I 

114TH CONGRESS 

1ST SESSION H. R. 3981 

To amend the Internal Revenue Code of 1986 to prevent tax-related identity 

theft and tax fraud, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

NOVEMBER 5, 2015 

Mr. PASCRELL (for himself, Mr. BLUMENAUER, Mr. THOMPSON of California, 

and Mr. LARSON of Connecticut) introduced the following bill; which was 

referred to the Committee on Ways and Means, and in addition to the 

Committees on Energy and Commerce, the Judiciary, Financial Services, 

and Appropriations, 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 

A BILL 

To amend the Internal Revenue Code of 1986 to prevent 

tax-related identity theft and tax fraud, and for other 

purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE; ETC. 

4 (a) IN GENERAL.—This Act may be cited as the 

5 ‘‘Identity Theft and Tax Fraud Prevention Act of 2015’’. 

6 (b) TABLE OF CONTENTS.—The table of contents of 

7 this Act is as follows: 


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Sec. 1. Short title; etc. 

TITLE I—PROTECTING VICTIMS OF TAX-RELATED IDENTITY 

THEFT 

Sec. 101. Expedited refunds for identity theft victims. 

Sec. 102. Single point of contact for identity theft victims. 

Sec. 103. Enhancements to IRS PIN Program. 

Sec. 104. Electronic filing opt out. 

Sec. 105. Taxpayer notification of suspected identity theft. 

TITLE II—SHUTTING DOWN ABUSIVE IDENTITY THEFT AND TAX 

FRAUD SCHEMES 

Sec. 201. Restrictions on ability to use prepaid cards for tax fraud. 

Sec. 202. Limitation on multiple tax refunds to the same account. 

TITLE III—ADDING CRITICAL NEW PROTECTIONS TO SAFEGUARD 

SOCIAL SECURITY NUMBERS 

Sec. 301. Reducing medical identity theft. 

Sec. 302. Prohibition of the display, sale, or purchase of Social Security numbers. 

Sec. 303. Criminal penalties for the misuse of a Social Security number. 

Sec. 304. Civil actions and civil penalties. 

TITLE IV—STRENGTHENING LAWS AND IMPROVING 

ENFORCEMENT AGAINST TAX-RELATED IDENTITY THEFT 

Sec. 401. Criminal penalty for using a false identity in connection with tax 

fraud. 

Sec. 402. Increased penalty for improper disclosure or use of information by 

preparers of returns. 

Sec. 403. Authority to transfer Internal Revenue Service appropriations to combat tax fraud. 

Sec. 404. Local law enforcement liaison. 

Sec. 405. Extend Internal Revenue Service authority to require truncated social 

security numbers on Form W–2. 

Sec. 406. Clarification with respect to regulation of Federal tax return preparers. 

Sec. 407. Authentication of users of electronic services accounts. 

Sec. 408. Identity verification by tax return preparers required. 

TITLE V—ACCELERATING TRANSITION TO A REAL-TIME TAX 

SYSTEM THAT PROTECTS TAXPAYERS AND REDUCES FRAUD 

Sec. 501. Improvement in access to information in the National Directory of 

New Hires for tax administration purposes. 

Sec. 502. Plan of action for transitioning to a real-time tax system. 


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1 TITLE I—PROTECTING VICTIMS 

2 OF TAX-RELATED IDENTITY 

3 THEFT 

4 SEC. 101. EXPEDITED REFUNDS FOR IDENTITY THEFT VIC5 TIMS. 

6 Not later than 180 days after the date of the enact7 ment of this Act, the Secretary of the Treasury, or the 

8 Secretary’s delegate, shall establish a plan of action to re9 duce the administrative time required to process and re10 solve cases of identity theft in connection with tax returns, 

11 including the issuance of refunds to legitimate taxpayers, 

12 to no more than 90 days, on average. 

13 SEC. 102. SINGLE POINT OF CONTACT FOR IDENTITY THEFT 

14 VICTIMS. 

15 Not later than 180 days after the date of the enact16 ment of this Act, the Secretary of the Treasury, or the 

17 Secretary’s delegate, shall establish new procedures to en18 sure that any taxpayer whose return has been delayed or 

19 otherwise adversely affected due to identity theft has a 

20 single point of contact at the Internal Revenue Service 

21 throughout the processing of his or her case. The single 

22 point of contact shall track the case of the taxpayer from 

23 start to finish and coordinate with other specialized units 

24 to resolve case issues as quickly as possible. 


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1 SEC. 103. ENHANCEMENTS TO IRS PIN PROGRAM. 

