IRS Get Transcript Breach Triples In Scope

Data breach news just keeps getting worse and worse for the federal government this summer. The latest blow comes this week with the announcement from the IRS that the breach in its Get Transcript application was three times worse than initially reported.

First disclosed in May, the breach in question is now believed to have exposed the full tax account records of 330,000 taxpayers, far more than the 100,000 first believed to have been affected.

"The information accessed by the attackers is some of the most sensitive that can relate to a person, and seeing the ease at which attackers can access it is frustrating on multiple levels," says Josh Cannell, security researcher for Malwarebytes Labs. "Knowing that there are in fact more victims than originally thought is just a good reminder that large entities like the IRS are not immune to attack.”

According to the IRS, attackers were able to game the online system designed to give taxpayers full transcripts of previous year's tax returns by using stolen information about taxpayers from other sources. This included information like Social Security Numbers, dates of birth, and street address, all of which were used as authenticators for logging into the system.

“This attack highlights the fact that Big Data isn’t just something utilized by legitimate businesses, but also cyber criminals and fraudsters. The data used to perpetrate this attack was originally harvested from multiple sources, including open source data and data from other breaches," says Ken Westin, senior security analyst for Tripwire. "In this case, the criminals were able to quickly correlate disparate data sets to create complete profiles; once this was completed, they then automated the IRS ‘Get Transcript; form submission to extract additional information that can then be used to file fraudulent tax returns.”

The IRS has speculated that the motivation behind the attacks was likely driven by plans to file fraudulent tax returns during the upcoming 2016 filing season. Security experts warn of even wider spread consequences given the depth of information afforded by an IRS transcript.

"This is scary, especially given the compounding nature of the IRS breach," says Eric Chiu, president of HyTrust. "These profiles can be used to open new accounts, siphon funds and ultimately steal the identities of the victims."

While the agency has put into place special PINs to further authenticate at-risk taxpayers as they file their returns next year, security experts aren't holding their breath.

"Unfortunately, attackers are outsmarting systems put in place to protect private information, and the cost is very heavy," Cannell says. "It will be interesting to see if the special identify protection PIN provided by the IRS to affected taxpayers will be enough to stop more fraudulent returns in the future. As many cyber-criminals are masters of social engineering, they are skilled at acquiring the information they're seeking, and it's enough to make you wonder if they'll devise a scheme to get this PIN number and continue to launder money from the government."