US taxmen pull plug on anti-identity-theft system used by identity thieves

That's not how this works, that's not how any of this works

By Iain Thomson in San Francisco

Posted in Security, 8th March 2016 20:51 GMT

The US Internal Revenue Service (IRS) has suspended its Identity Protection PIN tool, designed to safeguard people at risk from identity theft, because scammers are using it for identity theft.

American taxpayers can request a six-digit PIN code from the IRS that is supposed to lock down their account with the taxmen: no valid code, no login. When the IRS admitted last month that 700,000 people's old tax returns – which are full of sensitive personal information – had been sent to scammers, it enrolled those affected in the PIN system.

In total this year, the IRS has issued 2.7 million PIN codes. But the scammers got wise, and used 800 of them to file fraudulent tax returns to redirect people's refunds to the criminals' bank accounts. Now the IRS has stopped the system.

"As part of its ongoing security review, the Internal Revenue Service temporarily suspended the Identity Protection PIN tool on IRS.gov," the agency said in a statement.

"The IRS is conducting a further review of the application that allows taxpayers to retrieve their IP PINs online and is looking at further strengthening the security features on the tool."

The problem appears to stem from PIN codes issued by the IRS website. Applicants have to answer four questions about themselves to get a number, but if the scammer already has some of their personal data, and does some digging online, then they can guess the answers, get the code, and file a fraudulent return.

The IRS is in something of a bind with this one. On the one hand, its security systems need work, but on the other it is the logical target for scammers because, to quote bank robber Willie Sutton, "that's where the money is." ®

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