Tax Crimes and Identity Theft Prevention Act

Bill: 113-hr-531
Sponsor: full_name: Rep. Castor, Kathy [D-FL-14]
Introduced: 2013-02-06
Policy area: Taxation
Subjects: Administrative law and regulatory procedures

Appropriations

Computer security and identity theft

Computers and information technology

Congressional oversight

Consumer credit

Correctional facilities and imprisonment

Crime prevention

Criminal investigation, prosecution, interrogation

Department of the Treasury

Evidence and witnesses

Executive agency funding and structure

Fraud offenses and financial crimes

Freedom of information

Government information and archives

Intergovernmental relations

Internal Revenue Service (IRS)

Law enforcement administration and funding

Tax administration and collection, taxpayers
Latest action: action_date: 2013-02-28
text: Referred to the Subcommittee on Crime, Terrorism, Homeland Security, And Investigations.

Summaries:
action_date: 2013-02-06
action_desc: Introduced in House
text: <p>Tax Crimes and Identity Theft Prevention Act - Requires the Secretary of the Treasury to take necessary action to correct a tax return or tax information affected by the misuse of a taxpayer's identity within 90 days after receiving notice of such misuse from the taxpayer.</p> <p>Amends the Internal Revenue Code to: (1) authorize the Secretary to disclose tax return information to federal, state, and local law enforcement personnel who are personally and directly engaged in the investigation of identity theft; (2) impose a fine and/or prison term on any person who knowingly or willfully misappropriates another person's tax identification number; (3) increase the civil and criminal penalties for improper disclosure or use of tax information by tax return preparers; and (4) require the Commissioner of the Internal Revenue Service (IRS) to report to Congress on the number of reported tax fraud cases and on actions taken in response to such reports.</p> <p>Directs the Secretary to: (1) implement an identity theft tax fraud prevention program that provides for a unique personal identification number (PIN) on tax returns; (2) establish a fraudulent tax refund prevention program that adds additional triggers to the refund database to identify potentially fraudulent tax refunds; and (3) review whether current federal tax law prevents the effective enforcement of local, state, and federal identity theft statutes.</p> <p>Authorizes the Commissioner to transfer appropriated funds to be used solely to prevent and resolve potential tax fraud cases.</p> <p>Directs the Commissioner to establish in the Criminal Investigation Division of the IRS the position of Local Law Enforcement Liaison to coordinate the investigation of tax fraud with state and local law enforcement agencies.</p> <p>Directs the Comptroller General to study and report on the role of prepaid debit cards and commercial tax preparation software in facilitating fraudulent tax returns through identity theft.</p> <p>Prohibits the Secretary of Commerce from disclosing information contained on the Death Master File relating to a deceased individual to persons who are not certified to access such information.</p> <p>Authorizes the Attorney General to award grants to state and local law enforcement agencies for the investigation and prosecution of tax crimes.</p>

tv_txt: I 113th CONGRESS 1st Session H. R. 531 IN THE HOUSE OF REPRESENTATIVES February 6, 2013 Ms. Castor of Florida (for herself and Mr. Nugent ) introduced the following bill; which was referred to the Committee on Ways and Means , and in addition to the Committee on the Judiciary , 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 prevent identity theft and tax crimes.

