IRS Website Hacked In $50m Tax Refund Scam

A criminal investigation is under way in the US after fraudsters stole personal tax information from an Internal Revenue Service website as part of an elaborate $50m (£32m) scam.

Congress is demanding answers over the serious security breach in which the details of more than 100,000 people were snatched by cyber thieves and used to claim fraudulent tax refunds.

The IRS believes the identity thieves are from Russia based on computer data, two officials briefed on the investigation told the AP news agency.

They spoke on condition of anonymity because they were not authorised to publicly comment on the investigation, the AP reported.

The personal information was stolen from an online IRS system called Get Transcript.

This allows taxpayers to access tax returns and other tax filings from previous years.

To get hold of the information, the crooks cleared a security screen requiring knowledge about the taxpayer, including their social security number, date of birth, tax filing status and home address.

The IRS said it is contacting those whose information was accessed and is providing them with credit monitoring services.

Alongside the criminal investigation, the agency's inspector general has also launched an inquiry.

IRS Commissioner John Koskinen said: "We're confident that these are not amateurs.

"These actually are organised crime syndicates that not only we, but everybody in the financial industry, are dealing with."

Identity thieves, both foreign and domestic, have stepped up their efforts in recent years to claim fraudulent tax refunds.

The agency estimates it paid out $5.8bn in fraudulent refunds to identity thieves in 2013.

More information is being sought on Capitol Hill over the IRS breach.

US Congressman Paul Ryan, chairman of the tax-writing House Ways and Means Committee, said: "It's deeply concerning that taxpayer information has been compromised.

"Protecting the taxpayer is supposed to be the IRS's top priority, and we need answers from them."

Mr Koskinen said the agency was alerted to the thieves when technicians noticed an increase in the number of taxpayers seeking their records.

The IRS said the thieves targeted the system from February to mid-May. The service has been temporarily shut down.

The agency said its main computer system, which handles tax filing submissions, remains secure.

In all, the thieves tried to access information from 200,000 taxpayers, the IRS said, and successfully got information on 104,000 of them.

During the current filing season, about 140 million taxpayers filed returns.

And around 23 million people successfully downloaded transcripts from the website used by the thieves.

The agency is still trying to find out how many fraudulent tax refunds were claimed this year using information from the stolen transcripts.

Giving a preliminary estimate, Mr Koskinen said less than $50m (£32m) was successfully claimed.

The thieves can also use the records to get around the IRS security filters and claim fraudulent tax refunds in the future.

Tax returns can also include personal information that can help people steal an identity, including social security numbers and birthdates of dependents and spouses.

But the IRS said the thieves appeared to already have a lot of personal information about the victims.