2 (a) IN GENERAL.—The Secretary of the Treasury, or 

3 the Secretary’s delegate, shall issue a personal identifica4 tion number to any individual requesting protection from 

5 identity theft-related tax fraud after the individual’s true 

6 identity has been established and verified. 

7 (b) REPORT.—Not later than 360 days after the date 

8 of the enactment of this Act, the Secretary of the Treasury 

9 shall submit to Congress a report analyzing the effective10 ness of the program described in subsection (a) in reduc11 ing tax fraud. 

12 SEC. 104. ELECTRONIC FILING OPT OUT. 

13 Not later than 180 days after the date of the enact14 ment of this Act, the Secretary of the Treasury, or the 

15 Secretary’s delegate, shall implement a program under 

16 which a person who has filed an identity theft affidavit 

17 with the Secretary may elect to prevent the processing of 

18 any Federal tax return submitted in an electronic format 

19 by a person purporting to be such a person. 

20 SEC. 105. TAXPAYER NOTIFICATION OF SUSPECTED IDEN21 TITY THEFT. 

22 (a) IN GENERAL.—Chapter 77 of the Internal Rev23 enue Code of 1986 is amended by adding at the end the 

24 following new section: 


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1 ‘‘SEC. 7529. NOTIFICATION OF SUSPECTED IDENTITY 

2 THEFT. 

3 ‘‘If the Secretary determines that there was an unau4 thorized use of the identity of any taxpayer, the Secretary 

5 shall— 

6 ‘‘(1) as soon as practicable and without jeop7 ardizing an investigation relating to tax administra8 tion, notify the taxpayer, and 

9 ‘‘(2) if any person is criminally charged by in10 dictment or information relating to such unauthor11 ized use, notify such taxpayer as soon as practicable 

12 of such charge.’’. 

13 (b) CLERICAL AMENDMENT.—The table of sections 

14 for chapter 77 of the Internal Revenue Code of 1986 is 

15 amended by adding at the end the following new item: 

‘‘Sec. 7529. Notification of suspected identity theft.’’. 

16 (c) EFFECTIVE DATE.—The amendments made by 

17 this section shall apply to determinations made after the 

18 date of the enactment of this Act. 

19 TITLE II—SHUTTING DOWN ABU20 SIVE IDENTITY THEFT AND 

21 TAX FRAUD SCHEMES 

22 SEC. 201. RESTRICTIONS ON ABILITY TO USE PREPAID 

23 CARDS FOR TAX FRAUD. 

24 (a) ACCOUNTS WITH ELEVATED RISK OF IDENTITY

25 THEFT.— 


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1 (1) IN GENERAL.—Not later than 360 days 

2 after the date of the enactment of this Act, the Fed3 eral primary financial regulatory agencies, in con4 sultation with the Secretary of the Treasury, shall 

5 jointly prescribe regulations requiring newly issued 

6 deposit or transaction account numbers, as the case 

7 may be, to be distinguishable between verified ac8 counts and at-risk accounts. 

9 (2) DEFINITIONS.—As used in this section— 

10 (A) the term ‘‘at-risk account’’ means any 

11 deposit account or transaction account, includ12 ing accounts associated with a prepaid access 

13 arrangement, that is not a verified account; 

14 (B) the term ‘‘primary financial regulatory 

15 agency’’ has the same meaning as in section 

16 2(12) of the Dodd-Frank Wall Street Reform 

17 and Consumer Protection Act (12 U.S.C. 

18 5301(12)); and 

19 (C) the term ‘‘verified account’’ means any 

20 deposit account or transaction account in which 

21 the identity of the account holder and any pre22 paid access customer associated with the ac23 count is verified by— 


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1 (i) customer identification procedures 

2 that comply with section 5318(l) of title 

3 31, United States Code; and 

4 (ii) direct review of an original, unex5 pired government-issued form of identifica6 tion bearing a photograph or similar safe7 guard, such as a driver’s license or pass8 port. 

9 (b) GAO AUDIT OF DEBIT CARD ISSUERS TO EN10 SURE COMPLIANCE WITH CUSTOMER IDENTIFICATION

11 REQUIREMENTS.— 

12 (1) REVIEW AND EVALUATION.—The Comp13 troller General of the United States shall review and 

14 evaluate the effectiveness of the current Customer 

15 Identification Program rules implementing the cus16 tomer identification program requirements under 

17 section 5318(l) of title 31, United States Code, as 

18 such rules apply to the prepaid card industry. 

