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It isn’t often we hear about the IRS giving something away for free. But, considering the fact that 104,000 taxpayers had their identities stolen and were unable to file their tax returns because thieves were able to access their personal information through the IRS’s “Get Transcript” application, well it seems that’s the least the IRS could do.
Criminals first gain enough information from other sources before they try to access the IRS site. First they troll through social media sites gaining access to birth dates, street addresses and nicknames before attempting to get into the IRS site. Eventually they get enough information allowing them to clear a multi-step authentication process, which includes several personal verification questions that typically are know only by the taxpayers.
Even though the IRS is scrambling to correct issues in their systems, it’s difficult to adapt detection and prevention processes to keep up with the identity thieves since identity theft patterns are constantly evolving. According to Russell George, the Treasury Inspector General for Tax Administration, “Undetected tax refund fraud results in significant federal outlays and erodes taxpayer confidence in the federal tax system.” (www.accountingtoday.com/news/tax-practice/irs-gets-better-at-detecting-identity-theft-74736-1.html?utm_campaign=daily-may%2029%202015&utm_medium=email&utm_source=newsletter&ET=webcpa%3Ae4465578%3A4454360a%3A&st=email)
While this type of activity is not officially recognized as a security breach because as the Inspector General points out, the IRS’s basic information is still secured, it is considered “a modified form of identity theft.” It gives the criminals enough data to impersonate the taxpayer.
Let this be a warning to be more cautious about what kind of information you make public on social media sites. Modified identity theft or security breach, the devastation to more than 100,000 taxpayers this year alone is indescribable. And who knows how many taxpayers are already targeted for the next tax season. So, a little free credit monitoring from the IRS for failing to keep important information out of the hands of thieves, yes, that is the very least the IRS could do.