Cyber attacks on IRS data much worse than thought

The "return on investment" for a $2.7 million government system that allowed citizens to obtain previous-year's tax returns, so far, looks to be about negative $42.7 million.

It could end up deeper in the red after  revelations about a breach of the online service - although exact cost estimates for the IRS system remained hard to put a figure to.

The IRS announced in May that crooks had used a tool called Get Transcript, to access 114,000 taxpayer files. In a further disclosure on 17 August, the agency said a more-extensive retroactive investigation into the matter showed crooks compromised about 220,000 additional taxpayer accounts.

Criminals had already used some of data they had accessed to illegally claim tax refunds totaling about $39 million, according to IRS officials.

The exact cost of the Get Transcript service remained murky. According to IRS officials' report to the White House Office of Management and Budget, $2 million had been spent on the system for "Get Transcript". According to IT Dashboard, a federal-spending website, $717,000 had been spent on a system called "Get Transcripts." It was not clear why there were two systems listed.

According to a statement by IRS officials, they believed some of the information on roughly 330,000 households "may have been gathered for potentially filing fraudulent tax returns during the upcoming 2016 filing season."

The Get Transcript service, launched last year, ultimately shut down in May once officials realised criminals were bypassing security protocols.

However, before it was unplugged, Get Transcript generated a record number of returns according to Performance.gov, a federal database that tracked agency progress in meeting administration goals.

The second quarter of fiscal 2015, saw the tool retrieve 14.7 million online transcripts, a figure that was up from 5.8 million during the same quarter last year and 7.6 million in the third quarter of that year.

"The IRS continues to work on strengthening the system," officials said on 17 August. "The IRS takes the security of taxpayer data extremely seriously, and we are working aggressively to protect affected taxpayers and continue to strengthen our systems."