Wednesday, December 6, 2023

IRS Data Leak – Over 120,000 User Data Leaked

It has been discovered that over 120,000 taxpayers‘ confidential information was accidentally leaked by the IRS (Internal Revenue Service). As part of their tax returns, all of these individuals filed a form 990-T.

Unrelated business income is reported through IRS Form 990T to tax-exempt entities like:-

  • Nonprofits (charities)
  • IRA retirement accounts
  • SEP retirement accounts

An individual retirement account is an account that pays income from investments such as real estate and sales that are unrelated to the core purpose of the nonprofit or from sales that are unrelated to that purpose.

Data Exposure

Normally, when a taxpayer submits these forms to the IRS, the IRS is the only organization that is able to see them. Despite this, non-profit organizations must retain their Form 990-T for a period of three years after they are filed.

Recently, the Internal Revenue Service discovered that the bulk download section of the TEOS now allows users to download data in a machine-readable format (XML) for Form 990-T.

Approximately 120,000 taxpayer records were exposed by the data leak, including an array of personal information, such as:-

  • Names
  • Contact information
  • Reported financial income data (Within those IRAs)

Moreover, these are some of the things that were not included in the exposure:-

  • Social Security numbers
  • Full individual income information
  • Other data that could affect a taxpayer’s credit

The mistake was discovered in recent weeks by an IRS employee who works in the research department. The data was removed as a result of a more comprehensive investigation that triggered a broader inquiry.

Furthermore, the IRS will begin notifying affected taxpayers as soon as possible within the coming weeks. 

Due to aging information-technology systems, the IRS has had to deal with challenges for quite some time. Consequently, there have been instances in which private taxpayer information has been disclosed as a result.

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