19 (2) REQUIRED CONSIDERATIONS.—The review 

20 and evaluation required under paragraph (1) shall— 

21 (A) consider whether weaknesses in cur22 rent customer identification programs are con23 tributing to identity theft and financial loss, 

24 particularly with respect to tax fraud; and 

25 (B) review whether— 


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1 (i) current risk-based standards for 

2 customer identification are the best means 

3 to prevent criminal use of prepaid cards 

4 and provide sufficient guidance and cer5 tainty to the sellers and providers of pre6 paid access; 

7 (ii) current exclusions from customer 

8 identification requirements, such as exclu9 sions for government benefit programs, are 

10 appropriate; and 

11 (iii) Federal regulatory agencies exer12 cise adequate oversight and supervision of 

13 customer identification practices of the 

14 prepaid card industry. 

15 (3) REPORT TO CONGRESS.—Not later than 

16 360 days after the date of the enactment of this Act, 

17 the Comptroller General of the United States shall 

18 submit to Congress a report— 

19 (A) on the findings of the review and eval20 uation required under paragraph (1); and 

21 (B) containing any recommendations or 

22 proposals for legislative or administrative action 

23 to improve the customer identification practices 

24 of the prepaid card industry. 


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1 SEC. 202. LIMITATION ON MULTIPLE TAX REFUNDS TO THE 

2 SAME ACCOUNT. 

3 (a) IN GENERAL.—Not later than 180 days after the 

4 date of the enactment of this Act, the Secretary of the 

5 Treasury, or the Secretary’s delegate, shall issue regula6 tions that restrict the delivery or deposit of multiple tax 

7 refunds from the same tax year to the same individual 

8 account or mailing address. 

9 (b) EXCEPTION.—The regulation promulgated under 

10 subsection (a) shall provide that the restrictions shall not 

11 apply in cases and situations where the Secretary deter12 mines there is not a likelihood of tax fraud. 

13 TITLE III—ADDING CRITICAL 

14 NEW PROTECTIONS TO SAFE15 GUARD SOCIAL SECURITY 

16 NUMBERS 

17 SEC. 301. REDUCING MEDICAL IDENTITY THEFT. 

18 (a) REDUCTION IN RELIANCE ON SOCIAL SECURITY

19 ACCOUNT NUMBERS IN ELECTRONIC HEALTH

20 RECORDS.—Section 3002 of the Public Health Service Act 

21 (42 U.S.C. 300jj–12) is amended by adding at the end 

22 the following: 

23 ‘‘(f) AUTHORIZATION TO DEVELOP CERTIFICATION

24 STANDARDS.— 

25 ‘‘(1) PLAN.— 


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1 ‘‘(A) DEVELOPMENT.—The HIT Policy 

2 Committee shall develop a plan to provide for a 

3 reliable nationwide health information tech4 nology infrastructure that precludes the use of 

5 an individual’s social security account number 

6 for data matching, coordination of benefits, bill7 ing, and research purposes. 

8 ‘‘(B) REPORT TO CONGRESS.—Not later 

9 than 1 year after the date of the enactment of 

10 this subsection, the HIT Policy Committee shall 

11 submit to Congress a report detailing the plan 

12 developed under paragraph (1), together with 

13 recommendations for such legislation and ad14 ministrative action as the HIT Policy Com15 mittee determines appropriate. 

16 ‘‘(2) INCORPORATION.—Not later than 5 years 

17 after the date of the enactment of this subsection, 

18 the Secretary, in consultation with the HIT Stand19 ards Committee and following notice and comment 

20 rulemaking, shall incorporate the plan developed 

21 under paragraph (1)(A) in certification criteria and 

22 use all means available to impose the plan on non23 certified health information systems.’’. 

24 (b) IMPROVED SECURITY STANDARDS.— 


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1 (1) IN GENERAL.—Section 1173(d)(1) of the 

2 Social Security Act (42 U.S.C. 1320d–2(d)(1)) is 

3 amended— 

4 (A) in subparagraph (A)(v), by striking 

5 ‘‘and’’ at the end; 

6 (B) in subparagraph (B), by striking the 

7 period at the end and inserting ‘‘; and’’; and 

8 (C) by adding at the end the following new 

9 subparagraph: 

10 ‘‘(C) require a health care provider to dis11 continue, over an established period of time, the 

12 storage of an individual’s social security ac13 count number after the individual’s eligibility 

14 and financial responsibility for specific services 

15 has been determined, except when— 

16 ‘‘(i) the individual’s ability to pay for 

17 such services is in doubt; 

18 ‘‘(ii) the individual’s social security 

19 account number is needed for the coordina20 tion of benefits for services rendered prior 

21 to the effective date of this subparagraph; 

22 or 

23 ‘‘(iii) the health insurance claim num24 ber of the individual contains the individ25 ual’s full social security account number.’’. 


