IRS May Offer Hope to Feds Affected by OPM Hack

As agencies scramble to contain damage from the data breach of federal personnel files, a senator has asked the Internal Revenue Service to assist the Office of Personnel Management to protect victims against identity theft.

Sen. Mark Warner, D-Va., on Monday wrote to Internal Revenue Commissioner John Koskinen asking him to do “everything in your power to protect the millions of current and former federal employees who had their sensitive personal information exposed by the hack of the OPM database.”

Already, there have been reports, Warner said, “that the credentials and identities of government breach victims are appearing for sale online to potential identity thieves. I am concerned that federal employees’ personal information could be used by scammers to fraudulently file a tax return next tax season.”

Cases of tax-related identity theft numbered 2.9 million in 2013, according to the Treasury Inspector General for Tax Administration, and the tax agency, according to its own estimates, paid out $5.8 billion in fraudulent tax refunds in 2013 related to identity theft.

On June 11, the IRS unveiled a new joint effort with private-sector tax preparation and software firms to combat identity theft through better data verification methods, and more effective information sharing with law enforcement and taxpayers.

Specifically, Warner asked the IRS to work with OPM to proactively notify federal workers that they meet the criteria to receive an a unique six-digit authentification number called an IP PIN, to be used when they file a tax return. He asked the agency to prominently post a notice on the availability of the IP PIN, and to build new filters in software for the next filing season that might improve scrutiny of questionable returns and refunds.

The IRS confirmed to Government Executive that it is reviewing the letter.

Not every senator shares Warner’s confidence in IRS’ capabilities. Last week, Sens. Chuck Grassley, R-Iowa, and John Thune, R-S.D., introduced legislation aimed at improving IRS customer service and protections for taxpayer information. Echoing parts of a bill passed by the House in April, their “taxpayer bill of rights enhancement” bill would increase penalties on IRS employees for unauthorized disclosure of private taxpayer information and crack down on the use of private email for official business. The bill also permits the Treasury Department to provide status updates, and in certain instances requires status updates, regarding investigations into misconduct by IRS employees or certain third parties.

“This bill is intended to enact a much-needed culture change at the IRS, an agency whose reputation and trustworthiness has severely deteriorated with the American people over the last several years,” Thune said. “No American should have to fear that politics could play a role in their confidential tax information being disclosed to a third party‎, that they will be targeted based on their political beliefs, or that the IRS would not properly retain its employees’ emails.”

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