IRS awards Equifax $7.25 million contract to prevent fraud

IRS awards Equifax $7.25 million contract to prevent fraud
© Greg Nash

The Internal Revenue Service (IRS) has agreed to give Equifax $7.25 million to verify taxpayers' identities and help combat fraud, according to a recently-issued contract.

The IRS is hiring the embattled credit reporting agency to “verify taxpayer identity and to assist in ongoing identity verification and validations needs of the Service,” according to its filing on Federal Business Opportunities, a website that lists federal contracts.

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The IRS labels Equifax as a “sole source order,” which means that the agency believes the credit reporting company is the only business capable of providing the service.

The contract comes as lawmakers and the public continue to hammer the company over its cybersecurity breach that compromised the information of 145.5 million Americans.

“This is considered a critical service that cannot lapse,” the Sept. 30 filing reads, saying that the Equifax contract will prevent a lapse in identity checks as the IRS resolves another contract.

The IRS said that it decided to award the "short-term contract" after an internal review.

"Equifax advised us that no IRS data was involved in their breach," the IRS said in a statement. "Following an internal review and an on-site visit with Equifax, the IRS believes the service Equifax provided does not pose a risk to IRS data or systems."

The agency says it will continue to "closely monitor the situation," though.

Equifax revealed last month that it had endured a massive cybersecurity breach in July, potentially exposing the personal information of almost half of all Americans, including names, dates of birth and Social Security numbers.

The company endured further criticism in the fallout of the breach after charging individuals to check to see if they were affected and accidentally tweeting a link to a fake website.

The Department of Justice then launched an investigation into the company over concerns of insider trading after three executives unloaded millions of dollars in stocks and options.

Lawmakers railed against former Equifax CEO Richard Smith during a congressional hearing on Tuesday.

Smith stepped down in the wake of breach last month.

“Mr. Smith, it seems to me that you’ve accomplished something that no one else has been able to accomplish,” Rep. Anna Eshoo (D-Calif.) said Tuesday.

“And that is that you have brought Republicans and Democrats together in outrage and distress and frustration over what’s happened, because this is huge."

The IRS contract was first reported by Politico.

This story was updated on Oct. 4 at 8:22 a.m.