Lawmakers Question IRS’ New Sole-Source Identity Verification Contract with Equifax

Rascon-CPA-Tax-Bookeeping-Payroll-Entrepreneurs-The Woodlands, TX-Houston, TXThe House Ways and Means Oversight Subcommittee held an October 4 hearing on the IRS’s efforts and challenges toward modernizing its information technology (IT) infrastructure. Witnesses from the IRS, Treasury Inspector General for Tax Administration (TIGTA) and Government Accountability Office (GAO) testified before the subcommittee.

The IRS is currently operating on out-of-date, antiquated hardware and software, IRS officials Jeffrey J. Tribiano, deputy commissioner for operations support, and Silvana Gina Garza, chief information officer, both testified. “Approximately 64 percent of IRS hardware is aged and out of warranty, and 32 percent of software is two or more releases behind the industry standard, with 15 percent more than four releases behind,” they noted in their shared written testimony.

According to Tribiano and Garza, the IRS’s depleted budget over the years is largely to blame. President Trump’s fiscal year (FY) 2018 budget request, however, requests $2.07 billion for information services, which is $216.1 million above current FY 2017 enacted levels. Additionally, Trump’s budget request proposes reinstating the IRS’s streamlined critical pay authority, the loss of which has caused the IRS challenges in its ability to recruit and retain IT officials with high expertise, the officials noted while encouraging Congress to approve the proposals.

Subcommittee Chairman Vern Buchanan, R-Fla., stated that the IRS’s management decisions must be included in the discussion, as well as the budget. “As we examine tax administration reforms, we welcome a discussion on changes to the IRS IT budget. However, changes to the budget must be coupled with better management and governance of the resources the IRS already has,” Buchanan said.

Administrative decisions, such as the IRS’s September 29 contract with Equifax following that company’s massive data breach, was of particular concern among lawmakers. “More than 20 days had passed since we learned of the greatest data breach in history, and you just signed a contract to pay Equifax to have access to IRS data for identity verification purposes,” Rep. Jackie Walorski, R-Ind., said. The IRS officials testifying did not have any information to provide on why the contract was executed.

Senate Concerns

Meanwhile, across the Capitol, Senate Finance Committee Chairman Orrin G. Hatch, R-Utah, and ranking member Ron Wyden, D-Ore., also expressed their concern as to the IRS’s contract with Equifax. In an October 4 bipartisan letter to IRS Commissioner John Koskinen, the SFC leaders requested information as to why the IRS moved forward with the contract.

“Last month, the Committee wrote to Equifax regarding the data breach that is now estimated to have exposed the personally identifiable information of at least 145-million Americans,” Hatch and Wyden wrote. “We were taken aback when it came to our attention that last week the IRS awarded Equifax a sole source contract worth over $7 million for “verifying taxpayer identity and…assisting in ongoing identity verification and validations needs of the Service,”” the taxwriters added. Hatch and Wyden requested a response by the IRS and a copy of the IRS/Equifax contract by October 11.