IRS Hacked: Information on Over 100,000 Americans Exposed

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Cybercriminals have finally done it, successfully hacking into one of the worlds most critical systems, an online service run by the Internal Revenue Service (IRS) which was abused to steal personal tax information on more than 100,000 taxpayers. Thieves used the information to steal identities and claim fraudulent tax refunds, the IRS reported Tuesday.

Hackers broke into the IRS system “Get Transcript,” an online portal taxpayers are able to access to get old tax returns and filings from previous years. Hackers were able to bypass the websites security, stealing information including Social Security Numbers, dates of birth, tax filing status’s and street addresses, the IRS reported.

“We’re confident that these are not amateurs,” IRS Commissioner, John Koskinen, told the Associated Press while speaking on the perpetrators. “These actually are organized crime syndicates that not only we but everybody in the financial industry are dealing with.”

Koskinen declined to comment on investigators findings thus far, stating the service of under a criminal investigation. IRS agency inspector general is aiding the investigation.

The timing of this attack is at its peak, as both foreign and domestic tax fraud have skyrocketed from previous years. The IRS estimated they paid out $5.8 billion in fraudulent tax returns to thieves back in 2013 alone.

United States congress has already begun to pressure the IRS for information regarding the devastating 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 Senator Orrin Hatch, R-Utah, chairman of the Senate Finance Committee speaking on the IRS breach. “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.”

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The agency became aware of the attack when IRS technicians identified a sharp increase in the number of Americans requesting transcripts. Technicians reported the IRS believes their systems were targeted from February to mid-May, following the service being temporarily turned offline.

The IRS did confirm that their main servers, which handles tax filing submissions and other sensitive information was not accessed by hackers.

“In all, about 200,000 attempts were made from questionable email domains, with more than 100,000 of those attempts successfully clearing authentication hurdles,” the agency reported. “During this filing season, taxpayers successfully and safely downloaded a total of approximately 23 million transcripts.”

Technicians said the agency is still investigating how many fraudulent returns were claimed this 2015 using the stolen information. Koskinen provided reporters with an estimate, stating he believes less than $50 million was successfully claimed from this cybercrime group alone.

What makes this breach far more devastating is hackers can use the stolen information to claim fraudulent tax returns in the future, making their fraud an annual occurrence. To deal with the large increase in fraudulent returns, the IRS has implemented an automated detection system to spot phony returns.

Koskinen said the system has already successfully identified nearly 3 million faulty returns.

Though the IRS has an automated system in place, as hackers stole old returns, they could easily mimic information to bypass the automated filters. Successfully claiming tax returns more than once.

Tax return information is dangerous as it carries large amounts of personal information, including Social Security Numbers, birdthdates, spouses and dependents information as well.

The IRS said the agency has begun to notify taxpayers affected in the breach. To the extent of what the IRS hack will force affected Americans to do to safeguard their identity could be critical.

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[Photo via Ray Tsang/Flickr [CC BY 2.0]]

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Brandon Stosh is the founder and CEO of www.freedomhacker.net. Stosh is a cyber security researcher and professional consultant who strives to provide reliable news on cyber-security based topics.

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