The Get Transcript application allows a taxpayer to view tax account transactions, tax return information, and wage and income reported during a particular tax season. To utilize the application, the user undergoes a multi-step identification process, which involves entering the user’s social security number, street address and date of birth. The hackers successfully cleared this identification process to gain access to 104,000 tax accounts. This attack is now believed to have started in February and to have concluded sometime in May.
The matter is now under review by the Treasury Inspector for Tax Administration. Additionally, the IRS and the Senate Finance Committee are attempting to discover the identity(ies) of the hackers, the total amount of money secured through the processing of the 15,000 fraudulent returns, and how the hackers cleared the authentication process. As a precautionary and remedial measure, the IRS is now giving free credit monitoring to the tax payers whose Get Transcript accounts were accessed.