DESCRIPTION OF THE CHAIRMAN’S FIRST MODIFICATION 

TO THE CHAIRMAN’S MARK OF A BILL TO 

PREVENT IDENTITY THEFT AND TAX REFUND FRAUD 

Scheduled for Markup 

Before the 

SENATE COMMITTEE ON FINANCE 

on April 20, 2016 

Prepared by the Staff 

of the 

JOINT COMMITTEE ON TAXATION 

April 18, 2016 

JCX-27-16 
i 

CONTENTS 

Page

INTRODUCTION .......................................................................................................................... 1

A. Modifications to the Chairman’s Mark ............................................................................... 2

1. Modification to require the IRS to prepare a report on identity theft refund fraud ...... 2

2. Modification of criminal penalty for misappropriating taxpayer identity in 

 connection with tax fraud .............................................................................................. 2

3. Modification to authority to transfer IRS appropriations to combat tax fraud ............. 2

4. Modification to taxpayer notification of suspected identity theft ................................. 2

5. Modification to enhancements to the IRS PIN program ............................................... 2

6. Modification to increase electronic filing of returns ..................................................... 2

7. Modification to internet platform for Form 1099 filings .............................................. 3

8. Modification to requirement that electronically-prepared paper returns include a 

 scannable code .............................................................................................................. 3

9. Modification to streamlined critical pay authority for information technology 

 positions ........................................................................................................................ 3

B. Additions to the Chairman’s Mark ..................................................................................... 3

1. Require the IRS to report on the status of the Refund Fraud Information Sharing 

 and Assessment Center (“ISAC”) ................................................................................. 3

2. Require the GAO to prepare various reports on identity theft and tax refund fraud .... 4

3. Sense of the Senate to express support for strengthened penalties and enforcement 

 for impersonating an IRS official or agent ................................................................... 5

C. Deletions from the Chairman’s Mark ................................................................................. 5

1. Extend the authority to require a truncated Social Security Number (“SSN”) 

 on Form W-2 ................................................................................................................. 5

2. Modify due dates for filing certain information returns ............................................... 5

3. Safe harbor for de minimis errors on information returns, payee statements, and 

 withholding ................................................................................................................... 5

4. Clarify the use of credentials by Enrolled Agents ........................................................ 5
1 

INTRODUCTION 

The Senate Committee on Finance has scheduled a markup of a proposal to prevent 

identity theft and tax refund fraud.1 This document,2 prepared by the staff of the Joint 

Committee on Taxation, provides a description of the Chairman’s modification of the proposals, 

additional proposals, and proposals removed from the Chairman’s mark. 

 

 

1

 Unless otherwise stated, all section references are to the Internal Revenue Code of 1986, as amended. 

2

 This document may be cited as follows: Joint Committee on Taxation, Description of the Chairman’s 

First Modification to the Chairman’s Mark of a Bill to Prevent Identity Theft and Tax Refund Fraud (JCX-27-16), 

April 18, 2016. This document can also be found on the Joint Committee on Taxation website at www.jct.gov. 
2 

A. Modifications to the Chairman’s Mark 

1. Modification to require the IRS to prepare a report on identity theft refund fraud 

The Chairman’s modification adds to the information required in the IRS’s reports on 

identity theft refund fraud, information on both the average and maximum amounts of time that 

elapsed before victims’ cases were resolved. 

The Chairman’s modification adds to the information required in the IRS’s first biannual 

report on identity theft refund fraud, an assessment of the agency’s progress on identity theft 

outreach and education to the private sector, State agencies, and external organizations. 

The Chairman’s modification adds to the information required in the IRS’s first biannual 

report on identity theft refund fraud, a feasibility study on the costs and benefits to enhancing its 

taxpayer authentication approach to the electronic tax return filing process. 

2. Modification of criminal penalty for misappropriating taxpayer identity in connection 

with tax fraud 

The Chairman's modification adds theft of an identity protection personal identification 

number (“IP PIN”) in order to file a return or other document as a felony crime under the tax 

code. The modification also expresses the sense of the Senate that this theft be added to the list 

of predicate offenses contained in the Aggravated Identity Theft Statute. 

3. Modification to authority to transfer IRS appropriations to combat tax fraud 

The Chairman’s modification clarifies that preventing tax fraud includes educating 

taxpayers about scams that target them and providing information about how they can protect 

themselves. 

4. Modification to taxpayer notification of suspected identity theft 

The Chairman's modification provides an additional requirement that, as part of the IRS's 

notification to the taxpayer, the IRS is to include in that communication: (1) instructions to the 

taxpayer about filing a police report; and (2) the forms the taxpayer must submit to allow 

investigating law enforcement officials to access the taxpayer's personal information. 

5. Modification to enhancements to the IRS PIN program 

The Chairman's modification changes the effective date of the proposal so that it is 

effective on the date of enactment and required to be available on a nation-wide basis by July 1, 

2019. 

6. Modification to increase electronic filing of returns 

The Chairman's modification changes the dates for the phased reduction in the threshold 

requirement that taxpayers have an obligation to file a specified number of returns and 

statements during a calendar year in order to be subject to a regulatory mandate. Specifically, 
3 

the threshold is reduced from 250 to 200 for calendar year 2019, from 200 to 150 for calendar 

year 2020, from 150 to 100 for calendar year 2021, from 100 to 50 for calendar year 2022, and 

from 50 to 20 for calendar years thereafter. 

The Chairman's modification also changes the effective date of the proposal so that it is 

effective for returns with a due date, determined without regard to extensions, after December 

31, 2017. 

