‘‘(a) IN GENERAL.—Any person’’, and 
(2) by adding at the end the following new sub-
section: 
‘‘(b) USE OF FALSE IDENTITY.—Any person who 
willfully misappropriates another person’s taxpayer iden-
tity (as defined in section 6103(b)(6)) for the purpose of 
making any list, return, account, statement, or other docu-
ment submitted to the Secretary under the provisions of 
this title shall be guilty of a felony and, upon conviction 
thereof, shall be fined not more than $250,000 ($500,000 
in the case of a corporation) or imprisoned not more than 
5 years, or both, together with the costs of prosecution.’’. 
(b) 
AGGRAVATED
IDENTITY
THEFT.—Section 
1028A(c) of title 18, United States Code, is amended by 
striking ‘‘or’’ at the end of paragraph (10), by striking 
the period at the end of paragraph (11) and inserting ‘‘; 
or’’, and by adding at the end the following new para-
graph: 
‘‘(12) section 7206(b) of the Internal Revenue 
Code of 1986 (relating to use of false identity in 
connection with tax fraud).’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to offenses committed after the 
date of the enactment of this Act. 
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SEC. 402. INCREASED PENALTY FOR IMPROPER DISCLO-
SURE OR USE OF INFORMATION BY PRE-
PARERS OF RETURNS. 
(a) IN GENERAL.—Section 6713(a) of the Internal 
Revenue Code of 1986 is amended— 
(1) by striking ‘‘$250’’ and inserting ‘‘$1,000’’, 
and 
(2) by striking ‘‘$10,000’’ and inserting 
‘‘$50,000’’. 
(b) CRIMINAL PENALTY.—Section 7216(a) of the In-
ternal Revenue Code of 1986 is amended by striking 
‘‘$1,000’’ and inserting ‘‘$100,000’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to disclosures or uses after the date 
of the enactment of this Act. 
SEC. 403. AUTHORITY TO TRANSFER INTERNAL REVENUE 
SERVICE APPROPRIATIONS TO COMBAT TAX 
FRAUD. 
For any fiscal year, the Commissioner of Internal 
Revenue may transfer not more than $10,000,000 to any 
account of the Internal Revenue Service from amounts ap-
propriated to other Internal Revenue Service accounts. 
Any amounts so transferred shall be used solely for the 
purposes of preventing, detecting, and resolving potential 
cases of tax fraud. 
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SEC. 404. LOCAL LAW ENFORCEMENT LIAISON. 
(a) ESTABLISHMENT.—The Commissioner of Inter-
nal Revenue shall establish within the Criminal Investiga-
tion Division of the Internal Revenue Service the position 
of Local Law Enforcement Liaison. 
(b) DUTIES.—The Local Law Enforcement Liaison 
shall serve as the primary source of contact for State and 
local law enforcement authorities with respect to tax-re-
lated identity theft and other tax fraud matters, having 
duties that shall include— 
(1) receiving information from State and local 
law enforcement authorities; 
(2) responding to inquiries from State and local 
law enforcement authorities; 
(3) administering authorized information-shar-
ing initiatives with State or local law enforcement 
authorities and reviewing the performance of such 
initiatives; 
(4) ensuring any information provided through 
authorized information-sharing initiatives with State 
or local law enforcement authorities is used only for 
the prosecution of identity theft-related crimes and 
not re-disclosed to third parties; and 
(5) any other duties as delegated by the Com-
missioner of Internal Revenue. 
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SEC. 405. EXTEND INTERNAL REVENUE SERVICE AUTHOR-
ITY TO REQUIRE TRUNCATED SOCIAL SECU-
RITY NUMBERS ON FORM W–2. 
(a) IN GENERAL.—Paragraph (2) of section 6051(a) 
of the Internal Revenue Code of 1986 is amended by strik-
ing ‘‘his social security number’’ and inserting ‘‘an identi-
fying number for the employee’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall take effect on the date of the enactment 
of this Act. 
SEC. 406. CLARIFICATION WITH RESPECT TO REGULATION 
OF FEDERAL TAX RETURN PREPARERS. 
