,,ii ,calendar ,no4 #eee #aadth ,,congress #b;d ,session ,s4 #caeg ,report ,no4 #aad-bii ,,in ,,the ,,senate ,,of ,,the ,,united ,,states ,july #ab1 #bjaf ,mr4 ,hatch1 from the ,committee on ,finance1 reported the following original bill2 which was read twice and placed on the calendar ,a ,,bill ,to prevent taxpayer identity theft and tax refund fraud1 and for other purposes4 #a4 ,short title2 etc 7a7 ,short title ,this ,act may be cited as the ,stolen ,identity ,refund ,fraud ,prevention ,act4 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 ,secretary ,in this ,act1 the term ,secretary means the ,secretary of the ,treasury or the ,secretary's delegate4 7d7 ,table of contents ,the table of contents of this ,act is as follows3 ,sec4 #a4 ,short title2 etc4 ,,title ,i--,identity ,theft and ,tax ,refund ,fraud ,prevention ,subtitle ,a--,general ,provisions ,sec4 #aja4 ,guidelines for stolen identity refund fraud cases4 ,sec4 #ajb4 ,criminal penalty for misappropriating taxpayer identity in connection with tax fraud4 ,sec4 #ajc4 ,increased penalty for improper disclosure or use of information by preparers of returns4 ,sec4 #ajd4 ,notification of suspected identity theft4 ,subtitle ,b--,administrative ,authority ,to ,prevent ,identity ,theft and ,tax ,refund ,fraud ,sec4 #aaa4 ,authority to transfer ,internal ,revenue ,service appropriations to combat tax fraud4 ,sec4 #aab4 ,streamlined critical pay authority for information technology positions4 ,sec4 #aac4 ,access to the ,national ,directory of ,new ,hires to identify and prevent fraudulent tax return filings and claims for refund4 ,sec4 #aad4 ,repeal of provision regarding certain tax compliance procedures and reports4 ,sec4 #aae4 ,sense of the ,senate on strengthened penalties and enforcement for impersonating an ,,irs official or agent4 ,subtitle ,c--,reports ,sec4 #aba4 ,,irs ,report on stolen identity refund fraud4 ,sec4 #abb4 ,report on status of the ,identity ,theft ,tax ,refund ,fraud ,information ,sharing and ,analysis ,center4 ,sec4 #abc4 ,,gao ,reports on identity theft and tax refund fraud4 ,,title ,,ii--,improvements to ,electronic ,filing of ,tax ,returns ,sec4 #bja4 ,study on feasibility of blocking electronically filed tax returns4 ,sec4 #bjb4 ,enhancements to ,,irs ,,pin ,program4 ,sec4 #bjc4 ,increasing electronic filing of returns4 ,sec4 #bjd4 ,internet platform for ,form #ajii filings4 ,sec4 #bje4 ,requirement that electronically prepared paper returns include scannable code4 ,sec4 #bjf4 ,authentication of users of electronic services accounts4 ,i ,identity ,theft and ,tax ,refund ,fraud ,prevention ,a ,general ,provisions #aja4 ,guidelines for stolen identity refund fraud cases 7a7 ,in general ,not later than #f months after the date of the enactment of this ,act1 the ,secretary1 in consultation with the ,national ,taxpayer ,advocate1 shall develop and implement publicly available guidelines for management of cases involving stolen identity refund fraud in a manner that reduces the administrative burden on taxpayers who are victims of such fraud4 7b7 ,standards and procedures ,to be considered ,the guidelines described in subsection 7a7 may include-- 7#a7 standards for-- 7,a7 the average length of time in which a case involving stolen identity refund fraud should be resolved1 7,b7 the maximum length of time1 on average1 a taxpayer who is a victim of stolen identity refund fraud and is entitled to a tax refund which has been stolen should have to wait to receive such refund1 and 7,c7 the maximum number of offices and employees within the ,internal ,revenue ,service with whom a taxpayer who is a victim of stolen identity refund fraud should be required to interact in order to resolve a case1 7#b7 standards for opening1 assigning1 reassigning1 or closing a case involving stolen identity refund fraud1 and 7#c7 procedures for implementing and accomplishing the standards described in paragraphs 7#a7 and 7#b71 and measures for evaluating such procedures and determining whether such standards have been successfully implemented4 #ajb4 ,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 ,identity protection personal identification number ,section #faji is amended by inserting after subsection 7d7 the following new subsection3 7e7 ,identity protection personal identification number 7#a7 ,in general ,for purposes of this section1 the term identifying number shall include an identity protection personal identification number1 as defined in paragraph 7#b74 7#b7 ,definition ,the term identity protection personal identification number means a number assigned