FAFSA Hack Compromises Financial Information of Up to 100,000 Taxpayers, Says IRS

The hackers pretended to be students using an online tool to apply for financial aid

FAFSA Hack Compromises Financial Information of Up to 100,000 Taxpayers, Says IRS
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April 10, 2017

The IRS has announced that the financial information of as many as 100,000 taxpayers may have been compromised by hackers pretending to be students applying for financial aid.

This breach may be the most extensive since the one in 2015, when thieves used stolen information to access the tax returns of more than 300,000 people and filed fraudulent returns to get a refund.

The possibility of a hack was first raised in early March when the agency shut down the Data Retrieval Tool used by families to import their tax information into the Free Application for Federal Student Aid (FAFSA) on the Department of Education's website.

The shutdown of the tool took place at the very height of the financial aid application season, outraging parents and students trying to completed the complicated FAFSA forms.

With a shrinking budget and staff, the IRS has had a hard time updating its cyber-defenses against increasingly sophisticated attacks.

It started to be concerned last fall upon realizing that criminals could take advantage of the Data Retrieval Tool. Agency staff worried that thieves might once again use stolen information to steal refunds by filing fraudulent returns.

"Fortunately we caught this at the front end," said IRS Commissioner Josh Koskinen during a Senate Finance Committee hearing.

The agency expects that the Data Retrieval Tool will not be secure and functioning again until October.

"Our highest priority is making sure that we protect taxpayers and their identity," Koskinen said.

The actual breadth of the hack is still unknown.