Escalating tax fraud exposes weakness in IRS security

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According to a report on Friday, lawmakers from both parties are pressuring the IRS to do more to protect taxpayers from identity theft, as cyber criminals are becoming an increasing threat.

In 2015, the personal data of more than 700,000 taxpayer accounts was exposed in an IRS breach, and IRS Commissioner John Koskinen told lawmakers last year that the agency is bombarded daily with more than a million malicious attempts to break into its computer systems.

A hearing took place on Thursday to address the matter. “Criminals are becoming even more sophisticated and ruthless in ways they commit tax identity theft and file fraudulent returns with ill-gotten personal information,” said Rep. Steve Chabot (R-Ohio), chair of the House Small Business Committee. “At a minimum, the goal of the IRS must be to make this crime harder, not easier, for identity thieves to commit.”

Chabot added, “It has become clear that the IRS, like all agencies trusted with the American people’s most sensitive personal information, needs to step up its game.”

Senate Finance Committee ranking member Ron Wyden (D-Ore.) expressed his concerns to Koskinen regarding cyber security efforts at the IRS through two letters urging him to make better use of an email authentication tool which is supposed to put the brakes on phishing emails, which has been identified as a huge problem.

According to the IRS, there was a 400-percent rise in phishing and malware incidents last year. Criminals try to trick taxpayers into disclosing personal information through emails that impersonate the IRS or other tax industry entities.

Wyden also decried President Trump’s plan to slash $239 million from the IRS’ budget, noting, “This continued budgetary onslaught can only result in the agency increasingly being unable to provide basic customer service to taxpayers, much less safeguard taxpayer data from cyber criminals who would wreak havoc with their financial livelihoods.”

Testimony from a U.S. Treasury watchdog suggested that budget cuts have limited the agency’s ability to safeguard taxpayer information.

According to Russell George, the Treasury inspector general, reduced funding has affected their efforts to secure information with e-filing providers; however, since the new budget has not been released yet, there are no specifics regarding IRS budget cuts.

“The bottom line is, with additional resources, the IRS could do more,” George claimed.

Trump’s budget proposal does direct the IRS to focus resources on fighting tax fraud and enforcing tax laws. It also directs the Treasury Department to shore up cyber security.

During the Obama administration, the IRS was discovered to be targeting right-leaning non-profit organizations. No arrests were made, and no one at the IRS lost their job.

“To be clear, this is not an issue of funding at the IRS. It is an issue of priorities at the IRS,” Chabot said, adding, “If the IRS can pay out big bonuses to its employees — some of whom were implicated in the targeting of Americans for their political views — it should be able to find the money to protect people’s data from identity thieves.”

H/T: The Hill

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