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1 (2) EFFECTIVE DATE.—The amendments made 

2 by paragraph (1) shall take effect 90 days after the 

3 date that is 4 years after the date of the enactment 

4 of this Act. 

5 (c) REPORT.—Not later than 1 year after the date 

6 of the enactment of this Act, the Secretary of Health and 

7 Human Services shall submit to Congress a report on the 

8 state of information security at medical offices and facili9 ties. Such report shall include recommendations for such 

10 legislative actions as the Secretary determines appropriate 

11 to help prevent identity theft at such offices and facilities. 

12 SEC. 302. PROHIBITION OF THE DISPLAY, SALE, OR PUR13 CHASE OF SOCIAL SECURITY NUMBERS. 

14 (a) PROHIBITION.— 

15 (1) IN GENERAL.—Chapter 47 of title 18, 

16 United States Code, is amended by inserting after 

17 section 1028A the following: 

18 ‘‘§ 1028B. Prohibition of the display, sale, or purchase 

19 of Social Security numbers 

20 ‘‘(a) DEFINITIONS.—In this section: 

21 ‘‘(1) DISPLAY.—The term ‘display’ means to in22 tentionally communicate or otherwise make available 

23 (on the Internet or in any other manner) to the gen24 eral public an individual’s Social Security number. 


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1 ‘‘(2) PERSON.—The term ‘person’ means any 

2 individual, partnership, corporation, trust, estate, co3 operative, association, or any other entity. 

4 ‘‘(3) PURCHASE.—The term ‘purchase’ means 

5 providing directly or indirectly, anything of value in 

6 exchange for a Social Security number. 

7 ‘‘(4) SALE.—The term ‘sale’ means obtaining, 

8 directly or indirectly, anything of value in exchange 

9 for a Social Security number. 

10 ‘‘(5) STATE.—The term ‘State’ means any 

11 State of the United States, the District of Columbia, 

12 Puerto Rico, the Northern Mariana Islands, the 

13 United States Virgin Islands, Guam, American 

14 Samoa, and any territory or possession of the 

15 United States. 

16 ‘‘(b) LIMITATION ON DISPLAY.—No person may dis17 play any individual’s Social Security number to the gen18 eral public without the affirmatively expressed consent of 

19 the individual. 

20 ‘‘(c) LIMITATION ON SALE OR PURCHASE.—Except 

21 as otherwise provided in this section, no person may sell 

22 or purchase any individual’s Social Security number with23 out the affirmatively expressed consent of the individual. 

24 ‘‘(d) PREREQUISITES FOR CONSENT.—In order for 

25 consent to exist under subsection (b) or (c), the person 


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1 displaying or seeking to display, selling or attempting to 

2 sell, or purchasing or attempting to purchase, an individ3 ual’s Social Security number shall— 

4 ‘‘(1) inform the individual of the general pur5 pose for which the number will be used, the types of 

6 persons to whom the number may be available, and 

7 the scope of transactions permitted by the consent; 

8 and 

9 ‘‘(2) obtain the affirmatively expressed consent 

10 (electronically or in writing) of the individual. 

11 ‘‘(e) EXCEPTIONS.— 

12 ‘‘(1) IN GENERAL.—Nothing in this section 

13 shall be construed to prohibit or limit the display, 

14 sale, or purchase of a Social Security number— 

15 ‘‘(A) required, authorized, or excepted 

16 under any Federal law; 

17 ‘‘(B) for a public health purpose, including 

18 the protection of the health or safety of an indi19 vidual in an emergency situation; 

20 ‘‘(C) for a national security purpose; 

21 ‘‘(D) for a law enforcement purpose, in22 cluding the investigation of fraud and the en23 forcement of a child support obligation; 

24 ‘‘(E) if the display, sale, or purchase of the 

25 number is for a use occurring as a result of an 


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1 interaction between businesses, governments, or 

2 business and government (regardless of which 

3 entity initiates the interaction), including— 

4 ‘‘(i) the prevention of fraud (including 

5 fraud in protecting an employee’s right to 

6 employment benefits); 

7 ‘‘(ii) the facilitation of credit checks 

8 or the facilitation of background checks of 

9 employees, prospective employees, or volun10 teers; 

11 ‘‘(iii) the retrieval of other informa12 tion from other businesses, commercial en13 terprises, government entities, or private 

14 nonprofit organizations; or 

15 ‘‘(iv) when the transmission of the 

16 number is incidental to, and in the course 

17 of, the sale, lease, franchising, or merger 

18 of all, or a portion of, a business; 

19 ‘‘(F) if the transfer of such a number is 

20 part of a data matching program involving a 

21 Federal, State, or local agency; or 

22 ‘‘(G) if such number is required to be sub23 mitted as part of the process for applying for 

24 any type of Federal, State, or local government 

25 benefit or program. 


