Text of S. 1534 (112th): Identify Theft and Tax Fraud Prevention Act (Introduced version)

1.

This Act may be cited as the Identify Theft and Tax Fraud Prevention Act.

2.

(a)

Section 7207 of the Internal Revenue Code of 1986 is amended—

(1)

by striking Any person who willfully and inserting the following:

(a)

Any person who willfully

,

(2)

by striking Any person required and inserting the following:

(b)

Any person required

, and

(3)

by adding at the end the following:

(c)

Any person who knowingly or willfully misappropriates another person's tax identification number in connection with any list, return, account, statement, or other document submitted to the Secretary shall be fined not less than $25,000 ($200,000 in the case of a corporation), or imprisoned not more than 5 years, or both, together with the costs of prosecution.

.

(b)

The amendments made by this section shall apply to returns and information submitted after the date of the enactment of this Act.

3.

(a)

Section 6713(a) of the Internal Revenue Code of 1986 is amended—

(1)

by striking $250 and inserting $1,000, and

(2)

by striking $10,000 and inserting $50,000.

(b)

Section 7216(a) of the Internal Revenue Code of 1986 is amended by striking $1,000 and inserting $100,000.

(c)

The amendments made by this section shall apply to disclosures or uses after the date of the enactment of this Act.

4.

(a)

Not later than 1 year after the date of the enactment of this Act, the Secretary of the Treasury (or the Secretary's delegate) shall implement an identify theft tax fraud prevention program under which—

(1)

a person who has filed an identity theft affidavit with the Secretary may elect—

(A)

to be provided with a unique personal identification number to be included on any Federal tax return filed by such person, or

(B)

to prevent the processing of any Federal tax return submitted in an electronic format by a person purporting to be such person, and

(2)

the Secretary will provide additional identity verification safeguards for the processing of any Federal tax return filed by a person described in paragraph (1) in cases where a unique personal identification number is not included on the return.

5.

For any fiscal year, the Commissioner of Internal Revenue may transfer not more than $10,000,000 to the Enforcement account of the Internal Revenue Service from amounts appropriated to other Internal Revenue Service accounts. Any amounts so transferred shall be used solely for the purposes of preventing and resolving potential cases of tax fraud.

6.

(a)

The Commissioner of Internal Revenue shall establish within the Criminal Investigation Division of the Internal Revenue Service the position of Local Law Enforcement Liaison.

(b)

The Local Law Enforcement Liaison shall—

(1)

coordinate the investigation of tax fraud with State and local law enforcement agencies;

(2)

communicate the status of tax fraud cases involving identity theft, and

(3)

carry out such other duties as delegated by the Commissioner of Internal Revenue.

7.

Subsection (a) of section 7803 of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:

(4)

The Commissioner shall submit to the Committee on Finance of the Senate and the Committee on Ways and Means of the House or Representatives an annual report detailing—

(A)

the number of reports of tax fraud and suspected tax fraud received from State and local law enforcement agencies in the preceding year, and

(B)

the actions taken in response to such reports.

.

8.

(a)

The Comptroller General shall conduct a study to examine the role of prepaid debit cards and commercial tax preparation software in facilitating fraudulent tax returns through identity theft.

(b)

Not later than 1 year after the date of the enactment of this Act, the Comptroller General shall submit to the Committee on Finance of the Senate and the Committee on Ways and Means of the House of Representatives a report with the results of the study conducted under subsection (a), together with any recommendations.

9.

(a)

The Secretary of Commerce shall not disclose information contained on the Death Master File to any person with respect to any individual who has died at any time during the calendar year in which the request for disclosure is made or the succeeding calendar year unless such person is certified under the program established under subsection (b).

(b)

(1)

The Secretary of Commerce shall establish a program to certify persons who are eligible to access the information described in subsection (a) contained on the Death Master File.

(2)

A person shall not be certified under the program established under paragraph (1) unless the Secretary determines that such person has a legitimate fraud prevention interest in accessing the information described in subsection (a).

(c)

Any person who is certified under the program established under subsection (b), who receives information described in subsection (a), and who during the period of time described in subsection (a)—

(1)

discloses such information to any other person, or

(2)

uses any such information for any purpose other than to detect or prevent fraud,

shall pay a penalty of $1,000 for each such disclosure or use, but the total amount imposed under this subsection on such a person for any calendar year shall not exceed $50,000.

(d)

(1)

The Social Security Administration shall not be compelled to disclose to any person who is not certified under the program established under section 9(b) the information described in section 9(a).

(2)

For purposes of section 552 of title 5, United States Code, this section shall be considered a statute described in subsection (b)(3)(B) of such section 552.

10.

(a)

Section 6103(k)(10) of the Internal Revenue Code of 1986 is amended by striking subparagraph (D).

(b)

Not later than 6 months after the date of the enactment of this Act, the head of the Federal Bureau of Prisons shall submit to Congress a detailed plan on how it will use the information provided from the Secretary of Treasury under section 6103(k)(10) of the Internal Revenue Code of 1986 to reduce prison tax fraud.

(c)

It is the sense of the Senate that the heads of State agencies charged with the administration of prisons should—

(1)

develop plans for using the information provided by the Secretary of Treasury under section 6103(k)(10) of the Internal Revenue Code of 1986 to reduce prison tax fraud, and

(2)

coordinate with the Internal Revenue Service with respect to the use of such information.

11.

(a)

(1)

The Secretary of the Treasury (or the Secretary's delegate) shall review whether current federal tax laws and regulations related to the confidentiality and disclosure of return information prevent the effective enforcement of local, State, and federal identity theft statutes. The review shall consider whether greater information sharing between the Internal Revenue Service and State and local law enforcement authorities would improve the enforcement of criminal laws at all levels of government.

(2)

In conducting the review under paragraph (1), the Secretary shall solicit the views of, and consult with, State and local law enforcement officials.

(b)

Not later than 180 days after the date of enactment of this Act, the Secretary shall submit a report with the results of the review conducted under subsection (a), along with any legislative recommendations, to the Committee on Finance of the Senate and the Committee on Ways and Means of the House of Representatives.