7. Modification to internet platform for Form 1099 filings 

The Chairman's modification changes the proposal to require that the Secretary (or his or 

her delegate) make available, by January 1, 2021, an Internet website or other electronic 

medium, similar to the Business Services Online Suite of Services provided by the Social 

Security Administration. 

The Chairman's modification changes the proposal to require that the website be 

available, by January 1, 2019, in a partial form that will allow taxpayers to prepare, file, and 

distribute Forms 1099-MISC. 

8. Modification to requirement that electronically-prepared paper returns include a 

scannable code 

The Chairman's modification changes the effective date of the proposal so that it is 

effective for tax returns with a due date, determined without regard to extensions, after 

December 31, 2017. 

9. Modification to streamlined critical pay authority for information technology positions 

The Chairman's modification changes the proposal so as to reinstate streamlined critical 

pay authority at the IRS to certain designated information technology positions for a period 

starting on the date of enactment through September 30, 2021. 

B. Additions to the Chairman’s Mark 

1. Require the IRS to report on the status of the Refund Fraud Information Sharing and 

Assessment Center (“ISAC”) 

Present Law

In June 2015, IRS joined with representatives of tax preparation and software firms, 

payroll and tax financial product processors, and State tax administrators to announce that they 

would look at establishing a formalized Refund Fraud Information Sharing and Assessment 

Center (“ISAC”) to more aggressively and efficiently share information between the public and 

private sector to help stop the proliferation of fraud schemes and reduce the risk to taxpayers.3 

 3

 IR-2015-87, June 11, 2015, available at http://www.irs.gov/uac/Newsroom/IRS-and-Industry-and-StatesTake-New-Steps-Together-to-Fight-Identity-Theft-and-Protect-Taxpayers. 
4 

For example, ISAC would provide better data to law enforcement to improve the investigations 

and prosecution of identity thieves. 

The IRS is not currently required to report on the status of ISAC. 

Description of Proposal

The proposal would require the IRS to submit a report to the Senate Committee on 

Finance and the House Committee on Ways and Means no later than 90 days after the date of 

enactment that includes information on whether ISAC is fully operational (and, if not, what 

additional steps are necessary for it to be operational and the best estimate of when ISAC will be 

operational), what challenges remain in the effective sharing of information, and steps that are 

being taken to address these challenges. 

Effective Date

The proposal is effective on the date of enactment. 

2. Require the GAO to prepare various reports on identity theft and tax refund fraud 

Present Law

The U.S. Government Accountability Office (“GAO”) is not currently required to prepare 

reports on identity theft and tax refund fraud. 

Description of Proposal

The proposal requires the GAO to prepare a report to the Senate Committee on Finance 

and the House Committee on Ways and Means evaluating the IRS’s progress on identity theft 

outreach and education to the private sector, state agencies, and external organizations. The 

report would be required to be provided by September 30, 2020. 

The proposal also requires the GAO to prepare a report to the Senate Committee on 

Finance and the House Committee on Ways and Means evaluating the IRS’s feasibility study on 

the costs and benefits to enhancing its taxpayer authentication approach to the electronic tax 

return filing process. The report would be required to be provided by September 30, 2020. 

The proposal further requires the GAO to prepare a report to the Senate Committee on 

Finance and the House Committee on Ways and Means evaluating the clarity of the language the 

IRS uses for notifying taxpayers of instances of potential and known tax-related identity theft 

refund fraud and the IRS systems that generate tax-related identity theft notifications. The report 

would be required to be provided by September 30, 2018. 

Effective Date

The proposal is effective on the date of enactment. 
5 

3. Sense of the Senate to express support for strengthened penalties and enforcement for 

impersonating an IRS official or agent 

Under present law, section 912 of Title 18 provides that it is a Federal crime to 

impersonate an officer or employee of any Federal agency in an attempt to obtain money or 

anything of value. Such impersonation is punishable by a fine, imprisonment for up to three 

years, or both. The proposal expresses the sense of the Senate that penalties for impersonating 

an IRS official or agent should be increased and enforced to the fullest extent of the law. 

C. Deletions from the Chairman’s Mark 

1. Extend the authority to require a truncated Social Security Number (“SSN”) on Form 

W-2 

The Chairman’s modification removes the proposal to revise section 6501 to require 

employers to include an “identifying number” for each employee, rather than an employee’s 

SSN, on Form W-2. This proposal was recently enacted.4

 

2. Modify due dates for filing certain information returns 

The Chairman’s modification removes the proposal to modify the due dates for filing 

certain information returns. A substantially similar proposal was recently enacted.5

3. Safe harbor for de minimis errors on information returns, payee statements, and 

withholding 

The Chairman’s modification removes the proposal to create a safe harbor from the 

application of the penalty for failure to file a correct information return and the penalty for 

failure to furnish a correct payee statement in circumstances in which the information return or 

payee statement is otherwise correctly filed but includes a de minimis misstatement of the 

amount required to be reported on such return or statement. A substantially similar proposal was 

recently enacted.6

 

4. Clarify the use of credentials by Enrolled Agents 

The Chairman’s modification removes the proposal to amend Title 31 of the U.S. Code to 

permit enrolled agents meeting the Secretary’s qualifications to use the designation “enrolled 

agent,” “EA,” or “E.A.” This proposal was recently enacted.7

 4

 Section 409 of the Protecting Americans from Tax Hikes Act of 2015 (Division Q of Pub. L. No. 114-

113) (“PATH Act of 2015”). 

5

 Section 201 of the PATH Act of 2015. 

6

 Section 202 of the PATH Act of 2015. 

7

 Section 410 of the PATH Act of 2015.