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1 ‘‘(2) RULE OF CONSTRUCTION.—Nothing in 

2 this subsection shall be construed as permitting a 

3 professional or commercial user to display or sell a 

4 Social Security number to the general public. 

5 ‘‘(f) LIMITATION.—Nothing in this section shall pro6 hibit or limit the display, sale, or purchase of Social Secu7 rity numbers as permitted under title V of the Gramm8 Leach-Bliley Act (15 U.S.C. 6801 et seq.), or for the pur9 pose of affiliate sharing as permitted under the Fair Cred10 it Reporting Act (15 U.S.C. 1681 et seq.), except that no 

11 entity regulated under such Acts may make Social Secu12 rity numbers available to the general public, as may be 

13 determined by the appropriate regulators under such Acts. 

14 For purposes of this subsection, the general public shall 

15 not include affiliates or unaffiliated third-party business 

16 entities as may be defined by the appropriate regulators.’’. 

17 (2) CONFORMING AMENDMENT.—The chapter 

18 analysis for chapter 47 of title 18, United States 

19 Code, is amended by inserting after the item relating 

20 to section 1028 the following: 

‘‘1028B. Prohibition of the display, sale, or purchase of Social Security numbers.’’. 

21 (b) STUDY; REPORT.— 

22 (1) IN GENERAL.—The Attorney General shall 

23 conduct a study and prepare a report on all of the 

24 uses of Social Security numbers permitted, required, 


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1 authorized, or excepted under any Federal law. The 

2 report shall include a detailed description of the uses 

3 allowed as of the date of enactment of this Act, the 

4 impact of such uses on privacy and data security, 

5 and shall evaluate whether such uses should be con6 tinued or discontinued by appropriate legislative ac7 tion. 

8 (2) REPORT.—Not later than 1 year after the 

9 date of the enactment of this Act, the Attorney Gen10 eral shall report to Congress findings under this 

11 subsection. The report shall include such rec12 ommendations for legislation based on criteria the 

13 Attorney General determines to be appropriate. 

14 (c) EFFECTIVE DATE.—The amendments made by 

15 this section shall take effect on the date that is 30 days 

16 after the date on which the final regulations promulgated 

17 under section 1028B of title 18, United States Code, are 

18 published in the Federal Register. 

19 SEC. 303. CRIMINAL PENALTIES FOR THE MISUSE OF A SO20 CIAL SECURITY NUMBER. 

21 (a) PROHIBITION OF WRONGFUL USE AS PERSONAL

22 IDENTIFICATION NUMBER.—No person may obtain any 

23 individual’s Social Security number for purposes of locat24 ing or identifying an individual with the intent to physVerDate Sep 11 2014 07:21 Nov 10, 2015 Jkt 059200 PO 00000 Frm 00017 Fmt 6652 Sfmt 6201 E:\BILLS\H3981.IH H3981

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1 ically injure, harm, or use the identity of the individual 

2 for any illegal purpose. 

3 (b) CRIMINAL SANCTIONS.—Section 208(a) of the 

4 Social Security Act (42 U.S.C. 408(a)) is amended— 

5 (1) in paragraph (8), by inserting ‘‘or’’ after 

6 the semicolon; and 

7 (2) by inserting after paragraph (8) the fol8 lowing: 

9 ‘‘(9) except as provided in subsections (e) and 

10 (f) of section 1028B of title 18, United States Code, 

11 knowingly and willfully displays, sells, or purchases 

12 (as those terms are defined in section 1028B(a) of 

13 title 18, United States Code) any individual’s Social 

14 Security account number without having met the 

15 prerequisites for consent under section 1028B(d) of 

16 title 18, United States Code; or 

17 ‘‘(10) obtains any individual’s Social Security 

18 number for the purpose of locating or identifying the 

19 individual with the intent to injure or to harm that 

20 individual, or to use the identity of that individual 

21 for an illegal purpose;’’. 

