Taxpayer ID Protection and Fraud Prevention Act

Summary: Taxpayer ID Protection and Fraud Prevention Act  This bill amends the Internal Revenue Code to establish or modify various requirements related to protecting taxpayer identities and filing tax returns electronically.  The bill requires:    tax refunds for electronically filed returns to be made by electronic funds transfer with certain exceptions; the Internal Revenue Service (IRS), to the maximum extent practicable, to allow income tax refunds to be made by electronic funds transfer to prepaid debit cards, Direct Express cards, digital wallets, and other secure electronic payment methods;  the IRS to report to Congress annually on improper payments made by the IRS;  the IRS to work collaboratively with the public and private sectors to protect taxpayers from identity theft refund fraud; and  the Department of the Treasury to ensure that the Electronic Tax Administration Advisory Committee studies (including by providing organized public forums) and makes recommendations to Treasury regarding methods to prevent identity theft refund fraud.   The bill also:  decreases from 250 to 25 the minimum number of tax returns a taxpayer must be required to file during the year to allow the IRS to require electronic filing, and  changes the earliest date on which credits or refunds may be made for the child tax credit or the earned income tax credit to the 1st day of the third month (currently the 15th day of the second month) following the close of the taxable year.  

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Taxpayer ID Protection and Fraud 
Prevention Act''.

SEC. 2. INCOME TAX REFUNDS WITH RESPECT TO ELECTRONICALLY FILED RETURNS 
              REQUIRED TO BE MADE BY ELECTRONIC FUNDS TRANSFER.

    (a) In General.--Section 6402 of the Internal Revenue Code of 1986 
is amended by adding at the end the following new subsection:
    ``(n) Refunds To Be Made by Electronic Funds Transfer.--
            ``(1) In general.--Except as otherwise provided in this 
        subsection, any refund or payment made by the Secretary under 
        this title with respect to an income tax return which is filed 
        electronically shall be made by electronic funds transfer.
            ``(2) Exceptions.--The Secretary may, based on standards 
        developed by the Secretary, waive the application of paragraph 
        (1) to refunds or payments--
                    ``(A) to persons or classes of persons for whom 
                compliance imposes a hardship, including persons who do 
                not have access to any of the methods by which the 
                Secretary makes payments by electronic funds transfer 
                (including bank accounts, prepaid debit cards, Direct 
                Express Cards, digital wallets, and any other secured 
                electronic payment method as may identified by the 
                Secretary), and
                    ``(B) in other circumstances as may be necessary.
            ``(3) Regulations.--The Secretary shall issue such 
        regulations or other guidance as may be necessary to increase 
        the percentage of refunds and payments made by electronic funds 
        transfer, including regulations or other guidance which--
                    ``(A) requires recipients of refunds or payments 
                required to be made by electronic funds transfer to--
                            ``(i) designate one or more financial 
                        institutions or other authorized agents to 
                        which such payments shall be made, and
                            ``(ii) provide information necessary for 
                        such recipient to receive such refund or 
                        payment by electronic funds transfer, and
                    ``(B) ensures that persons required to have an 
                account at a financial institution under subparagraph 
                (A) because of the application of paragraph (1)--
                            ``(i) will have access to such an account 
                        at a reasonable cost, and
                            ``(ii) are given the same consumer 
                        protections with respect to such account as 
                        other account holders at the same financial 
                        institution.''.
    (b) No Inference With Respect to Form of Electronic Funds 
Transfer.--Nothing in the amendment made by this section shall be 
interpreted to restrict the form of electronic funds transfer by which 
the Secretary of the Treasury, or his designee, may make refunds or 
payments.
    (c) Effective Date.--The amendment made by this section shall apply 
to refunds and payments made after December 31, 2019.

SEC. 3. REFUNDS TO PREPAID DEBIT CARDS, DIRECT EXPRESS CARDS, ETC.

    The Secretary of the Treasury, or his designee, shall--
            (1) to the maximum extent practicable, allow income tax 
        refunds to be made by electronic funds transfer to prepaid 
        debit cards, Direct Express cards, digital wallets, and any 
        other secure electronic payment method as may be determined by 
        the Secretary,
            (2) ensure that taxpayers are aware of the various methods 
        referred to in paragraph (1) by which taxpayers may received 
        income tax refunds by electronic funds transfer, and
            (3) revise references in materials provided to taxpayers 
        (including income tax returns and instructions) to ensure that 
        the various accounts to which refunds may be made are 
        referenced, not simply checking and savings accounts.

SEC. 4. REPORT ON IMPLEMENTATION OF REQUIREMENT THAT ALL INCOME TAX 
              REFUNDS BE MADE BY ELECTRONIC FUNDS TRANSFER.

    Not later than the date which is 1 year after the date of the 
enactment of this Act, the Secretary of the Treasury, or the 
Secretary's delegate, shall submit a written report to Congress 
describing how the Secretary would implement a requirement that all 
income tax refunds be made by electronic funds transfer. Such report 
shall include any legislative recommendations that the Secretary may 
have with respect to the implementation of such a requirement.

SEC. 5. DECREASE IN RETURN THRESHOLD FOR REQUIRING ELECTRONIC FILING.

    (a) In General.--Section 6011(e)(2)(A) of the Internal Revenue Code 
of 1986 is amended by striking ``250'' and inserting ``25''.
    (b) Effective Date.--The amendment made by this section shall apply 
to returns the due date for which (determined without regard to 
extensions) is after December 31, 2018.

SEC. 6. MODIFICATION OF EARLIEST DATE ON WHICH CREDITS OR REFUNDS IN 
              CONNECTION WITH CHILD TAX CREDIT AND EARNED INCOME TAX 
              CREDIT ARE MADE.

    (a) In General.--Section 6402(m) of the Internal Revenue Code of 
1986 is amended by striking ``the 15th day of the second month'' and 
inserting ``the 1st day of the third month''.
    (b) Effective Date.--The amendment made by this section shall apply 
to credits or refunds made after December 31, 2018.

SEC. 7. ANNUAL REPORT ON IMPROPER PAYMENTS.

    The Secretary of the Treasury, or the Secretary's delegate, shall 
annually submit a written report to Congress which identifies the 
aggregate amounts of improper payments made by the Internal Revenue 
Service. Such report shall separately state the aggregate amount of 
such payments by relevant subcategories. Such subcategories shall 
include underpayments, overpayments, payments attributable to identity 
theft, payments attributable to misidentification other than identity 
theft, payments attributable to other fraud, and such other 
subcategories as the Secretary determines would be useful.

SEC. 8. PUBLIC-PRIVATE PARTNERSHIP TO ADDRESS IDENTITY THEFT.

    The Secretary of the Treasury (or the Secretary's delegate) shall 
work collaboratively with the public and private sectors to protect 
taxpayers from identity theft refund fraud.

SEC. 9. RECOMMENDATIONS OF ELECTRONIC TAX ADMINISTRATION ADVISORY 
              COMMITTEE REGARDING IDENTITY THEFT REFUND FRAUD.

    The Secretary of the Treasury shall ensure that the advisory group 
convened by the Secretary pursuant to section 2001(b)(2) of the 
Internal Revenue Service Restructuring and Reform Act of 1998 (commonly 
known as the Electronic Tax Administration Advisory Committee) studies 
(including by providing organized public forums) and makes 
recommendations to the Secretary regarding methods to prevent identity 
theft refund fraud.