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IRS didn't flag compromised Social Security numbers

An IRS office charged with monitoring and mitigating the impact of external data breaches on taxpayers is faltering when it comes to keeping track of the problem, according to a new audit by the U.S. Treasury Inspector General for Tax Administration.

In 70 external breaches, the office failed to follow internal guidelines by requesting Taxpayer Identification Numbers of affected users. As a result, more than 11,000 Social Security numbers weren't flagged to the IRS' Dynamic Selection List for added identity protections.

The IRS keeps tabs on external data breaches of private companies and other entities, which collect personally identifiable information that taxpayers use to file their returns. The Office of Return Integrity and Compliance Services is charged with collecting known instances of such breaches in an internal IRS database, reporting them and cross-referencing the data with attempts by criminals and fraudsters to use that information to commit identity theft or file false returns.

However, Of the 527 external data breaches selected for an internal audit, the office failed to monitor or record 89 that were reported to their database during 2017.

"As a result, the IRS did not monitor, evaluate, and assign a treatment for these data breaches, as required by the incident management process," wrote auditors.

The report recommends the office follow correct protocols around recordkeeping and taxpayer ID number requests for the missed breaches, develop improved processes to ensure future breaches aren't missed, research thousands of unprocessed TINs to determine if they warrant placement on the list and add the ones auditors identified as well.

Kenneth Corbin, Commissioner for the Wage and Investment Division at IRS, said the agency would have a permanent solution in place no later than April 2019.

"As a result of this review we are automating many of the manual processes that led to the issues identified in this report," wrote Corbin.

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