You’d think that government agencies would be reticent to work with Equifax given that it just exposed the private info of more than 145 million people through a preventable hack , but a massive data breach apparently isn’t enough of a deterrent. The Internal Revenue Service recently awarded Equifax a fraud prevention contract that will have it verifying taxpayer identities. And crucially, it was a no-bid, “sole source” contract — Equifax was deemed the only company capable of fulfilling demand. In practice, officials didn’t have much of a choice. Credit reporting in the US is dominated by three large companies (Equifax, Experian and TransUnion), and Equifax is arguably the powerhouse of the bunch. However, that only underscores the problem here: the IRS had to trust a crucial anti-fraud system to a company that not only had sloppy online security practices, but has been reluctant to take full responsibility for its mistakes. There’s a real chance that the hack will get Equifax to clean up its act in time to improve its handling of IRS data. We wouldn’t count on it, though, and there’s always the possibility that the IRS will fall afoul of the kind of data breach that prompted this anti-fraud contract in the first place. Via: Politico Source: FedBizOpps.gov
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IRS hands fraud prevention contract to Equifax despite massive hack
In America the Internal Revenue Service used to pick who got audited based on math mistakes or discrepancies with W-2 forms — but not any more. schwit1 shares an article from the Vanderbilt Journal of Entertainment and Technology Law describing their new technique: The IRS is now engaging in data mining of public and commercial data pools (including social media) and creating highly detailed profiles of taxpayers upon which to run data analytics. This article argues that current IRS practices, mostly unknown to the general public, are violating fair information practices. This lack of transparency and accountability not only violates federal law regarding the government’s data collection activities and use of predictive algorithms, but may also result in discrimination. While the potential efficiencies that big data analytics provides may appear to be a panacea for the IRS’s budget woes, unchecked these activities are a significant threat to privacy [PDF]. Other concerns regarding the IRS’s entrée into big data are raised including the potential for political targeting, data breaches, and the misuse of such information. While tax evasion cost the U.S.$3 trillion between 2000 and 2009, one of the report’s authors argues that people should be aware âoethat what they say and do onlineâ could be used against them. Read more of this story at Slashdot. 
coondoggie writes: There has been a 400% surge in phishing and malware incidents in this tax season alone, the Internal Revenue Service warned this week. According to the IRS, there have been thousands of phony emails aimed at fooling taxpayers into thinking these are official communications from the IRS or others in the tax industry, including from many tax software companies. Read more of this story at Slashdot. 
Trailrunner7 writes: Few, if any, companies or government agencies store more sensitive personal information than the IRS, and consumers have virtually no insight into how that data is used and secured. But, as the results of a recent Justice Department investigation show, when you start poking around in those dark corners, you sometimes find very ugly things. Beginning in 2008, a small group of people–including an IRS employee who worked in the Taxpayer Advocate Service section–worked a simple and effective scam that involved fake tax returns, phony refunds, dozens of pre-loaded debit cards, and a web of lies. The scheme relied upon one key ingredient for its success: access to taxpayers’ personal information. And it brought the alleged perpetrators more than $1 million. What sets this case apart is that the accused IRS employee, Nakeisha Hall, was tasked specifically with helping people who had been affected by some kind of tax-related identity theft or fraud. Read more of this story at Slashdot. 