,,ii #aacth ,,congress #b;d ,session ,s4 #bgcf ,,in ,,the ,,senate ,,of ,,the ,,united ,,states ,july #ca1 #bjad ,mr4 ,hatch 7for himself and ,mr4 ,wyden7 introduced the following bill2 which was read twice and referred to the ,committee on ,finance ,a ,,bill ,to amend the ,internal ,revenue ,code of #aihf to prevent identity theft related tax refund fraud1 and for other purposes4 #a4 ,short title2 etc 7a7 ,short title ,this ,act may be cited as the ,tax ,refund ,theft ,prevention ,act of #bjad4 7b7 ,amendment of #aihf ,code ,except as otherwise expressly provided1 whenever in this ,act an amendment or repeal is expressed in terms of an amendment to1 or repeal of1 a section or other provision1 the reference shall be considered to be made to a section or other provision of the ,internal ,revenue ,code of #aihf4 7c7 ,table of contents ,the table of contents of this ,act is as follows3 ,sec4 #a4 ,short title2 etc4 ,sec4 #b4 ,safe harbor for de minimis errors on information returns and payee statements4 ,sec4 #c4 ,internet platform for ,form #ajii filings4 ,sec4 #d4 ,requirement that electronically prepared paper returns include scannable code4 ,sec4 #e4 ,single point of contact for identity theft victims4 ,sec4 #f4 ,criminal penalty for misappropriating taxpayer identity in connection with tax fraud4 ,sec4 #g4 ,extend ,internal ,revenue ,service authority to require truncated social security numbers on ,form ,w-#b4 ,sec4 #h4 ,improvement in access to information in the ,national ,directory of ,new ,hires for tax administration purposes4 ,sec4 #i4 ,password system for prevention of identity theft tax fraud4 ,sec4 #aj4 ,increased penalty for improper disclosure or use of information by preparers of returns4 ,sec4 #aa4 ,increase electronic filing of returns4 ,sec4 #ab4 ,increased real-time filing4 ,sec4 #ac4 ,limitation on multiple individual income tax refunds to the same account4 ,sec4 #ad4 ,identity verification required under due diligence rules4 ,sec4 #ae4 ,report on refund fraud4 #b4 ,safe harbor for de minimis errors on information returns and payee statements 7a7 ,in general ,subsection 7c7 of section #fgba is amended-- 7#a7 by striking ,exception for de minimis failure to include all required information in the heading and inserting ,exceptions for certain de minimis failures1 7#b7 by striking ,in general in the heading of paragraph 7#a7 and inserting ,exception for de minimis failure to include all required information1 and 7#c7 by adding at the end the following new paragraph3 7#c7 ,safe harbor for certain de minimis errors 7,a7 ,in general ,if1 with respect to an information return filed with the ,secretary-- 7i7 there are #a or more failures described in subsection 7a77#b77;,b7 relating to an incorrect dollar amount1 and 7ii7 no single amount in error differs from the correct amount by more than #be1 then no correction shall be required and1 for purposes of this section1 such return shall be treated as having been filed with all of the correct required information4 7,b7 ,exception ,subparagraph 7,a7 shall not apply to returns required under section #fjdi4 7,c7 ,regulatory authority ,the ,secretary may issue regulations to prevent the abuse of the safe harbor under this paragraph1 including regulations providing that this subparagraph shall not apply to the extent necessary to prevent any such abuse4 4 7b7 ,failure ,to furnish correct payee statements ,subsection 7c7 of section #fgbb is amended by adding at the end the following new paragraph3 7#c7 ,safe harbor for certain de minimis errors 7,a7 ,in general ,if1 with respect to any payee statement-- 7i7 there are #a or more failures described in subsection 7a77#b77;,b7 relating to an incorrect dollar amount1 and 7ii7 no single amount in error differs from the correct amount by more than #be1 then no correction shall be required and1 for purposes of this section1 such statement shall be treated as having been filed with all of the correct required information4 7,b7 ,exception ,subparagraph 7,a7 shall not apply to payee statements required