IRS Notifies Financial Aid Applicants About Identity Theft

by | Apr 20, 2017

Last Updated May 20, 2024
Identity Theft


The IRS is sending out 100,000 notification letters to student financial aid applicants who might be identity theft victims.

IRS Commissioner, John Koskinen, told members of the Senate Finance Committee that 35,000 letter were on their way to people advising them their tax information may be at risk for identity theft thanks to a “convenience app” that populates their student loan application with tax data.

John Koskinen’s Statement

On April 6, Koskinen released a statement:

“Our position has been, as we’ve been working with [the Department of Education], we can’t confidently distinguish the smaller part of that pool or the part of the pool that had their data stolen from those that may have had their data stolen. So out of an abundance of caution, we’re going to notify all 100,000. We marked all 100,000 accounts, so whenever a return is filed, they’ll be protected, but while…we don’t want to unnecessarily worry people, we will advise everyone that there’s been some indication that they may be at risk.”

Koskinen also said that IRS filters have stopped 52,000 tax returns related to the 100,000 accounts and about 14,000 were identified as illegal returns and never left the agency. However, 8,000 returns worth $30 million were submitted and approved.

The Education Department’s Efforts to Solve Identity Theft

The Education Department is working on a solution for the issue but it won’t be available until October 2017. In the meantime, the data retrieval tool remains shut down and applicants must manually enter their tax information.

The IRS Commissioner also said, “At this point, you can still file a student loan application, you just have to put in the tax information yourself…What you won’t be able to do until probably October is go in and have the data automatically populated. We’re at the front end of the problem but we’ve been monitoring it. We have other areas we’re monitoring. We’re trying to anticipate where will the criminals will attack next.”

The IRS added another additional layer of security after last years’ attack on the Electronic Filing PIN application. Now, taxpayers must enter their adjusted gross income from the previous year when filing their return.

Koskinen also shared that they are waiting to hear back from the Office of Management and Budget on hiring freeze exemptions. He spoke at the National Press Club in Washington, DC and told the audience that the agency must be efficient but after 7 years of budget cuts, it’s taking its toll on customer service and cyber security.

According to President Trump’s budget proposal, the IRS would receive a $239 million cut in funding. Senator Ron Wyden (D-OR), finance committee ranking member, called for “reinstatement” of funding for the IRS, saying that fewer tools and funding provided to the tax agency will only increase the risk of stolen taxpayer identity information.

A Call for New Leadership

More than 50 House Republicans, earlier this month, signed two letters to President Trump calling for Koskinen’s removal. Fifteen Republican members of the House Ways and Means Committee also sent a letter to President Trump calling for Koskinen’s removal citing destruction of evidence, misleading Congress and “intentionally [degrading] customer service at the IRS”. The letter stated, “As we work to reform the tax code and restructure the IRS, we must ensure that the agency has the tools it needs to accomplish the tasks at hand and to achieve a smooth transition. During this transition, the IRS would benefit immeasurably from new leadership and regain the trust of the American people, the committee believes that we must have a new commissioner appointed as soon as possible.”

Members of the House Oversight and Government Reform Committee signed a letter claiming Koskinen’s actions “permanently deprived Americans of a full understanding of the IRS targeting scandal, where Americans, selected based on their political views, underwent extra scrutiny”.

This isn’t the first time that lawmakers have wanted him removed. Koskinen plans to work out the remainder of his term, which ends in November.

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