by the ,secretary to a taxpayer to help prevent the misuse of the social security account number of the taxpayer on fraudulent ,federal income tax returns and to assist the ,secretary in verifying a taxpayer's identity4 4 7c7 ,sense of the ,senate relating to criminal penalty for aggravated identity theft ,it is the sense of the ,senate that subsection 7c7 of section #ajbh;,a of title #ah1 ,united ,states ,code1 should be amended to include the offenses described in section #gbjf7;b7 of the ,internal ,revenue ,code of #aihf1 as added by subsection 7a74 7d7 ,effective date ,the amendments made by subsection 7a7 shall apply to offenses committed on or after the date of the enactment of this ,act4 #ajc4 ,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 subsection 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 on or after the date of the enactment of this ,act4 #ajd4 ,notification of suspected identity theft 7a7 ,in general ,chapter #gg is amended by adding at the end the following new section3 #gebi4 ,notification of suspected identity theft 7a7 ,in general ,if the ,secretary determines that there has been or may have been an unauthorized use of the identity of any individual1 the ,secretary shall1 without jeopardizing an investigation relating to tax administration-- 7#a7 as soon as practicable1 notify the individual of such determination and provide-- 7,a7 instructions on how to file a report with law enforcement regarding the unauthorized use of the identity of the individual1 7,b7 the identification of any forms necessary for the individual to complete and submit to law enforcement to permit access to personal information of the individual during the investigation1 7,c7 information regarding actions the individual may take in order to protect the individual from harm relating to such unauthorized use1 and 7,d7 an offer of identity protection measures to be provided to the individual by the ,internal ,revenue ,service1 such as the use of an identity protection personal identification number 7as defined in section #faji7;e771 and 7#b7 at the time the information described in paragraph 7#a7 is provided 7or1 if not available at such time1 as soon as practicable thereafter71 issue additional notifications to such individual 7or such individual's designee7 regarding-- 7,a7 whether an investigation has been initiated in regards to such unauthorized use1 7,b7 whether the investigation substantiated an unauthorized use of the identity of the individual1 and 7,c7 whether-- 7i7 any action has been taken against a person relating to such unauthorized use1 or 7ii7 any referral has been made for criminal prosecution of such person and1 to the extent such information is available1 whether such person has been criminally charged by indictment or information4 7b7 ,employment-,related identity theft 7#a7 ,in general ,for purposes of this section1 the unauthorized use of the identity of an individual includes the unauthorized use of the identity of the individual to obtain employment4 7#b7 ,determination of employment-related identity theft ,for purposes of this section1 in making a determination as to whether there has been or may have been an unauthorized use of the identity of an individual to obtain employment1 the ,secretary shall review any information-- 7,a7 obtained from a statement described in section #fjea or an information return relating to compensation for services rendered other than as an employee1 or 7,b7 provided to the ,internal ,revenue ,service by the ,social ,security ,administration regarding any statement described in section #fjea1 which indicates that the social security account number provided on such statement or information return does not correspond with the name provided on such statement or information return or the name on the tax return reporting the income which is included on such statement or information return4 4 7b7 ,additional measures 7#a7 ,examination of both paper and electronic statements and returns ,the ,secretary shall examine the statements1 information returns1 and tax returns described in section #gebi7;b77#b7 for any evidence of employment-related identity theft1 regardless of whether such statements or returns are submitted electronically or on paper4 7#b7 ,improvement of effective return processing program with ,social ,security ,administration ,section #bcb of the ,social ,security ,act 7#db ,u4,s4,c4 #dcb7 is amended by inserting after the third sentence the following3 ,for purposes of carrying out the return processing program described in the preceding sentence1 