Human Trafficking Fraud Enforcement Act of 2014

Summary: Human Trafficking Fraud Enforcement Act of 2014 - Directs the Secretary of the Treasury to establish within the Internal Revenue Service (IRS) an office to investigate and prosecute violations of internal revenue laws by persons that appear to be engaged in violations of specified federal laws prohibiting forced labor, trafficking of individuals, and transportation of minors or aliens for immoral purposes and of state or territorial laws prohibiting the promotion of&nbsp;prostitution or of any commercial sex act. Directs such office to cooperate with the Child Exploitation and Obscenity Section of the Department of Justice (DOJ) and the Innocence Lost National Initiative of the Federal Bureau of Investigation (FBI).  Allow victims of human trafficking crimes to claim awards allowed for whistleblowing.  Amends the Internal Revenue Code to increase civil and criminal penalties for tax evasion attributable to income derived from human trafficking and commercial sex acts. Makes it a felony to fail to file a tax return including income derived from human trafficking or commercial sex acts. Appropriates to the Crime Victims Fund additional funds equal to the increase in receipts from increased civil and criminal penalties provided by this Act. 

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Human Trafficking Fraud Enforcement 
Act of 2014''.

SEC. 2. OFFICE FOR TAX LAW ENFORCEMENT RELATING TO HUMAN TRAFFICKING 
              AND PROMOTION OF COMMERCIAL SEX ACTS.

    (a) Establishment.--The Secretary of the Treasury shall establish 
an office within the Internal Revenue Service to investigate and 
prosecute violations of the internal revenue laws by persons that 
appear to be engaged in conduct in violation of any of the provisions 
specified in subsection (b).
    (b) Certain Criminal Provisions Relating to Human Trafficking and 
Promotion of Commercial Sex Acts.--The provisions of law referenced in 
this subsection are as follows:
            (1) The following provisions of title 18, United States 
        Code:
                    (A) Section 1351.
                    (B) Section 1589.
                    (C) Section 1590.
                    (D) Section 1591(a).
                    (E) Section 1952.
                    (F) Section 2421.
                    (G) Section 2422.
                    (H) Subsection (a), (d), or (e) of section 2423.
            (2) Section 1328 of title 8, United States Code.
            (3) The laws of any State or territory that prohibit the 
        promotion of prostitution or of any commercial sex act (as such 
        term is defined in section 1591(e)(3) of title 18, United 
        States Code).
    (c) Cooperation With Department of Justice.--To the extent 
possible, the office established under subsection (a) shall cooperate 
with the Child Exploitation and Obscenity Section of the Department of 
Justice and the Innocence Lost National Initiative of the Federal 
Bureau of Investigation.
    (d) Report.--Not later than 1 year after the date of the enactment 
of this Act, the Secretary of the Treasury shall report to the 
Committee on Ways and Means of the House of Representatives and the 
Committee on Finance of the Senate on the enforcement activities of the 
office established under subsection (a) and shall include any 
recommendations for statutory changes to assist in future prosecutions 
pursuant to this section.
    (e) Applicability of Whistleblower Awards to Victims of Human 
Trafficking.--For purposes of making an award under paragraph (1) or 
(2) of section 7623(b) of the Internal Revenue Code of 1986 with 
respect to information provided by victims of any person convicted of 
violating any of the provisions specified in subsection (b), the 
determination of whether such person is described in such paragraph 
shall be made without regard to paragraph (3) of section 7623(b) of 
such Code.
    (f) Authorization of Appropriations.--
            (1) In general.--There is authorized to be appropriated not 
        more than $4,000,000 for fiscal year 2015 to carry out 
        subsection (a).
            (2) Additional funding for administration of office.--
        Unless specifically appropriated otherwise, there is authorized 
        to be appropriated and is appropriated to the office 
        established under subsection (a) for fiscal years 2015 and 2016 
        for the administration of such office an amount equal to the 
        sum of--
                    (A) the amount of any tax under chapter 1 of the 
                Internal Revenue Code of 1986 (including any interest) 
                collected during such fiscal years as the result of the 
                actions of such office, plus
                    (B) the amount of any civil or criminal monetary 
                penalties imposed under such Code relating to such tax 
                and so collected.
        Amounts not expended under the preceding sentence shall be 
        transferred to and deposited in the Crime Victims Fund in the 
        Treasury (42 U.S.C. 10601).

SEC. 3. INCREASE IN CRIMINAL MONETARY PENALTIES.

