Bramwell’s Lunch Beat: IRS ‘Get Transcript’ Application Gets Hackedby
SEC fines Deutsche Bank for accounting irregularities in crisis
The US Securities and Exchange Commission (SEC) said Deutsche Bank misstated its financial accounts during the peak of the financial crisis and fined the bank $55 million to settle the long-running probe into the valuation of complex derivatives, wrote Thomas Atkins of Reuters. The SEC did not bring any cases against individuals, nor did the bank admit or deny allegations connected to trading “leveraged super senior” (LSS) derivatives dating back to late 2008 and early 2009. But the SEC issued a stinging critique of the bank's accounting practices after determining that Deutsche undervalued risk held on its books through the complex derivatives by not correctly accounting for so-called gap risk in the LSS trades. The bank responded by saying that there was no reliable model available for gap risk during the turbulence following the collapse of Lehman Brothers.
Breach at IRS exposes tax returns
The IRS said on Tuesday that identity thieves used one of its online services to obtain prior-year tax return information for about 100,000 US households, a major breach of the agency charged with safeguarding taxpayers’ privacy, wrote John D. McKinnon and Laura Saunders of the Wall Street Journal. The information was obtained from an IRS application known as “Get Transcript” that allows taxpayers to access prior-year returns. About 104,000 attempts successfully accessed earlier returns, IRS Commissioner John Koskinen said. An additional 100,000 attempts were unsuccessful, the agency added. The IRS said cybercrooks used stolen Social Security numbers and other specific data acquired from elsewhere to gain unauthorized access to the tax-agency accounts, beginning in February and continuing through mid-May. The thieves then used the data to fashion a fake return for 2014, and requested the IRS send a tax refund to a hard-to-trace debit card.
IRS statement on the ‘Get Transcript’ application
The IRS released a statement Tuesday on the data breach of the Get Transcript application. Here’s a portion of that statement. [To read the full statement, click here.]
“The IRS announced today that criminals used taxpayer-specific data acquired from non-IRS sources to gain unauthorized access to information on approximately 100,000 tax accounts through IRS’s Get Transcript application. This data included Social Security information, date of birth, and street address.
“These third parties gained sufficient information from an outside source before trying to access the IRS site, which allowed them to clear a multistep authentication process, including several personal verification questions that typically are only known by the taxpayer. The matter is under review by the Treasury Inspector General for Tax Administration (TIGTA), as well as the IRS’s Criminal Investigation unit, and the Get Transcript application has been shut down temporarily. The IRS will provide free credit monitoring services for the approximately 100,000 taxpayers whose accounts were accessed. In total, the IRS has identified 200,000 total attempts to access data and will be notifying all of these taxpayers about the incident.
“As always, the IRS takes the security of taxpayer data extremely seriously, and we are working aggressively to protect affected taxpayers and continue to strengthen our protocols.”
CFOs seek to avoid bite of health law’s ‘Cadillac tax’
Finance chiefs grappling with rising healthcare costs face a new dilemma: how to avoid paying hefty taxes on generous employee healthcare plans, wrote Kimberly S. Johnson and Maxwell Murphy of the Wall Street Journal’s CFO Journal. The Affordable Care Act calls for an excise tax on high-cost health plans, often called the “Cadillac tax,” starting in 2018. The tax is meant to help fund insurance for previously uncovered Americans through the new health law. These cost thresholds begin at $10,200 for individual coverage and $27,500 for family coverage. The cost is the total amount both the employer and employee pay in premiums. Waste management company Action Environmental Group could face a $400,000 bill from the government for triggering the tax, based on coverage it provides for 350 of its employees and their families. “To me it’s a penalty for giving our employees a generous benefits package,” said CFO Brian Giambagno.
Senate tax reform groups get more time
Senate Finance Committee leaders are giving tax reform working groups some more time to formulate their recommendations, wrote Bernie Becker of The Hill. Chairman Orrin Hatch (R-UT) and the panel's top Democrat, Sen. Ron Wyden (D-OR), had hoped for recommendations by the end of May. But in a statement on May 21, the two senators said that the working groups made it clear that they needed extra time to do the job right. The panel will set a new deadline after lawmakers return from next week's recess. The Senate Finance Committee set up five separate working groups in January to deal with the wide range of knotty problems that come with revamping the tax code. The working groups are focusing on individual taxes, business taxes, savings and investment, infrastructure, and international issues.
GOP senator targets education credits
Bernie Becker also wrote for The Hill that Sen. Dan Coats (R-IN) is pushing new legislation aimed at rooting out the fraud involved in tax breaks for higher education. TIGTA reported this month that the IRS wrongly handed more than $5.6 billion in education credits in 2012 to roughly 3.6 million taxpayers. Coats' bill, which Senate Finance Committee Chairman Orrin Hatch signed on to, would require a valid tuition statement or other proof of education status to qualify for tax incentives. It also seeks to limit the burdens on colleges and universities.
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