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Lawsuit: IRS data breach could affect more than 500,000

Twenty-five years ago, the IRS e-file system became operational nationwide. For the most part, it's been a secure system that protects taxpayers' information, but there have certainly been some bungles -- the latest being the subject of a lawsuit recently filed against the IRS and IRS Commissioner John A. Koskinen.

Two plaintiffs say their personal information was stolen by hackers in order to file fraudulent tax returns. The IRS has already announced that criminals accessed 330,000 taxpayer accounts through use of the agency's "Get Transcript" application, but the plaintiffs, who are seeking to have the lawsuit be made a class action, say their proposed class could include more than 500,000 members.

The complaint states that the IRS became aware of security problems after the Treasury Inspector General for Tax Administration warned about security program deficiencies, but the agency "deliberately and intentionally decided not to implement the security measures needed to prevent the subject data breach."

In addition to injunctive relief that would improve the IRS's security protocol, the plaintiffs are seeking identity theft insurance, identity repair services, credit monitoring services for a limited time, attorney's fees, as well as other damages.

One of the plaintiffs said that she never actually used the Get Transcript app, but there was no reason to think that her transcript had been stolen before the IRS announced the breach. She believes hackers were still able to steal her information through the app on the IRS website.

The other plaintiff said that an IRS representative told her that her tax information had been illegally accessed through the Get Transcript application.

The truth is that the IRS has an obligation to protect your personal information, and the IRS is not above the law. If you find yourself involved in a tax controversy, then don't hesitate to work with an experienced tax lawyer to ensure that your rights are protected.

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