H. R. 531
IN THE HOUSE OF REPRESENTATIVES
February 6, 2013
Ms. Castor of Florida (for herself and Mr. Nugent) introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the Committee on the Judiciary, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned
To prevent identity theft and tax crimes.
This Act may be cited as the
Tax Crimes and Identity Theft
Expedited resolution from Internal Revenue Service for identity theft victims
Not later than 90 days after an individual notifies the Secretary of the Treasury that such individual’s identity has been misused by another person in connection with the internal revenue laws, the Secretary shall, to the extent practicable, determine the extent to which the taxpayer’s return and return information were affected by such misuse and shall take such actions as are necessary to correct such affected return or return information with respect to such misuse.
Disclosure of return and return information in Federal and State prosecution relating to identity fraud
Subsection (k) of section 6103 of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:
Disclosure of certain return information in connection with identity theft and fraudulent returns
In the case of an investigation pertaining to the misuse of the identity of another person for purposes of filing a false or fraudulent return of tax, upon receipt of a written request which meets the requirements of subparagraph (C), the Secretary may disclose return information to officers and employees of any Federal law enforcement agency, or any officers and employees of any State or local law enforcement agency, who are personally and directly engaged in the investigation of any crimes implicated in such misuse, but only if any such law enforcement agency is part of a team with the Internal Revenue Service in such investigation.
Limitation on use of information
Information disclosed under this subparagraph shall be solely for the use of such officers and employees to whom such information is disclosed in such investigation.
A request meets the requirements of this clause if—
the request is made by the head of the agency (or his delegate) involved in such investigation, and
the request sets forth the specific reason why such disclosure may be relevant to the investigation.
Paragraph (2) of
section 6103(a) of such Code is amended by inserting
Paragraph (4) of
section 6103(p) of such Code is amended in the matter preceding subparagraph
(A) by inserting
or (11) after
Paragraph (2) of
section 7213(a) of such Code is amended by inserting
The amendments made by this section shall apply to disclosures after the date of the enactment of this Act.
Criminal penalty for using a false identity in connection with tax fraud
Section 7207 of the Internal Revenue Code of 1986 is amended—
Any person who willfully and inserting the following:
Any person who willfully
Any person required and inserting the following:
Information in connection with certain exempt organizations
Any person required
by adding at the end the following:
Misappropriation of identity
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.
The amendments made by this section shall apply to returns and information submitted after the date of the enactment of this Act.
Increased penalty for improper disclosure or use of information by preparers of returns
Section 6713(a) of the Internal Revenue Code of 1986 is amended—
$250 and inserting
$10,000 and inserting
Section 7216(a) of the Internal Revenue Code of 1986 is
amended by striking
$1,000 and inserting
The amendments made by this section shall apply to disclosures or uses after the date of the enactment of this Act.
PIN system for prevention of identity theft tax fraud
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—
a person who has filed an identity theft affidavit with the Secretary may elect—
to be provided with a unique personal identification number to be included on any Federal tax return filed by such person, or
to prevent the processing of any Federal tax return submitted in an electronic format by a person purporting to be such person, and
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.
Prevention of fraudulent refunds
The Secretary of the Treasury (or the Secretary’s delegate) shall establish a fraudulent tax refund prevention program under which—
additional triggers are added to the refund database to identify potentially fraudulent tax refunds, and
the legitimacy of the refund claim can be promptly determined before the distribution of the refund.
Multiple refunds to same debit card
The additional triggers added under subsection (a)(1) shall include identification of requests for multiple refunds to be paid to the same debit card.
Authority to transfer Internal Revenue Service appropriations to use for tax fraud enforcement
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.
Local Law Enforcement Liaison
The Commissioner of Internal Revenue shall establish within the Criminal Investigation Division of the Internal Revenue Service the position of Local Law Enforcement Liaison.
The Local Law Enforcement Liaison shall—
coordinate the investigation of tax fraud with State and local law enforcement agencies;
communicate the status of tax fraud cases involving identity theft, and
carry out such other duties as delegated by the Commissioner of Internal Revenue.
Report on tax fraud
Subsection (a) of section 7803 of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:
Annual report on tax fraud
The Commissioner shall submit to the Committee on Finance of the Senate and the Committee on Ways and Means of the House of Representatives an annual report detailing—
the number of reports of tax fraud and suspected tax fraud received from State and local law enforcement agencies in the preceding year, and
the actions taken in response to such reports.
Study on the use of prepaid debit cards and commercial tax preparation software in tax fraud
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.
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.
Restriction on access to the death master file
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).
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.
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).
Imposition of penalty
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)—
discloses such information to any other person, or
uses any such information for any purpose other than to detect or prevent fraud,
Exemption from Freedom of Information Act requirement with respect to certain records of deceased individuals
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).
Treatment of Information
Treasury report on information sharing barriers with respect to identity theft
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.
In conducting the review under paragraph (1), the Secretary shall solicit the views of, and consult with, State and local law enforcement officials.
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.
Grants to investigate and prosecute State and local tax crimes
Grant program authorized
The Attorney General is authorized to award grants to State and local law enforcement agencies to assist such agencies in the investigation and prosecution of tax crimes.
Authorization of appropriations
For each fiscal year, there are authorized to be appropriated to carry out this section, from amounts made available in each such fiscal year to carry out the Edward Byrne Memorial Justice Assistance Grants program under part E of title I of the Omnibus Crime Control and Safe Streets Act of 1968 (42 U.S.C. 3750 et seq.) , $50,000,000.