Cybersecurity Funds Well Spent at IRS, Watchdog Says

By Kat Lucero, Bloomberg BNA

The IRS appropriately used $106.4 million in funding designated for cybersecurity enhancements and identity theft prevention, the agency’s watchdog said.

“Cybersecurity funding supported network security improvements, more effective monitoring of data traffic, replacement of outdated equipment, and protection of taxpayer data from unauthorized access by identity thieves,” the Treasury Inspector General for Tax Administration said in a new report released Aug. 17.

The $106.4 million was part of the $290 million Congress set aside for the Internal Revenue Service for two years to improve customer service, cybersecurity, and the prevention of tax-related identity theft and fraud. About $91.8 million was allocated for security improvements, and $14.6 million was designated for identity theft prevention efforts. A total of $11.2 billion was enacted into law (Pub. L. No. 114-113) for the entire agency in fiscal year 2016.

TIGTA said IRS measures to protect taxpayer information and refund fraud prevention were the result of “collaborative efforts” of the Security Summit, a public-private partnership that includes tax preparation firms, software developers, payroll and tax financial product processors, and state tax administrators.

The report comes as Congress develops a funding amount for the IRS in the broader fiscal 2018 appropriations package for non-defense agencies and programs. Lawmakers have reduced the agency’s budget each year since 2010 amid growing cybersecurity threats and tax-related identity theft.

The House’s fiscal year 2018 appropriations bill proposes a $149 million cut to the IRS budget from the current level. It would also provide $3.9 billion for operations support, an increase of $211 million, to boost cybersecurity initiatives. The Rules Committee is preparing the measure for a September vote.

The Senate Appropriations Financial Services and General Government Subcommittee has yet to release its figures for the agency.

In prepared testimony to Senate appropriators on July 26, IRS Commissioner John Koskinen said the agency has implemented “sophisticated” capabilities that have “helped us detect suspicious activity in our various online tools and applications more quickly.”

Koskinen also said the IRS implemented new protections for the 2016 tax filing season that have yielded positive results — a 46 percent decrease in the number of victims reporting identity theft from 2015 to 2016. “Preliminary indications are that this number is again declining in 2017,” he said.

The text of the TIGTA report (2017-20-049) can be found at

To contact the reporter on this story: Kat Lucero in Washington at     

To contact the editor responsible for this story: Meg Shreve at