under section #fjdi4 7,c7 ,regulatory authority ,the ,secretary may issue regulations to prevent the abuse of the safe harbor under this paragraph1 including regulations providing that this subparagraph shall not apply to the extent necessary to prevent any such abuse4 4 7c7 ,conforming amendments 7#a7 ,subsection 7i7 of section #djh is amended by striking #aj and inserting #be4 7#b7 ,paragraph 7#e7 of section #cdjf7;b7 is amended-- 7,a7 by striking #aj both places it appears and inserting #be1 and 7,b7 by adding at the end the following flush text3 ,the preceding sentence shall not apply to payments of interest to which section #fjdi applies4 4 7#c7 ,subparagraphs 7,a7 and 7,b7 of section #fjdb7;a77#a7 are each amended by striking #aj and inserting #be4 7#d7 ,paragraph 7#b7 of section #fjdb7;a7 is amended by striking #aj and inserting #be4 7#e7 ,paragraphs 7#a7 and 7#b7 of section #fjdd7;a7 are each amended by striking #aj and inserting #be4 7#f7 ,paragraph 7#a7 of section #fjdg7;d7 is amended by striking #aj and inserting #be4 7#g7 ,subsection 7a7 of section #fjej;,b is amended by striking #aj and inserting #be4 7#h7 ,subsection 7a7 of section #fjej;,e is amended by striking #aj and inserting #be4 7#i7 ,paragraphs 7#a7 and 7#b7 of section #fjej,n7a7 are each amended by striking #aj and inserting #be4 7#aj7 ,paragraphs 7#a7 and 7#b7 of section #ffeb7;a7 are each amended by striking #aj and inserting #be4 7#aa7 ,the heading of subsection 7a7 of section #ffeb is amended by striking #aj and inserting #be4 7d7 ,effective date ,the amendments made by this section shall apply to information returns required to be filed1 and payee statements required to be provided1 on or after the date of the enactment of this ,act4 #c4 ,internet platform for ,form #ajii filings 7a7 ,in general ,not later than #c years after the date of the enactment of this ,act1 the ,secretary of the ,treasury 7or such ,secretary's delegate7 shall make available an ,internet website or other electronic media1 similar to the ,business ,services ,online ,suite of ,services provided by the ,social ,security ,administration1 that will provide taxpayers access to resources and guidance provided by the ,internal ,revenue ,service and will allow taxpayers to-- 7#a7 prepare and file 7in batches of not more than #ej7 ,forms #ajii1 7#b7 prepare ,forms #ajii for distribution to recipients other than the ,internal ,revenue ,service1 and 7#c7 create and maintain necessary taxpayer records4 7b7 ,early implementation for ,forms #ajii-,,misc ,not later than #a year after the date of the enactment of this ,act1 the ,internet website under subsection 7a7 shall be available in a partial form that will allow taxpayers to take the actions described in such subsection with respect to ,forms #ajii-,,misc required to be filed or distributed by such taxpayers4 #d4 ,requirement that electronically prepared paper returns include scannable code 7a7 ,in general ,subsection 7e7 of section #fjaa is amended by adding at the end the following new paragraph3 7#e7 ,special rule for returns prepared electronically and submitted on paper ,the ,secretary shall require that any return of tax which is prepared electronically1 but is printed and filed on paper1 bear a code which can1 when scanned1 convert such return to electronic format4 4 7b7 ,conforming amendment ,paragraph 7#a7 of section #fjaa7;e7 is amended by striking paragraph 7#c7 and inserting paragraphs 7#c7 and 7#e74 7c7 ,effective date ,the amendments made by this section shall apply to returns of tax the due date for which 7determined without regard to extensions7 is after ,december #ca1 #bjad4 #e4 ,single point of contact for identity theft victims 7a7 ,in general ,not later than #ahj days after the date of the enactment of this ,act1 the ,secretary of the ,treasury 7or such ,secretary's delegate7 shall establish new procedures to ensure that any taxpayer whose return has been delayed or otherwise adversely affected due to misappropriation of the taxpayer's taxpayer identity 7as defined in section #fajc7;b77#f7 of the ,internal ,revenue ,code of #aihf7 has a single point of contact who-- 7#a7 is an individual employee of the ,internal ,revenue ,service1 and 7#b7 tracks the case of the taxpayer from start to finish and coordinates with other specialized units to resolve case issues as quickly as possible4 7b7 ,change of contact ,the procedures under subsection 7a7 shall provide that the single point of contact may be changed-- 7#a7 upon request of the taxpayer1 or 7#b7 in any case where the individual employee ceases employment or is otherwise unavailable for any period1 or a change is required to meet agency staffing needs1 but only if the taxpayer is notified of any such change within #e business days4 #f4 ,criminal penalty for misappropriating taxpayer identity in connection with tax fraud 7a7 ,in general ,section #gbjf is amended-- 7#a7 by striking ,any person and inserting the following3 7a7 ,in general ,any person 1 and 7#b7 by adding at the end the following new subsection3 7b7 ,misappropriation of identity ,any person who willfully misappropriates another person's taxpayer identity 7as defined in section #fajc7;b77#f77 for the purpose of making any list1 return1 account1 statement1 or other document submitted to the ,secretary under the provisions of this title shall be guilty of a felony and1 upon conviction thereof1 shall be fined not more than #bej1jjj 7#ejj1jjj in the case of a corporation7 or imprisoned not more than #e years1 or both1 together with the costs of prosecution4 4 7b7 ,aggravated identity theft ,section #ajbh;,a7c7 of title #ah1 ,united ,states ,code1 is amended by striking or at the end of paragraph 7#aj71 by striking the period at the end of paragraph 7#aa7 and inserting 2 or1 and by adding at the end the following new paragraph3 7#ab7 section #gbjf7;b7 of the ,internal ,revenue ,code of #aihf 7relating to misappropriation of identity in connection with tax fraud74 4 7c7 ,effective date ,the amendments made by this section shall apply to offenses committed on or after the date of the enactment of this ,act4 #g4 ,extend ,internal ,revenue ,service authority to require truncated social security numbers on ,form ,w-#b 7a7 ,in general ,paragraph 7#b7 of section #fjea7;a7 is amended by striking his social security number and inserting an identifying number for the employee4 7b7 ,effective date ,the amendment made by this section shall take effect on the date of the enactment of this ,act4 #h4 ,improvement in access to information in the ,national ,directory of ,new ,hires for tax administration purposes 7a7 ,in general ,paragraph 7#c7 of section #dec7;i7 of the ,social ,security ,act 7#db ,u4,s4,c4 #fec7;i77 is amended to read as follows3 7#c7 ,administration of ,federal tax laws relating to fraud ,the ,secretary of the ,treasury shall have access to the information in the ,national ,directory of ,new ,hires for the sole purpose of identifying and preventing fraudulent tax return filings and claims for refund under the ,internal ,revenue ,code of #aihf4 4 7b7 ,effective date ,the amendment made by this section shall take effect on the date of the enactment of this ,act4 #i4 ,password system for prevention of identity theft tax fraud 7a7 ,in general ,the ,secretary of the ,treasury shall implement an identity theft tax fraud prevention program under which any individual taxpayer may elect to be provided with a unique password which1 as a result of such election1 will be required to be included on any ,federal tax return filed by such individual before the return will be processed4 ,such program shall be available not later than ,january #a of the first calendar year beginning on or after the date that is #b years after the date of the enactment of this ,act4 7b7 ,study and report ,the ,secretary of the ,treasury shall conduct a study of the program under subsection 7a7 and1 not later than #c years after the ,january #a date under such subsection1 shall report to the ,committee on ,finance of the ,senate and the ,committee on ,ways and ,means of the ,house of ,representatives on the efficacy of such program in reducing tax refund fraud4 ,such report shall include a recommendation as to whether the program under subsection 7a7 should be made mandatory1 rather than elective1 for all taxpayers4 #aj4 ,increased penalty for improper disclosure or use of information by preparers of returns 7a7 ,in general ,section #fgac is amended-- 7#a7 by redesignating subsections 7b7 and 7c7 as subsections 7c7 and 7d71 respectively1 and 7#b7 by inserting after subsection 7a7 the following new subsection3 7b7 ,enhanced penalty for improper use or disclosure relating to identity theft 7#a7 ,in general ,in the case of a disclosure or use described in subsection 7a7 that is made in connection with a crime relating to the misappropriation of another person's taxpayer identity 7as defined in section #fajc7;b77#f771 whether or not such crime involves any tax filing1 subsection 7a7 shall be applied-- 7,a7 by substituting #a1jjj for #bej1 and 7,b7 by substituting #ej1jjj for #aj1jjj4 7#b7 ,separate application of total penalty limitation ,the limitation on the total amount of the penalty under subsection 7a7 shall be applied separately with respect to disclosures or uses to which this paragraph applies and to which it does not apply4 4 7b7 ,criminal penalty ,section #gbaf7;a7 is amended by striking #a1jjj and inserting #a1jjj 7#ajj1jjj in the case of a disclosure or use to which section #fgac7;b7 applies74 7c7 ,effective date ,the amendments made by this section shall apply to disclosures or uses after the date of the enactment of this ,act4 #aa4 ,increase electronic filing of returns 7a7 ,in general ,subparagraph 7,a7 of section #fjaa7;e77#b7 is amended by striking #bej and inserting the applicable number of4 7b7 ,applicable number ,subsection 7e7 of section #fjaa1 as amended by this ,act1 is amended by adding at the end the following new paragraph3 7#f7 ,applicable number ,for purposes of paragraph 7#b77;,a71 the applicable number is-- 7,a7 in the case of returns and statements relating to calendar years before #bjae1 #bej1 7,b7 in the case of returns and statements relating to calendar year #bjae1 #ajj1 7,c7 in the case of returns and statements relating to calendar year #bjaf1 #ej1 and 7,d7 in the case of returns and statements relating to calendar years after #bjaf1 #bj4 4 7c7 ,returns filed by a tax return preparer 7#a7 ,in general ,subparagraph 7,a7 of section #fjaa7;e77#c7 is amended to read as follows3 7,a7 ,in general ,the ,secretary shall require that-- 7i7 any individual income tax return1 and 7ii7 any return or statement under subpart ,b1 ,c1 or ,e of part ,,iii of this subchapter1 which is prepared by a tax return preparer be filed on magnetic media4 ,the ,secretary may waive the requirement of the preceding sentence if the ,secretary determines1 on the basis of an application by the tax return preparer1 that the preparer cannot meet such requirement based on technological constraints 7including lack of access to the ,internet74 4 7#b7 ,conforming amendment ,paragraph 7#c7 of section #fjaa7;e7 is amended by striking subparagraph 7,b71 and by redesignating subparagraph 7,c7 as subparagraph 7,b74 7d7 ,effective dates ,the amendments made by this section shall apply to returns the due date for which 7determined without regard to extensions7 is after ,december #ca1 #bjad4 #ab4 ,increased real-time filing 7a7 ,accelerated filing of forms ,w-#b and ,w-#c 7#a7 ,in general ,section #fjga is amended by redesignating subsection 7c7 as subsection 7d71 and by inserting after subsection 7b7 the following new subsection3 7c7 ,returns relating to employee wage information ,returns and statements made under sections #fjea and #fjeb shall be filed on or before ,february #ae of the year following the calendar year to which such returns relate4 4 7#b7 ,conforming amendment ,subsection 7b7 of section #fjga is amended by striking subparts ,b and ,c and inserting section #fjec and subpart ,b4 7#c7 ,effective date ,the amendments made by this subsection shall apply to returns and statements