IRS suspends Equifax contract, cites ‘new information’

The Internal Revenue Service has suspended its $7.25 million contract with Atlanta-based Equifax, the agency announced Friday.

The decision came a day after the company was forced to shut down one of its customer service web sites, a page that had been manipulated by hackers who had apparently placed malicious software on the site.

That hijacking was acknowledged by Equifax after the misuse of the site was reported by tech magazine Ars Technica.

The IRS, no-bid contract was granted to Equifax, “to provide fraud prevention and taxpayer identification services.” The deal was roundly criticized, since it came in the wake of disclosure of the breach in which hackers gained access to information about 145 million people.

According to a statement issued by Equifax Friday afternoon the IRS had notified the company of the suspension.

“We remain confident that we are the best party to perform the services required in this contract,” the statement said. “We are engaging IRS officials to review the facts and clarify available options.”

The IRS had awarded the contract to Equifax in late September, the same week that the company’s former chief executive was testifying before Congress about the massive data breach suffered by the company.

That decision had been harshly criticized in Congress. IRS officials faced tough questions about the deal in early October during hearings before a U.S. House Ways and Means subcommittee.

For example, Rep. Jackie Walorski (R-Indiana) called the contract award “an abject failure.”

Sen. Jeff Merkley (D-Oregon) tweeted: “Have the people who awarded this contract been living under a rock for the last month??”

On Friday, the IRS described the suspension as temporary and said the action was taken “following new information available today.”

“During this suspension, the IRS will continue its review of Equifax systems and security,” the IRS said.

The agency said it does not believe that any data shared by the IRS with Equifax had been compromised. The suspension was taken as “a precautionary step as the IRS continues its review,” the agency said.

Losing the contract does only modest financial damage to the $3.14 billion-a-year company, but it adds to the public relations beating that the company has been taking — just this week.

On Tuesday, the Wall Street Journal reported that data for 10.9 million driver’s licenses was including in the huge breach the company announced last month. Then came the tampering with the firm’s customer service web site.

The company said Thursday that the problems with that site had involved a “third party” and did not give hackers any information held by Equifax. However, the danger, experts said, was that the software tricked visitors into providing data thinking they were giving it to Equifax.

With the contract’s suspension, taxpayers cannot open new “Secure Access” accounts at the IRS, accounts that offer a variety of online tools to help a taxpayer prepare for filing taxes. However, existing accounts are apparently not affected.


AJC Business reporter Michael E. Kanell keeps you updated on the latest news about jobs, housing and consumer issues in metro Atlanta and beyond. You'll find more on, including these stories:

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