(a) IN GENERAL.—Subsection (a) of section 330 of 
title 31, United States Code, is amended— 
(1) by striking paragraph (1) and inserting the 
following: 
‘‘(1) regulate— 
‘‘(A) the practice of representatives of per-
sons before the Department of the Treasury; 
and 
‘‘(B) the practice of tax return preparers; 
and’’, and 
(2) in paragraph (2)— 
(A) by inserting ‘‘or tax return preparer’’ 
after ‘‘representative’’ each place it appears, 
and 
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(B) by inserting ‘‘or in preparing their tax 
returns, claims for refund, or documents in con-
nection with tax returns or claims for refund’’ 
after ‘‘cases’’ in subparagraph (D). 
(b) AUTHORITY TO SANCTION REGULATED TAX RE-
TURN PREPARERS.—Subsection (b) of section 330 of title 
31, United States Code, is amended— 
(1) by striking ‘‘before the Department’’, 
(2) by inserting ‘‘or tax return preparer’’ after 
‘‘representative’’ each place it appears, and 
(3) in paragraph (4), by striking ‘‘misleads or 
threatens’’ and all that follows and inserting ‘‘mis-
leads or threatens— 
‘‘(A) any person being represented or any 
prospective person being represented; or 
‘‘(B) any person or prospective person 
whose tax return, claim for refund, or document 
in connection with a tax return or claim for re-
fund, is being or may be prepared.’’. 
(c) TAX RETURN PREPARER DEFINED.—Section 330 
of title 31, United States Code, is amended by adding at 
the end the following new subsection: 
‘‘(e) TAX RETURN PREPARER.—For purposes of this 
section— 
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‘‘(1) IN GENERAL.—The term ‘tax return pre-
parer’ has the meaning given such term under sec-
tion 7701(a)(36) of the Internal Revenue Code of 
1986. 
‘‘(2) TAX RETURN.—The term ‘tax return’ has 
the meaning given to the term ‘return’ under section 
6696(e)(1) of the Internal Revenue Code of 1986. 
‘‘(3) CLAIM FOR REFUND.—The term ‘claim for 
refund’ has the meaning given such term under sec-
tion 6696(e)(2) of such Code.’’. 
SEC. 407. AUTHENTICATION OF USERS OF ELECTRONIC 
SERVICES ACCOUNTS. 
(a) IN GENERAL.—The Commissioner of Internal 
Revenue shall establish a program to verify the identity 
of any individual opening an e-Services account with the 
Internal Revenue Service before such individual is able to 
use the e-Services tools. 
(b) REPORT.—The Commissioner of Internal Rev-
enue shall report to the Committee on Finance of the Sen-
ate and the Committee on Ways and Means of the House 
of Representatives, not later than 1 year after the date 
of the enactment of this Act, on any further legislative 
recommendations to prevent fraud relating to the Internal 
Revenue Service e-Services tools, including an authorized 
e-file provider program. 
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SEC. 408. IDENTITY VERIFICATION BY TAX RETURN PRE-
PARERS REQUIRED. 
(a) IN GENERAL.—Section 6695 of the Internal Rev-
enue Code of 1986 is amended by adding at the end the 
following new subsection: 
‘‘(i) FAILURE TO VERIFY TAXPAYER IDENTITY.— 
Any person who is a tax return preparer with respect to 
any return or claim for refund who fails to verify (in such 
manner and with such documentation as the Secretary 
shall provide) the identity of the taxpayer with respect to 
such return or claim for refund shall pay a penalty of 
$500 for each such failure.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to returns or claims for refund 
filed after December 31, 2014. 
TITLE V—ACCELERATING TRAN-
SITION 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. 
(a) IN GENERAL.—Paragraph (3) of section 453(i) 
of the Social Security Act (42 U.S.C. 653(i)) is amended 
to read as follows: 
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‘‘(3) 
ADMINISTRATION
OF
FEDERAL
TAX 
LAWS.—The Secretary of the Treasury shall have 
access to the information in the National Directory 
of New Hires for purposes of administering the In-
ternal Revenue Code of 1986.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall take effect on the date of the enactment 
of this Act. 
SEC. 502. PLAN OF ACTION FOR TRANSITIONING TO A 
REAL-TIME TAX SYSTEM. 
Not later than 270 days after the date of the enact-
ment of this Act, the Secretary of the Treasury, or the 
Secretary’s delegate, shall submit to Congress a report 
analyzing and outlining options and potential timelines for 
moving toward a tax system that reduces burdens on tax-
payers and decreases tax fraud through real-time informa-
tion matching. 
Æ 
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