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IRS Awards Multimillion Dollar Contract for Fraud Prevention to… Equifax

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Under a no-bid contract that was issued last week, the IRS is set to pay Equifax $7.25 million to help the agency prevent fraud and verify the identities of taxpayers. The announcement comes within a month of Equifax announcing a massive security breach that resulted in approximately 145.5 million citizens having their personal information exposed.

As reported by Politico, the Federal Business Opportunities database contract award announced the contract award on September 30, the last day of the fiscal year, confirming the IRS secured data services through Equifax. The credit bureau is set to “assist in ongoing identity verifications and validations” and will “verify taxpayer identity.”

The announcement labels the contract as a “sole source order.” This means that Equifax was identified as the only company capable of providing the needed services. It also asserts that the contract was issued in efforts to prevent a lapse in identity verifications while US officials resolve a dispute involving a separate contract.

Equifax, one of the three major credit bureaus, released a statement in early September stating that a cybersecurity breach had occurred that potentially compromised the personal details of over 145 million Americans, including social security numbers. Data from Equifax is used to determine whether a person qualifies for various financial products, including credit cards, mortgages, loans, and other services.

After the breach was confirmed, Equifax faced additional scrutiny for its actions, including providing confusing instructions to customers, using language that appeared to limit a person’s ability to sue the company, and tweeting out links to a fake website instead of its own.

The Department of Justice also became involved, ultimately opening a criminal investigation, after it was revealed that three Equifax executives sold company stock valued at nearly $1.8 million after the breach was discovered internally but before it was disclosed to the public.

Richard Smith, Equifax’s CEO at the time of the breach, stepped down from his position during the fallout.

The IRS, which hasn’t been immune to security breaches, was provided $106.4 million by Congress to implement security upgrades and bolster identity theft efforts, and has taken steps to upgrade outdated technology.

Last month, Orrin Hatch, the Senate Finance Chairman, wrote a letter to Josh Koskinen, the IRS Commissioner, calling into question the agency’s security systems. Hatch expressed his concern that the IRS doesn’t have the technology required “to safeguard the integrity of our tax administration system.”