the ,commissioner of ,social ,security shall request1 not less than annually1 such information described in section #gebi7;b77#b7 of the ,internal ,revenue ,code of #aihf as may be necessary to ensure the accuracy of the records maintained by the ,commissioner of ,social ,security related to the amounts of wages paid to1 and the amounts of self-employment income derived by1 individuals44 7#c7 ,underreporting of income ,the ,secretary shall establish procedures to ensure that income reported in connection with the unauthorized use of a taxpayer's identity is not taken into account in determining any penalty for underreporting of income by the victim of identity theft4 7c7 ,clerical amendment ,the table of sections for chapter #gg is amended by adding at the end the following new item3 ,sec4 #gebi4 ,notification of suspected identity theft4 4 7d7 ,effective date ,the amendments made by this section shall apply to determinations made after the date of the enactment of this ,act4 ,b ,administrative ,authority ,to ,prevent ,identity ,theft and ,tax ,refund ,fraud #aaa4 ,authority to transfer ,internal ,revenue ,service appropriations to combat tax fraud 7a7 ,in general ,for any fiscal year1 in addition to any other authority to transfer amounts appropriated to an ,internal ,revenue ,service account1 the ,commissioner of ,internal ,revenue 7referred to in this section as the ,commissioner7 may transfer not more than #aj1jjj1jjj to any account of the ,internal ,revenue ,service from amounts appropriated to other ,internal ,revenue ,service accounts4 ,any amounts so transferred shall be used solely for the purposes of preventing1 detecting1 and resolving potential cases of tax fraud1 which may include educating taxpayers about common tax fraud scams and how to protect themselves from such scams4 7b7 ,limitation ,the ,commissioner shall not transfer any amounts described in subsection 7a7 unless the ,commissioner has determined that taxpayer services provided by the ,internal ,revenue ,service to the public 7including telephone operations1 forms and publications1 and similar types of taxpayer assistance7 will not be impaired by such transfer4 #aab4 ,streamlined critical pay authority for information technology positions 7a7 ,authority ,section #iejc7;a7 of title #e1 ,united ,states ,code1 is amended-- 7#a7 in the matter preceding paragraph 7#a71 by striking the ,secretary of the ,treasury and all that follows through establish and inserting the ,secretary of the ,treasury may1 during the period beginning on the date of the enactment of the ,stolen ,identity ,refund ,fraud ,prevention ,act and ending on ,september #cj1 #bjba1 establish1 and 7#b7 in paragraph 7#a77;,b71 by striking the ,internal ,revenue ,service's successful accomplishment of an important mission and inserting the functionality of the information technology operations of the ,internal ,revenue ,service4 7b7 ,recruitment1 retention1 relocation incentives1 and relocation expenses ,section #iejd of title #e1 ,united ,states ,code1 is amended-- 7#a7 in subsection 7a7-- 7,a7 by striking ,before ,september #cj1 #bjac and inserting ,during the period beginning on the date of the enactment of the ,stolen ,identity ,refund ,fraud ,prevention ,act and ending on ,september #cj1 #bjba1 and 7,b7 by inserting for employees holding positions described in section #iejc7;a77#a7 after incentives1 and 7#b7 in subsection 7b7-- 7,a7 by striking ,before ,september #cj1 #bjac and inserting ,during the period beginning on the date of the enactment of the ,stolen ,identity ,refund ,fraud ,prevention ,act and ending on ,september #cj1 #bjba1 7,b7 by striking employees transferred or reemployed and inserting employees holding positions described in section #iejc7;a77#a7 who are transferred or reemployed during such period1 and 7,c7 by striking section #iejb or #iejc after ,june #a1 #aiih and inserting section #iejc during such period4 7c7 ,performance awards for senior executives ,section #ieje7;a7 of title #e1 ,united ,states ,code1 is amended-- 7#a7 by striking ,before ,september #cj1 #bjac and inserting ,during the period beginning on the date of the enactment of the ,stolen ,identity ,refund ,fraud ,prevention ,act and ending on ,september #cj1 #bjba1 and 7#b7 by striking significant functions and inserting the information technology operations4 7d7 ,effective date ,the amendments made by this section shall apply to payments made on or after the date of the enactment of this ,act4 #aac4 ,access to the ,national ,directory of ,new ,hires to identify and prevent fraudulent tax return