When filling out FAFSA forms, people tend to use the Data Retrieval Tool to import tax information from the IRS and automatically populate the application with those details. this past fall, it was discovered that attackers could possibly take advantage of this tool, and they might use the stolen data to file fraudulent tax returns and steal refunds. Despite this possible threat, the tool remained available because up to 15 million people utilized it.
The Data Retrieval Tool was shut down in March after an unusual amount of uncompleted forms were discovered - a sign of an attack. Hackers posed as students by obtaining personal information outside the tax system and used the tool to access tax returns. the data gained from these returns were used to file for tax returns. Questionable tax returns were filed by people who had used the tool, and those returns have already been stopped. Though, the IRS suspects about 8,000 fraudulent returns were filed, processed, and refunded for a total of $30 million.
The shutdown also affects those applying for an income-driven repayment plan. Those applying for an income-driven repayment plan should submit alternative documentation of income to their federal loan services after they complete and submit the online application. The process of submitting alternative documentation of income is explained as a part of the online application.
While the Data Retrieval Tool is unavailable, the applications are still available and operable. The information needed to complete the FAFSA or the income-driven repayment plan can be found on the 2015 tax return. If one is not available, you may obtain a transcript through Get Transcript Online. If you also need access to your credit report, follow the steps provided by the Federal Trade Commission to acquire a free copy.
The extend of the breach is unknown, but the IRS is in the process of contacting 100,000 taxpayers to inform them their data may have been compromised. So far, they have sent out 35,000 letters to potential victims. If you have used the Data Retrieval Tool this year and have not received a letter, be sure to reach out to the IRS to make sure no fraudulent returns were filed under your name.
If you have been notified, contact one of the three Credit Reporting agencies: Transunion, Equifax, or Experian. Notify your bank and credit card companies of what has happened. If you do online banking or manage your credit card accounts online, place alerts on each account so you'll be notified of any transaction. Also, visit IdentityTheft.gov for any further assistance you may need.
The IRS is planning to launch a more secure version of the tool for the next application cycle in October.
For more information on the Data Retrieval Tool shut down, please visit The New York Times and the U.S. Department of Education.
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