The IRS awarded a $7.25 million no-bid contract for fraud prevention services to Equifax at the end of last month, as the credit reporting firm reeled from its massive data breach.
The tax collection agency reported on Sept. 30th it contracted with Equifax to "verify taxpayer identity and to assist in ongoing identity verification."
On Monday, Equifax revealed hackers may have stolen the information of as many as 145.5 million Americans.
Former CEO Richard Smith, who resigned shortly after the disclosure of the massive breach, appeared before a House panel Tuesday to face questions from lawmakers and refused to promise the company's restitution efforts would make consumers whole. Smith is scheduled to testify before Congress several times this week.
In a statement, the IRS said that "the short-term contract was awarded to Equifax to prevent a lapse in service during a protest on another contract." Once the conflict is resolved, the agency said, it will pursue a competitive bidding process.
"Equifax advised us that no IRS data was involved in their breach," the statement continued. "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. At this time, we have seen no indications of tax fraud related to the Equifax breach, but we will continue to closely monitor the situation."
The service to be provided involves validating taxpayers' identities on the phone and in online communications.
News of the contract was first reported by Politico.