22 SEC. 304. CIVIL ACTIONS AND CIVIL PENALTIES. 

23 (a) CIVIL ACTION IN STATE COURTS.— 

24 (1) IN GENERAL.—Any individual aggrieved by 

25 an act of any person in violation of this Act or any 


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1 amendments made by this Act may, if otherwise per2 mitted by the laws or rules of the court of a State, 

3 bring in an appropriate court of that State— 

4 (A) an action to enjoin such violation; 

5 (B) an action to recover for actual mone6 tary loss from such a violation, or to receive up 

7 to $500 in damages for each such violation, 

8 whichever is greater; or 

9 (C) both such actions. 

10 It shall be an affirmative defense in any action 

11 brought under this paragraph that the defendant 

12 has established and implemented, with due care, rea13 sonable practices and procedures to effectively pre14 vent violations of the regulations prescribed under 

15 this Act. If the court finds that the defendant will16 fully or knowingly violated the regulations prescribed 

17 under this subsection, the court may, in its discre18 tion, increase the amount of the award to an amount 

19 equal to not more than 3 times the amount available 

20 under subparagraph (B). 

21 (2) STATUTE OF LIMITATIONS.—An action may 

22 be commenced under this subsection not later than 

23 the earlier of— 

24 (A) 5 years after the date on which the al25 leged violation occurred; or 


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1 (B) 3 years after the date on which the al2 leged violation was or should have been reason3 ably discovered by the aggrieved individual. 

4 (3) NONEXCLUSIVE REMEDY.—The remedy pro5 vided under this subsection shall be in addition to 

6 any other remedies available to the individual. 

7 (b) CIVIL PENALTIES.— 

8 (1) IN GENERAL.—Any person who the Attor9 ney General determines has violated any section of 

10 this Act or any of the amendments made by this Act 

11 shall be subject, in addition to any other penalties 

12 that may be prescribed by law— 

13 (A) to a civil penalty of not more than 

14 $5,000 for each such violation; and 

15 (B) to a civil penalty of not more than 

16 $50,000, if the violations have occurred with 

17 such frequency as to constitute a general busi18 ness practice. 

19 (2) DETERMINATION OF VIOLATIONS.—Any 

20 willful violation committed contemporaneously with 

21 respect to the Social Security numbers of 2 or more 

22 individuals by means of mail, telecommunication, or 

23 otherwise, shall be treated as a separate violation 

24 with respect to each such individual. 


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1 (3) ENFORCEMENT PROCEDURES.—The provi2 sions of section 1128A of the Social Security Act 

3 (42 U.S.C. 1320a–7a), other than subsections (a), 

4 (b), (f), (h), (i), (j), (m), and (n) and the first sen5 tence of subsection (c) of such section, and the pro6 visions of subsections (d) and (e) of section 205 of 

7 such Act (42 U.S.C. 405) shall apply to a civil pen8 alty action under this subsection in the same man9 ner as such provisions apply to a penalty or pro10 ceeding under section 1128A(a) of such Act (42 

11 U.S.C. 1320a–7a(a)), except that, for purposes of 

12 this paragraph, any reference in section 1128A of 

13 such Act (42 U.S.C. 1320a–7a) to the Secretary 

14 shall be deemed to be a reference to the Attorney 

15 General. 

16 TITLE IV—STRENGTHENING 

17 LAWS AND IMPROVING EN18 FORCEMENT AGAINST TAX19 RELATED IDENTITY THEFT 

20 SEC. 401. CRIMINAL PENALTY FOR USING A FALSE IDEN21 TITY IN CONNECTION WITH TAX FRAUD. 

22 (a) IN GENERAL.—Section 7206 of the Internal Rev23 enue Code of 1986 is amended— 

24 (1) by striking ‘‘Any person’’ and inserting the 

25 following: 


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1 ‘‘(a) IN GENERAL.—Any person’’, and 

2 (2) by adding at the end the following new sub3 section: 

4 ‘‘(b) USE OF FALSE IDENTITY.—Any person who 

5 willfully misappropriates another person’s taxpayer iden6 tity (as defined in section 6103(b)(6)) for the purpose of 

7 making any list, return, account, statement, or other docu8 ment submitted to the Secretary under the provisions of 

9 this title shall be guilty of a felony and, upon conviction 

10 thereof, shall be fined not more than $250,000 ($500,000 

11 in the case of a corporation) or imprisoned not more than 

12 5 years, or both, together with the costs of prosecution.’’. 

13 (b) AGGRAVATED IDENTITY THEFT.—Section 

14 1028A(c) of title 18, United States Code, is amended by 

15 striking ‘‘or’’ at the end of paragraph (10), by striking 

16 the period at the end of paragraph (11) and inserting ‘‘; 

17 or’’, and by adding at the end the following new para18 graph: 

19 ‘‘(12) section 7206(b) of the Internal Revenue 

20 Code of 1986 (relating to use of false identity in 

21 connection with tax fraud).’’. 

