By Laura Saunders and Richard Rubin 

The Internal Revenue Service said Tuesday that it identified an automated attack on its computer systems aimed at getting information that could be used to steal tax refunds.

The agency said identity thieves last month used personal data of taxpayers that was stolen elsewhere in an attempt to generate e-file personal identification numbers to file fraudulent returns and claim tax refunds.

E-file PINs are used by some individuals to file their tax returns. The numbers are different from Identity Protection PINs, which the IRS gives victims of tax ID theft to protect them from future issues.

The agency said it identified unauthorized attempts to obtain e-file PINs for 464,000 Social Security numbers, of which 101,000 successfully accessed an e-file PIN.

No personal taxpayer data was disclosed by IRS systems, the agency said. The IRS is notifying affected taxpayers by mail that their personal information was used by criminals. The IRS said it is protecting their accounts against tax ID theft.

An agency spokesman said identity thieves would typically need much more data than an e-file PIN to file a fraudulent return.

The agency also said the incident is unrelated to last week's outage of IRS tax processing systems.

Senate Finance Committee Chairman Orrin Hatch (R., Utah) said he would question IRS Commissioner John Koskinen about the issue at a previously scheduled hearing Wednesday.

"While it appears that the IRS was able to successfully block this attempted breach this time around, it's past time we fundamentally rethink our approach in authenticating taxpayers and processing tax returns," Mr. Hatch said.

Over the past year, the IRS, state tax officials and tax-preparation firms have conducted a campaign to combat the growing problem of tax-refund fraud, a crime in which thieves use stolen personal information to file a return claiming a fraudulent refund. If the swindler is able to use information from a real taxpayer's prior returns, the fake return could be harder for federal and state fraud filters to detect.

In 2015, hackers stole the personal information of more than 330,000 taxpayers from the IRS's "Get Transcript" database, which provided data from prior returns.

Write to Laura Saunders at laura.saunders@wsj.com and Richard Rubin at richard.rubin@wsj.com

 

(END) Dow Jones Newswires

February 09, 2016 20:48 ET (01:48 GMT)

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