Sources: IRS Believes Massive Data Theft Originated in Russia

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(CNNMONEY) U.S. Internal Revenue Service building, Washington D.C.

WASHINGTON — The IRS believes that a major cyber breach that allowed criminals to steal the tax returns of more than 100,000 people originated in Russia, two sources briefed on the data theft tell CNN.

On Tuesday, the Internal Revenue Service announced that organized crime syndicates used personal data obtained elsewhere to access tax information, which they then used to file $50 million in fraudulent tax refunds.

The IRS said the agency’s Criminal Investigation Unit and the Treasury Inspector General for Tax Administration are investigating the origins of the breach. The agency also alerted the Homeland Security Department of the breach, a DHS official confirmed.

An IRS spokeswoman said the agency does not discuss ongoing investigations.

The news that the IRS data breach is believed to have originated in Russia comes on the heels of the disclosure that Russian hackers had infiltrated both the White House and State Department computer systems.

The security of taxpayer data has been an IRS problem for years. In an October report, the IRS’ independent watchdog called it the agency’s number one problem.

“Computer security has been problematic for the IRS since 1997,” according to the report.

And the new breach has lawmakers on Capitol Hill demanding answers.

Calling it the first step of many, Republican Senate Finance Committee Chairman Orrin Hatch announced Wednesday that he plans to haul IRS Commissioner John Koskinen before his committee next week to explained what happened and who is to blame.

“When the federal government fails to protect private and confidential taxpayer information, Congress must act,” Hatch said.

Between February and May, criminals tried to access the tax accounts of 200,000 people, succeeding in about half the attempts, the IRS said. The agency said it plans to notify all 200,000 people to tell them that third parties appear to have access to their Social Security numbers and other personal information.

The roughly 100,000 taxpayers whose tax information was accessed will be offered free credit monitoring, the agency said.

If you believe you are the victim of a security breach, the IRS has a website full of tips you can visit by clicking here.

2 comments

  • M_17

    “When the federal government fails to protect private and confidential taxpayer information, Congress must act,” Hatch said.

    If anyone thinks things can’t get more screwed up, then read the above statement again.

  • HarryO

    They can’t figure out billions of dollars lost to theft and false returns but they can track a very sophisticated web attack and assign blame? Unlikely… but it does open up the possibility that a 104,000 people are about to lose everything and the finger of blame isn’t pointing in the right direction.

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