relating to calendar years beginning after the date of the enactment of this ,act4 7b7 ,accelerated filing for certain forms #ajii 7#a7 ,in general ,subsection 7c7 of section #fjga1 as amended by subsection 7a71 is amended-- 7,a7 by striking wage information in the heading and inserting wage information and ,forms #ajii-,,misc1 and 7,b7 by inserting 1 and any return which is filed on ,form #ajii-,,misc1 after #fjeb4 7#b7 ,conforming amendment ,subsection 7b7 of section #fjga1 as amended by this ,act1 is amended by striking section #fjec and subpart ,b of part ,,iii of this subchapter and inserting subpart ,b of part ,,iii of this subchapter 7other than returns filed on ,form #ajii-,,misc74 7#c7 ,effective date ,the amendments made by this subsection shall apply to returns relating to calendar years beginning after ,december #ca1 #bjad4 7c7 ,study regarding administrative implementation ,not later than ,january #a1 #bjag1 the ,secretary of the ,treasury shall report to the ,committee on ,finance of the ,senate and the ,committee on ,ways and ,means of the ,house of ,representatives including-- 7#a7 a recommendation of whether the due dates for filing ,forms ,w-#b and ,w-#c with the ,internal ,revenue ,service and the ,social ,security ,administration should be accelerated to ,january #ca to match the due date for furnishing copies of such forms to the recipient of the reported income1 7#b7 recommendations for processes-- 7,a7 to match the information reported on ,forms ,w-#b and ,forms #ajii-,,misc for the effective processing of returns and accurate determination of refunds1 and 7,b7 to correct errors on such documents1 and 7#c7 any other recommendations such ,secretary may have for accelerating information reporting1 including the identification of any other forms that should be due on an accelerated schedule in order to prevent tax refund fraud4 #ac4 ,limitation on multiple individual income tax refunds to the same account 7a7 ,in general ,not later than #ahj days after the date of enactment of this ,act1 the ,secretary of the ,treasury shall issue regulations that restrict the delivery or deposit of multiple individual income tax refunds from the same tax year to the same individual account or mailing address4 7b7 ,exception ,the regulation promulgated under subsection 7a7 shall provide that the restrictions shall not apply in cases and situations where the ,secretary of the ,treasury determines there is not a likelihood of tax fraud4 #ad4 ,identity verification required under due diligence rules 7a7 ,in general ,subsection 7g7 of section #ffie is amended by adding at the end the following new sentence3 ,such due diligence requirements shall include a requirement that such preparer verify 7in such manner and with such documentation as the ,secretary shall provide7 the identity of the taxpayer with respect to such return or claim for refund44 7b7 ,effective date ,the amendment made by this section shall apply to returns or claims for refund filed after ,december #ca1 #bjad4 #ae4 ,report on refund fraud ,not later than #a year after the date of the enactment of this ,act1 and annually thereafter1 the ,secretary of the ,treasury 7or the ,secretary's delegate7 shall report to the ,committee on ,finance of the ,senate and the ,committee on ,ways and ,means of the ,house of ,representatives on the extent and nature of fraud involving the use of a misappropriated taxpayer identity with respect to claims for refund under the ,internal ,revenue ,code of #aihf during the preceding completed income tax filing season1 and the detection1 prevention1 and enforcement activities undertaken by the ,internal ,revenue ,service with respect to such fraud1 including-- 7#a7 the development of fraud detection filters and how they are or may be updated and improved2 7#b7 the effectiveness of fraud detection activities1 and the ways in which such effectiveness is measured2 and 7#c7 the methods by which such ,service categorizes of refund fraud1 and the amounts of fraud that are associated with each category4