United States Revenue Authority

The Internal Revenue Service (IRS) is the state body of the Federal Government of the United States of America that collects taxes and monitors compliance with tax laws.

2023

The American tax system uses IT systems created back in the 1960s. $1.9 billion allocated for their replacement

At the end of November 2023, the United States Internal Revenue Agency (IRS) announced industry tenders as part of a large-scale project to update its IT infrastructure. $1.9 billion is allocated for relevant needs, and the work is designed for a seven-year period. Read more here.

US Tax Computer Systems Hacked with Porn

In January 2023, it became known that hackers from the Killlnet and Infinity Hackers BY groups managed to get personal data of 198 million Americans. The computer systems of the Internal Revenue Service hacked thanks to the addiction of one of his employees to pornography.

The leader of the Russian hacker group Killnet with the nickname Killmilk revealed the details of the hacking of the American department in a conversation with Газетой.ру:

My friends from Belarus created a regular copy of PornHub with a built-in script that steals cookies with passwords. We slipped this site by mail to a friend from the IRS. If interesting, then he came across when clicking on the link to the section with classic sex.

Hacker told how fake Pornhub helped hack the US tax network

A phishing attack on an employee of the US Internal Revenue Service was carried out at the end of 2022, but it was possible to penetrate the department's network and steal the personal data of the Americans only in January 2023.

"The hack of the US Tax Service has become a very difficult and tedious process for us, which lasted months," the hacker said.

According to him, the attack on the Tax Service was carried out in order to demonstrate the capabilities of Russian and Belarusian hackers in cyberspace.

Earlier in January 2023, Belarusian hackers from Infinity Hackers BY announced the hacking of the central block of the US Internal Revenue Service.

"Our servers hold the PASS access of one in two Americans. We want everyone to understand our presence on the Web. We did not come to discord your mood. We came to warn specifically in the direction of the American authorities, "the message says.

At the end of 2022, Killnet hackers also hacked into a software provider for American prisons. They said they wanted to demonstrate the vulnerability of the US security system.^[1]

2020: US authorities mistakenly distributed $1.4 billion to the dead

On June 25, 2020, the US Accounts Chamber announced that due to an error, about $1.4 billion was paid to the already deceased Americans. Funds were charged as part of state support for the population in the context of the crisis associated with the COVID-19 coronavirus pandemic.

The report of the Accounts Chamber says that the Tax Department and the Ministry of Finance "promptly moved to pay 160.4 million payments in the amount of $269 billion," but "faced difficulties in delivering payments to some persons and additional risks regarding payments to those who were not entitled to receive payments - dead or fraudsters."

More than $1.4 billion paid by US authorities to "dead souls" as compensation for coronavirus

It is explained that the rush caused by the situation in the country with the disease led to the fact that the data of the recipients of incentive payments were not compared with the registration database of the dead.    The Internal Revenue Service found no legal basis for refusing compensation to those who filed tax returns in 2018 and 2019, but later died.

Now the tax service will have to look for "economic effective ways" to notify the relatives of the late Americans about the way to return payments received by mistake to the state.

However, as the Congressional Administration emphasizes, by the end of June 2020, the US Internal Revenue Office has no plans on how to personally notify relatives of the almost 1.1 million dead who received payments as of April 30.Report of the Accounts Chamber of the United States

The US authorities adopted a package of stimulating economic measures in the amount of $2 trillion at the end of March 2020. They, in particular, included financial assistance to citizens who have already received 160 million benefits in the amount of $260 billion. Each adult citizen is entitled to a check for $1.2 thousand, and children were allocated $500. The United States decided to abandon unemployment benefits from August, as the economy recovers, and by that time there will be enough jobs

2019

Tax demanded to disclose income in bitcoins and warned about sanctions

In mid-August 2019, cryptocurrency investors received letters from the US Tax Office (IRS), which demanded to disclose revenues received in bitcoins and other digital assets, and warned of possible sanctions.

Notification of the CP2000 form is provided for cases when the tax reveals discrepancies between information transmitted by taxpayers and information from independent sources. The amount indicated in the letters is the estimated debt that cryptocurrency investors did not pay to the treasury. The tax office warns that letters should not be ignored in order to avoid a fine, but taxpayers have 30 days to protest these requirements. To do this, of course, the investor will need to provide supporting documents.

US authorities remind cryptocurrency owners of taxes

CoinCenter analysts note that the new newsletter includes 1099-K and 1099-MISC forms that some exchanges draw up for tax to report customer transactions that exceed a certain threshold. It is also known that the US tax office has been receiving information about 14,000 clients of Coinbase, the largest American crypto exchange, since 2017.

Earlier in July 2019, the tax service sent 10,000 letters urging investors to disclose revenues from cryptocurrency trading. Some investors received claims to disclose cryptocurrency deals between 2013 and 2017. However, the new newsletter is much more serious, as CoinTracker co-founder Chandan Loda notes - the CP2000 form contains specific amounts that investors must pay to the state and penalties that will follow if they ignore the request. The newsletter states that law enforcement measures of a civil or criminal nature will be applied to users who have not paid off debts to the state.^[2]

Start of IT modernization for $2.7 billion

On April 10, 2019, the head of the US Tax Service, Charles Rettig, called the update of information systems one of the most urgent areas of development of the department and announced the beginning of digital transformation.

Rettig told the Senate Finance Committee that the Internal Revenue Service has a plan for IT modernization in two stages (each for three years), which will cost from $2.3 billion to $2.7 billion. For 2020, Rettig asked the Senate for $290 million.

