IRS: Actually, that breach last year was way worse than we thought

At first, it looked like just over 100,000 taxpayers had been affected. Then, last August, the number was updated to more than 300,000.

Now, it looks like a further 390,000 people's information could have been breached, bringing the total estimate to over 700,000.

"The Treasury Inspector General for Tax Administration conducted a nine-month-long investigation looking back to the launch of the application in January 2014 for additional suspicious activity," the Internal Revenue Service announced on Friday. "This expanded review has identified additional suspicious attempts to access taxpayer accounts using sensitive information already in the hands of criminals."

The thieves behind the breach are believed to have stolen information including Social Security details, dates of birth and street addresses from an outside, non-IRS source. They then used that information to clear a multistep authentication process in the Get Transcript app and access personal tax data on the IRS site.

In addition to the 390,000 additional taxpayer accounts now thought to have been accessed, another 295,000 were targeted without success, the IRS said.

The IRS will begin alerting the newly identified victims via mailings starting on Monday. It is also placing "special markers" on affected accounts to alert IRS staff; those affected can request an Identity Protect PIN for extra protection, as well.

The IRS is offering taxpayers whose returns were accessed free Equifax identity theft protection for one year. Information about the incident is being shared with states as part of the IRS's new Security Summit collaboration effort.

Just last month, the IRS suffered another online breach as well. The Get Transcript application has been offline since the original breach was discovered in May.