IRS Data Breach Impacts FAFSA Applicants

Cybersecurity

Parents with children planning to attend college are familiar with the FAFSA, Free Application for Federal Student Aid.  It is the primary tool used by higher education to distribute both Federal financial aid as well as other available financial assistance. The Internal Revenue Service announced this past week that up to 100,000 accounts in that system have been compromised.

In March, the IRS shut off its data retrieval tool which could import tax information into the FAFSA. It took several months, but the agency finally came to the realization that the process was allowing data to be stolen and false tax returns, claiming refunds, were being filed.

Who’s a Victim? Who Knows!

IRS Commissioner John Koskinen told the Senate Finance Committee that they cannot determine how many users had their data stolen, so they were notifying the entire group of about 100,000. Within that batch of taxpayers, about 52,000 returns were identified. Some 8,000 illegal returns were not caught, resulting in losses of about $30 million. An additional 14,000 illegal returns were caught before any refund was issued.

The FAFSA can still be completed but tax information must be manually entered. The auto retrieval tool will not be functioning until October, IRS officials estimate. The IRS provides detailed information and instructions in a document titled IRS Offers Help to Students, Families to Get Tax Information for Student Financial Aid Applications.

This breach comes on the heels of a larger breech in 2015 in which the data of over 300,000 taxpayers was stolen. That event resulted in over $50 million in refunds based on fraudulent tax filings.

Charles Simmins brings thirty years of accounting and management experience to his coverage of the news. An upstate New Yorker, he is a freelance journalist, former volunteer firefighter and EMT, and is owned by a wife and four cats.

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