UPDATE, Oct. 13, 2017: Public and Congressional pressure, which included Sen. Sherrod Brown's (D-Ohio) letter to the Treasury Department urging it to review and potentially bar Equifax from consideration in any new or renewed government contracts, has paid off for opponents of the credit reporting bureau deal.
The IRS announced, per an Oct. 12 report by Politico, that it has temporarily suspended the $7.25 million, no-bid contract it awarded to Equifax to verify the identities of taxpayers when they create accounts on the tax agency's website.
Equifax isn't the only entity taking heat in the wake of the company's cyber security breach that exposed the personal and financial data of 145.5 million consumers.
The Internal Revenue Service is now under fire for awarding the credit reporting bureau a no-bid contract.
The IRS-Equifax deal was revealed this week as former Equifax CEO Richard Smith made mea culpa rounds on Capitol Hill.
The $7.25 million federal deal was finalized last week and was viewed with critical amazement during Smith's appearance Oct. 4 before the Senate Banking, Housing and Urban Affairs Committee.
"You realize to many Americans right now, that looks like we're giving Lindsay Lohan the key to the minibar," Senator John Kennedy (R-Louisiana).
Sen. Heidi Heitkamp (D-North Dakota) even suggested Equifax end the agreement. "Tell the IRS, 'It's okay to migrate the contract someplace else, and say, 'We're getting our house in order. We understand that we have a ways to walk back our reputation," she said.
Like that's going to happen.
So instead, lawmakers are demanding an explanation from the IRS.
IRS [tries to] explain Equifax deal: Word of the contract, finalized just as we were learning of Equifax's mishandling of its in-house security systems, couldn't have been worse, for both the credit reporting company and the IRS.
The IRS has described the contract, which was put in place on Sept. 29, the final day of the 2017 fiscal year, as a stopgap measure to prevent the interruption of critical IRS functions.
The IRS said it decided earlier this year to end what had been a long-term deal with Equifax to provide identity verification services to the IRS. However, the credit bureau challenged the proposed change. That meant before any new IRS contract could take effect, the Government Accountability Office (GAO) would be required to review the change.
"We had to either, one, stop the service, which means millions of taxpayers would not be able to get their transcripts, including those that are in need of it — like in the hurricane disaster areas, they use those tools to get their transcripts — or do a bridge contract with Equifax until GAO decides on the protest, and we move forward," IRS Deputy Commissioner for Operations Support Jeffrey Tribiano said during the Oct. 3 House Energy and Commerce Committee hearing on Equifax.
The GOA, however, says the IRS reason is not necessarily true.
"Congress gave agencies, like IRS, the tools to move forward under appropriate situations. They appear to be electing not to use it," Chuck Young, GAO public affairs managing director, said in a statement to The Hill newspaper.
Reps, Sens demand fuller IRS answers: Now House and Senate lawmakers are seeking more information from the IRS as to why it went with Equifax.
"Please share with me the materials you used for the internal deliberations regarding this contract, and the rationale to award this activity to Equifax," wrote Rep. Earl Blumenauer (D-Oregon) in an Oct. 3 letter to IRS Commissioner John Koskinen.
Two days later a similar, but more specific, letter was sent to Koskinen by nine Democratic Senators. That communication, led by Sen. Gary C. Peters (D-Michigan), asked for answers to eight specific questions prompted by the Equifax contract.
Peters and his Democratic colleagues Sens. Patrick Leahy of Vermont, Mazie K. Hirono of Hawaii, Jeanne Shaheen of New Hampshire, Robert Menendez of New Jersey, Kirsten Gillibrand of New York, Martin Heinrich of New Mexico, Patty Murray of Washington and Jeffrey A. Merkley of Oregon want to know:
- Full scope of the latest Equifax contract,
- Details on another, less-costly Equifax contract awarded under full and open competition,
- Extent that Experian and TransUnion credit bureau services (and other firms) were considered during the earlier competitive bidding process for identity verification services,
- How much consideration the IRS gave to Equifax's responsibility in exposing consumer data via identity theft during the contract award process,
- Metrics or oversight mechanisms that will be used to measure Equifax's contract performance,
- Amount the IRS has spent on taxpayer identification services from fiscal years 2013 through 2017,
- Amount the IRS projects it will spend for taxpayer ID services in fiscal year 2018, and
- How reduced IRS budgets have increased the agency's reliance on contractors in its efforts to fight tax fraud.
We, along with these members of Congress, are anxiously awaiting Koskinen's replies.
Tax identity theft protection steps: In the meantime, remember that we all need to be extra careful in filing this coming year since crooks have details on almost 146 million of us that they can use to submit fake returns in our names to claim fraudulent refunds.
There are several ways to protect your financial and tax data from Equifax hackers before tax filing season starts.
And once you can submit your 2017 tax return to the IRS (and for most folks to state tax departments, too) next year, your best move is to do so as early as you can so that you beat any crooks to the filing punch.
You also might find these items of interest:
- Will Equifax hack affect 2018 tax filing season?
- Monopoly Man photobombs Equifax Senate hearing to protest forced arbitration changes
- Bill collectors accused of using financially dubious tactics to collect unpaid IRS debts