    (a) Attempt To Evade or Defeat Tax.--Section 7201 of the Internal 
Revenue Code of 1986 (relating to attempt to evade or defeat tax) is 
amended--
            (1) by striking ``Any person'' and inserting the following:
    ``(a) In General.--Any person'', and
            (2) by adding at the end the following new subsection:
    ``(b) Attempt To Evade or Defeat Tax Attributable to Human 
Trafficking and Commercial Sex Acts.--
            ``(1) In general.--In the case of any attempt to evade or 
        defeat any tax attributable to income derived from an act 
        described in paragraph (2), subsection (a) shall be applied--
                    ``(A) by substituting `$500,000 ($1,000,000' for 
                `$100,000 ($500,000', and
                    ``(B) by substituting `10 years' for `5 years'.
            ``(2) Human trafficking and commercial sex acts.--For 
        purposes of paragraph (1), an act described in this paragraph 
        is any act which is a violation of any of the provisions 
        specified in section 2(b) of the Human Trafficking Fraud 
        Enforcement Act of 2014.''.
    (b) Willful Failure To File Return, Supply Information, or Pay 
Tax.--
            (1) General increase in monetary penalty.--Section 7203 of 
        the Internal Revenue Code of 1986 (relating to willful failure 
        to file return, supply information, or pay tax) is amended by 
        striking ``$25,000'' and inserting ``$50,000''.
            (2) Increase in penalties for failure to file with respect 
        to tax attributable to human trafficking and commercial sex 
        acts.--
                    (A) In general.--Section 7203 of the Internal 
                Revenue Code of 1986 (relating to willful failure to 
                file return, supply information, or pay tax), as 
                amended by paragraph (1), is amended by striking ``Any 
                person'' in the first sentence and inserting the 
                following:
    ``(a) In General.--Any person'', and
                    (B) by adding at the end the following new 
                subsection:
    ``(b) Failure To File With Respect to Tax Attributable to Human 
Trafficking and Commercial Sex Acts.--In the case of any failure with 
respect to any tax attributable to income derived from an act described 
in paragraph (2) of section 7201(b), the first sentence of subsection 
(a) shall be applied by substituting--
            ``(1) `felony' for `misdemeanor',
            ``(2) `$500,000 ($1,000,000' for `$50,000 ($100,000', and
            ``(3) `10 years' for `1 year'.''.
            (3) Conforming amendment.--The third sentence of section 
        7203(a) of the Internal Revenue Code of 1986 (as amended by 
        paragraph (1)) is amended by striking ``this section'' and 
        inserting ``this subsection''.
    (c) Fraud and False Statements.--Section 7206 of the Internal 
Revenue Code of 1986 (relating to fraud and false statements) is 
amended--
            (1) by striking ``Any person'' and inserting the following:
    ``(a) In General.--Any person'', and
            (2) by adding at the end the following new subsection:
    ``(b) Fraud and False Statements With Respect to Tax Attributable 
to Human Trafficking and Commercial Sex Acts.--In the case of any 
violation of subsection (a) relating to any tax attributable to income 
derived from an act described in paragraph (2) of section 7201(b), 
subsection (a) shall be applied--
            ``(1) by substituting `$500,000 ($1,000,000' for `$100,000 
        ($500,000', and
            ``(2) by substituting `5 years' for `3 years'.''.
    (d) Penalties May Be Applied in Addition to Other Penalties.--
Section 7204 of the Internal Revenue Code of 1986 (relating to 
fraudulent statement or failure to make statement to employees) is 
amended by striking ``the penalty provided in section 6674'' and 
inserting ``the penalties provided in sections 6674, 7201, and 7203''.
    (e) Increase in Monetary Limitation for Underpayment or Overpayment 
of Tax Due to Fraud.--Section 7206 of the Internal Revenue Code of 1986 
(relating to fraud and false statements), as amended by subsection (c), 
is amended by adding at the end the following new subsection:
    ``(c) Increase in Monetary Limitation for Underpayment or 
Overpayment of Tax Due to Fraud.--If any portion of any underpayment 
(as defined in section 6664(a)) or overpayment (as defined in section 
6401(a)) of tax required to be shown on a return is attributable to 
fraudulent action described in subsection (a), the applicable dollar 
amount under subsection (a) shall in no event be less than an amount 
equal to such portion. A rule similar to the rule under section 6663(b) 
shall apply for purposes of determining the portion so attributable.''.
    (f) Moneys Available To Assist Victims of Crime.--There are hereby 
appropriated to the Crime Victims Fund (42 U.S.C. 10601) amounts 
equivalent to the increase in receipts to the Treasury by reason of the 
amendments made by this section. Such amounts shall be available for 
victim assistance grants under the Victims of Crime Act of 1984, 
including crisis intervention, emergency shelter and transportation, 
counseling, and criminal justice advocacy to victims of crime.
    (g) Effective Date.--The amendments made by this section shall 
apply to actions, and failures to act, occurring after the date of the 
enactment of this Act.