22 (c) EFFECTIVE DATE.—The amendments made by 

23 this section shall apply to offenses committed after the 

24 date of the enactment of this Act. 


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1 SEC. 402. INCREASED PENALTY FOR IMPROPER DISCLO2 SURE OR USE OF INFORMATION BY PRE3 PARERS OF RETURNS. 

4 (a) IN GENERAL.—Section 6713(a) of the Internal 

5 Revenue Code of 1986 is amended— 

6 (1) by striking ‘‘$250’’ and inserting ‘‘$1,000’’, 

7 and 

8 (2) by striking ‘‘$10,000’’ and inserting 

9 ‘‘$50,000’’. 

10 (b) CRIMINAL PENALTY.—Section 7216(a) of the In11 ternal Revenue Code of 1986 is amended by striking 

12 ‘‘$1,000’’ and inserting ‘‘$100,000’’. 

13 (c) EFFECTIVE DATE.—The amendments made by 

14 this section shall apply to disclosures or uses after the date 

15 of the enactment of this Act. 

16 SEC. 403. AUTHORITY TO TRANSFER INTERNAL REVENUE 

17 SERVICE APPROPRIATIONS TO COMBAT TAX 

18 FRAUD. 

19 For any fiscal year, the Commissioner of Internal 

20 Revenue may transfer not more than $10,000,000 to any 

21 account of the Internal Revenue Service from amounts ap22 propriated to other Internal Revenue Service accounts. 

23 Any amounts so transferred shall be used solely for the 

24 purposes of preventing, detecting, and resolving potential 

25 cases of tax fraud. 


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1 SEC. 404. LOCAL LAW ENFORCEMENT LIAISON. 

2 (a) ESTABLISHMENT.—The Commissioner of Inter3 nal Revenue shall establish within the Criminal Investiga4 tion Division of the Internal Revenue Service the position 

5 of Local Law Enforcement Liaison. 

6 (b) DUTIES.—The Local Law Enforcement Liaison 

7 shall serve as the primary source of contact for State and 

8 local law enforcement authorities with respect to tax-re9 lated identity theft and other tax fraud matters, having 

10 duties that shall include— 

11 (1) receiving information from State and local 

12 law enforcement authorities; 

13 (2) responding to inquiries from State and local 

14 law enforcement authorities; 

15 (3) administering authorized information-shar16 ing initiatives with State or local law enforcement 

17 authorities and reviewing the performance of such 

18 initiatives; 

19 (4) ensuring any information provided through 

20 authorized information-sharing initiatives with State 

21 or local law enforcement authorities is used only for 

22 the prosecution of identity theft-related crimes and 

23 not re-disclosed to third parties; and 

24 (5) any other duties as delegated by the Com25 missioner of Internal Revenue. 


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1 SEC. 405. EXTEND INTERNAL REVENUE SERVICE AUTHOR2 ITY TO REQUIRE TRUNCATED SOCIAL SECU3 RITY NUMBERS ON FORM W–2. 

4 (a) IN GENERAL.—Paragraph (2) of section 6051(a) 

5 of the Internal Revenue Code of 1986 is amended by strik6 ing ‘‘his social security number’’ and inserting ‘‘an identi7 fying number for the employee’’. 

8 (b) EFFECTIVE DATE.—The amendment made by 

9 this section shall take effect on the date of the enactment 

10 of this Act. 

11 SEC. 406. CLARIFICATION WITH RESPECT TO REGULATION 

12 OF FEDERAL TAX RETURN PREPARERS. 

13 (a) IN GENERAL.—Subsection (a) of section 330 of 

14 title 31, United States Code, is amended— 

15 (1) by striking paragraph (1) and inserting the 

16 following: 

17 ‘‘(1) regulate— 

18 ‘‘(A) the practice of representatives of per19 sons before the Department of the Treasury; 

20 and 

21 ‘‘(B) the practice of tax return preparers; 

22 and’’, and 

23 (2) in paragraph (2)— 

24 (A) by inserting ‘‘or tax return preparer’’ 

25 after ‘‘representative’’ each place it appears, 

26 and 


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1 (B) by inserting ‘‘or in preparing their tax 

2 returns, claims for refund, or documents in con3 nection with tax returns or claims for refund’’ 

4 after ‘‘cases’’ in subparagraph (D). 

