It won’t be long before hacking is accepted as an
Olympic sport. The IRS has
had its own website hacked and financial information of taxpayers stolen by who
knows who. IRS says this information is used by hackers to file bogus tax
returns requesting refunds. The unsophisticated IRS programs simply punch out
the refunds to these crooks. Well the agency now has another concern. At least
two individuals have begun lawsuits against the IRS filing a class action
claiming their personal tax information was stolen by hackers when the IRS’
“Get Transcript” web application was hacked. In making out their case, it seems
the individuals are alleging that the IRS knew that its security system was not
up to the task of preventing easy access to this confidential information. The
failure to implement adequate security measures amounted to negligence by the
agency. The agency is certainly feeling the heat. Recently IRS issued temporary
regulations that ends the availability of automatic extensions for filing forms
W-2. It has also proposed regulations that would end the availability of
automatic extensions for other information returns as well. This is being done
to combat fraud and to limit the ability of hackers to file fraudulent tax
returns requesting refunds. When hackers file these false returns they do so
early in the filing season. If IRS has not as yet received W-2 forms from
employers it is not possible for the agency to check the accuracy of items
listed on the return. The longer these forms are unavailable to the service the
more likely that hackers will be successful in their quest for these refunds.
It is certainly not a very sophisticated approach to stopping tax hackers but
for an agency plagued by lack of funding it may be the best it can do right
now. Sort of bringing the wagons into a circle as they did in the old western
movies. But these bad guys are better at being bad than those back then.