1. Short title This Act may be cited as the Tax Crimes and Identity Theft Prevention Act . 2. Expedited resolution from Internal Revenue Service for identity theft victims Not later than 90 days after an individual notifies the Secretary of the Treasury that such individual’s identity has been misused by another person in connection with the internal revenue laws, the Secretary shall, to the extent practicable, determine the extent to which the taxpayer’s return and return information were affected by such misuse and shall take such actions as are necessary to correct such affected return or return information with respect to such misuse. 3. Disclosure of return and return information in Federal and State prosecution relating to identity fraud (a) In general Subsection (k) of section 6103 of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph: (11) Disclosure of certain return information in connection with identity theft and fraudulent returns (A) In general In the case of an investigation pertaining to the misuse of the identity of another person for purposes of filing a false or fraudulent return of tax, upon receipt of a written request which meets the requirements of subparagraph (C), the Secretary may disclose return information to officers and employees of any Federal law enforcement agency, or any officers and employees of any State or local law enforcement agency, who are personally and directly engaged in the investigation of any crimes implicated in such misuse, but only if any such law enforcement agency is part of a team with the Internal Revenue Service in such investigation. (B) Limitation on use of information Information disclosed under this subparagraph shall be solely for the use of such officers and employees to whom such information is disclosed in such investigation. (C) Requirements A request meets the requirements of this clause if— (i) the request is made by the head of the agency (or his delegate) involved in such investigation, and (ii) the request sets forth the specific reason why such disclosure may be relevant to the investigation. . (b) Conforming amendments (1) Paragraph (2) of section 6103(a) of such Code is amended by inserting or (k)(11) after subsection (i)(7)(A) . (2) Paragraph (4) of section 6103(p) of such Code is amended in the matter preceding subparagraph (A) by inserting or (11) after (k)(10) . (3) Paragraph (2) of section 7213(a) of such Code is amended by inserting (k)(11), after (7)(A)(i), . (c) Effective date The amendments made by this section shall apply to disclosures after the date of the enactment of this Act. 4. Criminal penalty for using a false identity in connection with tax fraud (a) In general Section 7207 of the Internal Revenue Code of 1986 is amended— (1) by striking Any person who willfully and inserting the following: (a) In general Any person who willfully , (2) by striking Any person required and inserting the following: (b) Information in connection with certain exempt organizations Any person required , and (3) by adding at the end the following: (c) Misappropriation of identity Any person who knowingly or willfully misappropriates another person's tax identification number in connection with any list, return, account, statement, or other document submitted to the Secretary shall be fined not less than $25,000 ($200,000 in the case of a corporation), or imprisoned not more than 5 years, or both, together with the costs of prosecution. . (b) Effective date The amendments made by this section shall apply to returns and information submitted after the date of the enactment of this Act. 5. Increased penalty for improper disclosure or use of information by preparers 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 Internal 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. 6. PIN system for prevention of identity theft tax fraud Not later than 1 year after the date of the enactment of this Act, the Secretary of the Treasury (or the Secretary's delegate) shall implement an identify theft tax fraud prevention program under which— (1) a person who has filed an identity theft affidavit with the Secretary may elect— (A) to be provided with a unique personal identification number to be included on any Federal tax return filed by such person, or (B) to prevent the processing of any Federal tax return submitted in an electronic format by a person purporting to be such person, and (2) the Secretary will provide additional identity verification safeguards for the processing of any Federal tax return filed by a person described in paragraph (1) in cases where a unique personal identification number is not included on the return. 7. Prevention of fraudulent refunds (a) In general The Secretary of the Treasury (or the Secretary’s delegate) shall establish a fraudulent tax refund prevention program under which— (1) additional triggers are added to the refund database to identify potentially fraudulent tax refunds, and (2) the legitimacy of the refund claim can be promptly determined before the distribution of the refund. (b) Multiple refunds to same debit card The additional triggers added under subsection (a)(1) shall include identification of requests for multiple refunds to be paid to the same debit card. 8. Authority to transfer Internal Revenue Service appropriations to use for tax fraud enforcement For any fiscal year, the Commissioner of Internal Revenue may transfer not more than $10,000,000 to the Enforcement account of the Internal Revenue Service from amounts appropriated to other Internal Revenue Service accounts. Any amounts so transferred shall be used solely for the purposes of preventing and resolving potential cases of tax fraud. 