Sophisticated criminals used an online service run by the IRS to access personal tax information from more than 100,000 taxpayers, part of an elaborate scheme to steal identities and claim fraudulent tax refunds, the IRS said Tuesday.
The thieves accessed a system called “Get Transcript,” where taxpayers can get tax returns and other filings from previous years. In order to access the information, the thieves cleared a security screen that required knowledge about the taxpayer, including Social Security number, date of birth, tax filing status and street address, the IRS said.
“We’re confident that these are not amateurs,” said IRS Commissioner John Koskinen. “These actually are organized crime syndicates that not only we but everybody in the financial industry are dealing with.”
Koskinen wouldn’t say whether investigators believe the criminals are based overseas — or where they obtained enough personal information about the taxpayers to access their returns. The IRS has launched a criminal investigation. The agency’s inspector general is also investigating.
Identity thieves, both foreign and domestic, have stepped up their efforts in recent years to claim fraudulent tax refunds. The agency estimates it paid out $5.8 billion in fraudulent refunds to identity thieves in 2013.
“Eighty percent of the of the identity theft we’re dealing with and refund fraud is related to organized crime here and around the world,” Koskinen said. “These are extremely sophisticated criminals with access to a tremendous amount of data.”
Congress is already pressing the IRS for information about the breach.
“That the IRS — home to highly sensitive information on every single American and every single company doing business here at home — was vulnerable to this attack is simply unacceptable,” said Sen. Orrin Hatch, R-Utah, chairman of the Senate Finance Committee. “What’s more, this agency has been repeatedly warned by top government watchdogs that its data security systems are inadequate against the growing threat of international hackers and data thieves.”
Koskinen said the agency was alerted to the thieves when technicians noticed an increase in the number of taxpayers seeking transcripts. The IRS said they targeted the system from February to mid-May. The service has been temporarily shut down.
Taxpayers sometimes need copies of old tax returns to apply for mortgages or college aid. While the system is shut down, taxpayers can still apply for transcripts by mail. The IRS said its main computer system, which handles tax filing submissions, remains secure.