The U.S. tax agency has long sought to modernize its systems. In 2018, a critical failure of the electronic file system caused widespread discontent among Americans who want to submit documents before the annual deadline. Rettig explained that outdated IT systems are unsafe and overloaded, and the installation of serious modern updates is impossible without complete modernization.

Ultimately, replacing the equipment will improve service to American taxpayers, Rettig stressed, as it will allow for high-quality services in real time, whether by phone, online or in person.

However, IT modernization raises the problem of hiring workers to support these systems. Protecting taxpayer information and processing tax returns is a major challenge that requires attracting highly skilled workers to complete, Rettig said. Every year, the US Internal Revenue Service's IT systems are targeted by 1.4 billion cyber attacks, many of which are capable of causing serious problems at the national level.

About 45% of tax officers in general are ready to retire over the next two years, and replacing staff quickly enough, especially in critical areas of IT and cybersecurity, was not so easy due to the high competition for good specialists, according to the publication of FedScoop on April 11, 2019.^[3]

2018: Failure on the last day of tax payments

On April 17, 2018 - the last tax day of the previous year USA in - the Internal Revenue Service (IRS) IT system crashed, leaving millions of Americans unable to pay taxes on time. The department was forced to extend the reporting period by a day.

According to a statement from the IRS, there were some computer hardware issues that prevented some taxpayers from filing or paying 2017 taxes before the deadline of midnight on April 17. Systemic problems did not affect taxpayers who filed paperwork on time, the Internal Revenue Service said.

Taxpayers in the United States were given an extra day due to a malfunction on the IRS website

The head of the US Treasury Department, Steven Mnuchin , described the incident as a "massive technical failure." According to The New York Times, when accessing the IRS website, users saw an error message. At the same time, the header of the message said that the service would be approximately resumed on December 31, 9999 - in almost 8 thousand years.

How many taxpayers were affected by the failure in the IRS system is not specified. It is known that April 17 is the busiest day of the year for the tax department. In 2017, at least 5 million Americans passed on this reporting day.

The IRS apologized and gave additional time to electronically hand over the documents - until midnight on April 18.

The IRS recommends taxpayers file tax information online to avoid possible errors in filing returns. This process is much faster than sending documents by regular mail. In addition, with electronic filing of returns, tax deductions from the state and states can be obtained at a much faster time - on average, two to three weeks from the date of filing the return.^[4]

2016: Major IT outage

On February 3, 2016, the Tax Office USA reported a malfunction of its IT system, as a result of which some services for taxpayers stopped working.

The American tax authority did not specify what exactly went wrong, but said that the problems were related to the power supply of computer equipment. Because of them, a number of tax processing systems ceased to work, including the one that is responsible for accepting income tax returns in electronic form. At the same time, the official irs.gov website remained available for public viewing during a problem.

As a result of a malfunction of computer equipment at the US Internal Revenue Office, the service responsible for accepting income tax returns in electronic form was interrupted

The IRS assured that the incident that arose would not lead to serious disruptions in payments to taxpayers, and 90% of them would receive refunds due to them within 21 days.^[5]

Taxpayers can send their returns through IRS-working intermediary firms, which, after troubleshooting, will be able to transfer documents to the tax authority, the IRS noted. Those citizens who have already sent applications online are advised to just wait.

Although the IRS promised to restore normal operation of its information systems soon, on Thursday, February 4, 2016, some of them remained inoperable.

According to sources from the Bloomberg news agency, the system failure occurred at the IRS center located in West Virginia, and department officials tried to find out if the problem affected other objects.

As the publication notes with reference to the official website of the IRS, in West Virginia, the tax service has several centers: two of them are called corporate computing, and another - financial.^[6]

2015: Holes in tax IT system cost Americans $6 billion

In February 2015, it became known about the damage of several billion dollars that the American economy suffered due to tax fraud. Such large losses could have been avoided if the tax authority had updated its IT infrastructure.

According to the US Government Accountability Office (GAO) for 2014, fraudsters illegally received tax deductions totaling about $5.8 billion, which approximately corresponds to $18.34 for each American. Such actions of criminals in 2011 caused damage to the country in the amount of $3.6 billion. Thus, we can talk about an increase in crime in the field of taxation, writes The Wall Street Journal.^[7]

Fraudsters use stolen personal data to illegally obtain tax deductions. By filling out tax refund forms for other people's names, they receive checks from the Ministry of Finance, which they then cash.

Holes in the tax IT system cost Americans $6 billion

One of the channels for stealing taxpayers' personal data is the cyber infrastructure of the US Internal Revenue Service (IRS). According to Tax Commissioner John Koskinen, IT systems are outdated, but the state is in no hurry to update them, thereby depriving its citizens of protection from leaks.

In fiscal 2015, the budget for improving the IRS decreased by $346 million. More than $200 million was intended for critical IT system updates, Koskinen said.

The GAO report says that to combat fraudsters, the American Tax Office is introducing data analysis tools that have made methods for detecting illegal financial transactions more dynamic. In 2014, the IRS blocked criminal transactions related to attempts to obtain a tax deduction using stolen information in the amount of $24.2 billion.

Despite limited investment, the IRS is developing a range of technologies that can protect honest taxpayers from the actions of criminals. In particular, it is planned to introduce better ways to identify users based on the unique computer and tablet numbers that are used for electronic tax filing.

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