9. Local Law Enforcement Liaison (a) Establishment The Commissioner of Internal Revenue shall establish within the Criminal Investigation Division of the Internal Revenue Service the position of Local Law Enforcement Liaison. (b) Duties The Local Law Enforcement Liaison shall— (1) coordinate the investigation of tax fraud with State and local law enforcement agencies; (2) communicate the status of tax fraud cases involving identity theft, and (3) carry out such other duties as delegated by the Commissioner of Internal Revenue. 10. Report on tax fraud Subsection (a) of section 7803 of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph: (4) Annual report on tax fraud The Commissioner shall submit to the Committee on Finance of the Senate and the Committee on Ways and Means of the House of Representatives an annual report detailing— (A) the number of reports of tax fraud and suspected tax fraud received from State and local law enforcement agencies in the preceding year, and (B) the actions taken in response to such reports. . 11. Study on the use of prepaid debit cards and commercial tax preparation software in tax fraud (a) In general The Comptroller General shall conduct a study to examine the role of prepaid debit cards and commercial tax preparation software in facilitating fraudulent tax returns through identity theft. (b) Report Not later than 1 year after the date of the enactment of this Act, the Comptroller General shall submit to the Committee on Finance of the Senate and the Committee on Ways and Means of the House of Representatives a report with the results of the study conducted under subsection (a), together with any recommendations. 12. Restriction on access to the death master file (a) In general The Secretary of Commerce shall not disclose information contained on the Death Master File to any person with respect to any individual who has died at any time during the calendar year in which the request for disclosure is made or the succeeding calendar year unless such person is certified under the program established under subsection (b). (b) Certification program (1) In general The Secretary of Commerce shall establish a program to certify persons who are eligible to access the information described in subsection (a) contained on the Death Master File. (2) Certification A person shall not be certified under the program established under paragraph (1) unless the Secretary determines that such person has a legitimate fraud prevention interest in accessing the information described in subsection (a). (c) Imposition of penalty Any person who is certified under the program established under subsection (b), who receives information described in subsection (a), and who during the period of time described in subsection (a)— (1) discloses such information to any other person, or (2) uses any such information for any purpose other than to detect or prevent fraud, shall pay a penalty of $1,000 for each such disclosure or use, but the total amount imposed under this subsection on such a person for any calendar year shall not exceed $50,000. (d) Exemption from Freedom of Information Act requirement with respect to certain records of deceased individuals (1) In General The Social Security Administration shall not be compelled to disclose to any person who is not certified under the program established under section 9(b) the information described in section 9(a). (2) Treatment of Information For purposes of section 552 of title 5, United States Code, this section shall be considered a statute described in subsection (b)(3)(B) of such section 552. 13. Treasury report on information sharing barriers with respect to identity theft (a) Review (1) In general The Secretary of the Treasury (or the Secretary’s delegate) shall review whether current Federal tax laws and regulations related to the confidentiality and disclosure of return information prevent the effective enforcement of local, State, and Federal identity theft statutes. The review shall consider whether greater information sharing between the Internal Revenue Service and State and local law enforcement authorities would improve the enforcement of criminal laws at all levels of government. (2) Consultation In conducting the review under paragraph (1), the Secretary shall solicit the views of, and consult with, State and local law enforcement officials. (b) Report Not later than 180 days after the date of enactment of this Act, the Secretary shall submit a report with the results of the review conducted under subsection (a), along with any legislative recommendations, to the Committee on Finance of the Senate and the Committee on Ways and Means of the House of Representatives. 14. Grants to investigate and prosecute State and local tax crimes (a) Grant program authorized The Attorney General is authorized to award grants to State and local law enforcement agencies to assist such agencies in the investigation and prosecution of tax crimes. (b) Authorization of appropriations For each fiscal year, there are authorized to be appropriated to carry out this section, from amounts made available in each such fiscal year to carry out the Edward Byrne Memorial Justice Assistance Grants program under part E of title I of the Omnibus Crime Control and Safe Streets Act of 1968 ( 42 U.S.C. 3750 et seq. ), $50,000,000.