5 (b) AUTHORITY TO SANCTION REGULATED TAX RE6 TURN PREPARERS.—Subsection (b) of section 330 of title 

7 31, United States Code, is amended— 

8 (1) by striking ‘‘before the Department’’, 

9 (2) by inserting ‘‘or tax return preparer’’ after 

10 ‘‘representative’’ each place it appears, and 

11 (3) in paragraph (4), by striking ‘‘misleads or 

12 threatens’’ and all that follows and inserting ‘‘mis13 leads or threatens— 

14 ‘‘(A) any person being represented or any 

15 prospective person being represented; or 

16 ‘‘(B) any person or prospective person 

17 whose tax return, claim for refund, or document 

18 in connection with a tax return or claim for re19 fund, is being or may be prepared.’’. 

20 (c) TAX RETURN PREPARER DEFINED.—Section 330 

21 of title 31, United States Code, is amended by adding at 

22 the end the following new subsection: 

23 ‘‘(e) TAX RETURN PREPARER.—For purposes of this 

24 section— 


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1 ‘‘(1) IN GENERAL.—The term ‘tax return pre2 parer’ has the meaning given such term under sec3 tion 7701(a)(36) of the Internal Revenue Code of 

4 1986. 

5 ‘‘(2) TAX RETURN.—The term ‘tax return’ has 

6 the meaning given to the term ‘return’ under section 

7 6696(e)(1) of the Internal Revenue Code of 1986. 

8 ‘‘(3) CLAIM FOR REFUND.—The term ‘claim for 

9 refund’ has the meaning given such term under sec10 tion 6696(e)(2) of such Code.’’. 

11 SEC. 407. AUTHENTICATION OF USERS OF ELECTRONIC 

12 SERVICES ACCOUNTS. 

13 (a) IN GENERAL.—The Commissioner of Internal 

14 Revenue shall establish a program to verify the identity 

15 of any individual opening an e-Services account with the 

16 Internal Revenue Service before such individual is able to 

17 use the e-Services tools. 

18 (b) REPORT.—The Commissioner of Internal Rev19 enue shall report to the Committee on Finance of the Sen20 ate and the Committee on Ways and Means of the House 

21 of Representatives, not later than 1 year after the date 

22 of the enactment of this Act, on any further legislative 

23 recommendations to prevent fraud relating to the Internal 

24 Revenue Service e-Services tools, including an authorized 

25 e-file provider program. 


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1 SEC. 408. IDENTITY VERIFICATION BY TAX RETURN PRE2 PARERS REQUIRED. 

3 (a) IN GENERAL.—Section 6695 of the Internal Rev4 enue Code of 1986 is amended by adding at the end the 

5 following new subsection: 

6 ‘‘(i) FAILURE TO VERIFY TAXPAYER IDENTITY.— 

7 Any person who is a tax return preparer with respect to 

8 any return or claim for refund who fails to verify (in such 

9 manner and with such documentation as the Secretary 

10 shall provide) the identity of the taxpayer with respect to 

11 such return or claim for refund shall pay a penalty of 

12 $500 for each such failure.’’. 

13 (b) EFFECTIVE DATE.—The amendment made by 

14 this section shall apply to returns or claims for refund 

15 filed after December 31, 2014. 

16 TITLE V—ACCELERATING TRAN17 SITION TO A REAL-TIME TAX 

18 SYSTEM THAT PROTECTS 

19 TAXPAYERS AND REDUCES 

20 FRAUD 

21 SEC. 501. IMPROVEMENT IN ACCESS TO INFORMATION IN 

22 THE NATIONAL DIRECTORY OF NEW HIRES 

23 FOR TAX ADMINISTRATION PURPOSES. 

24 (a) IN GENERAL.—Paragraph (3) of section 453(i) 

25 of the Social Security Act (42 U.S.C. 653(i)) is amended 

26 to read as follows: 


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1 ‘‘(3) ADMINISTRATION OF FEDERAL TAX

2 LAWS.—The Secretary of the Treasury shall have 

3 access to the information in the National Directory 

4 of New Hires for purposes of administering the In5 ternal Revenue Code of 1986.’’. 

6 (b) EFFECTIVE DATE.—The amendment made by 

7 this section shall take effect on the date of the enactment 

8 of this Act. 

9 SEC. 502. PLAN OF ACTION FOR TRANSITIONING TO A 

10 REAL-TIME TAX SYSTEM. 

11 Not later than 270 days after the date of the enact12 ment of this Act, the Secretary of the Treasury, or the 

13 Secretary’s delegate, shall submit to Congress a report 

14 analyzing and outlining options and potential timelines for 

15 moving toward a tax system that reduces burdens on tax16 payers and decreases tax fraud through real-time informa17 tion matching. 

Æ 


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