Congressional report criticizes contractor used by IRS during pandemic

A contractor that provided identity verification services for the IRS inflated both the amount of work it could handle and the amount of federal dollars lost to pandemic fraud, House investigators said in a statement. The company’s CEO denied the charges, saying he “would never use a claim about a national crisis to advance the interests of my company.”

A press release issued Thursday by the chairs of the Select Subcommittee on the Coronavirus Crisis and the Committee on Oversight and Reform said ID.me could not support its claim in June 2021 that the country had lost over $400 billion to fraudulent claims for unemployment benefits. That figure is nearly 10 times higher than the $45.7 billion in potential unemployment fraud that the Department of Labor Office of Inspector General found, the chairs of the congressional committees said.

In their statement, Rep. James Clyburn, D-S.C., chair of the Coronavirus Crisis Subcommittee, and Rep. Carolyn Maloney, D-N.Y., chair of the Committee on Oversight and Reform, said company CEO Blake Hall made this claim “in an apparent attempt to increase demands for ID.me’s services.” Hall responded that ID.me welcomes “additional oversight on this important matter so Americans have a full accounting of what happened to pandemic benefit funds.”

The press release also said wait times were longer than ID.me claimed as the federal government considered contracting with the company for services related to child tax credit payments, the report said. For example, in April 2021, the company said its wait times for video chats were “about 2 hours as of today.” But average wait times for video chats at that time were over four hours in 14 of 21 state unemployment programs that it served.

“Given substantial inequities in access to broadband internet, long wait times may have hurt those who most desperately needed relief” because people who cannot afford devices and internet access rely on computers in places such as public libraries, the report says.

Hall, in a response posted on LinkedIn, said “[a]ny assertion that we made a claim about fraud to advance our business omits the fact that 43 agencies chose ID.me before the statement was ever made.”

The situation with long wait times “was short-lived and temporary and caused by historic fraud,” ID.me spokesman Terry Neal said in a statement posted on the company’s website. “Excluding specific episodes, wait times have generally been below 30 minutes as they are today.”

Clyburn said ID.me has “received tens of millions in taxpayer dollars.” An ID.me spokesman declined to provide any figures.

But Graeme Crews, a spokesman for the Coronavirus Crisis Subcommittee, said in an email that the committee requested contract and revenue information from ID.me, which then provided contract ceilings, “including for federal contracts that appear to have low utilization.”

The IRS announced in February that it was moving away from its use of the facial-recognition technology that ID.me provided to authenticate people creating new online accounts. Elected officials and privacy advocates had questioned the use of the technology.

— To comment on this article or to suggest an idea for another article, contact Martha Waggoner at Martha.Waggoner@aicpa-cima.com.