filings and claims for refund 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 ,the ,secretary of the ,treasury shall have access to the information in the ,national ,directory of ,new ,hires for the purposes of-- 7,a7 administering section #cb of the ,internal ,revenue ,code of #aihf1 7,b7 verifying a claim with respect to employment in a tax return1 and 7,c7 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 #aad4 ,repeal of provision regarding certain tax compliance procedures and reports ,section #bjjd of the ,internal ,revenue ,service ,restructuring and ,reform ,act of #aiih 7#bf ,u4,s4,c4 #fjab note7 is repealed4 #aae4 ,sense of the ,senate on strengthened penalties and enforcement for impersonating an ,,irs official or agent ,it is the sense of the ,senate that the penalties under section #iab of title #ah1 ,united ,states ,code1 for impersonating an officer or employee acting under the authority of the ,united ,states should be amended to increase the penalties for impersonating an official or agent of the ,internal ,revenue ,service and enforced to the fullest extent of the law4 ,c ,reports #aba4 ,,irs ,report on stolen identity refund fraud 7a7 ,in general ,not later than ,september #cj1 #bjah1 and every even-numbered calendar year thereafter through ,september #cj1 #bjbf1 the ,secretary shall report to the ,committee on ,ways and ,means of the ,house of ,representatives and the ,committee on ,finance of the ,senate on the extent and nature of stolen identity refund fraud under the ,internal ,revenue ,code of #aihf1 as based on the most recent data that is available4 7b7 ,contents ,the report described in subsection 7a7 shall include-- 7#a7 a discussion of the detection1 prevention1 and enforcement activities undertaken by the ,internal ,revenue ,service with respect to such fraud1 including-- 7,a7 efforts to combat stolen identity refund fraud1 including an update on the victims' assistance unit1 7,b7 an update on ,internal ,revenue ,service efforts and results associated with limiting multiple refunds to the same financial account and physical address1 with appropriate exceptions1 and 7,c7 ,internal ,revenue ,service efforts associated with other avenues for addressing stolen identity refund fraud1 7#b7 information regarding the average and maximum amounts of time that elapsed before resolution of a victim's case1 7#c7 an analysis of ways to accelerate information matching in order to prevent stolen identity refund fraud1 7#d7 an update on the implementation of the relevant provisions of this ,act and the amendments made by this ,act1 and 7#e7 identification of any further legislation to protect taxpayer resources and information1 including preventing tax refund fraud related to the ,internal ,revenue ,service's e-,services tools and electronic filing identification numbers4 7c7 ,additional information for the first report ,the first report required under this section shall include-- 7#a7 an assessment of the progress made by the ,internal ,revenue ,service on identity theft outreach and education to individuals1 businesses1 ,state agencies1 and other external organizations1 and 7#b7 the results of a study on the costs and benefits relating to enhancement of the taxpayer authentication approach employed by the ,internal ,revenue ,service in the electronic tax return filing process4 #abb4 ,report on status of the ,identity ,theft ,tax ,refund ,fraud ,information ,sharing and ,analysis ,center ,not later than #ij days after the date of the enactment of this ,act1 the ,secretary shall report to the ,committee on ,ways and ,means of the ,house of ,representatives and the ,committee on ,finance of the ,senate on-- 7#a7 whether the ,identity ,theft ,tax ,refund ,fraud ,information ,sharing and ,analysis ,center 7referred to in this section as the ,center7 is fully operational1 7#b7 if the ,center is not fully operational1 what steps are necessary for the ,center to be fully operational and an estimate of when the ,center will be fully operational1 and 7#c7 any challenges that remain for effective sharing of information between the public and private sectors and efforts that are being undertaken to address such challenges4 #abc4 ,,gao ,reports on identity theft and tax refund fraud 7a7 ,report on notification relating to stolen identity refund fraud ,not later than ,september #cj1 #bjah1 the ,comptroller ,general of the ,united ,states shall submit a report to the ,committee on ,ways and ,means of the ,house of ,representatives and the ,committee on ,finance of the ,senate which evaluates-- 7#a7 the clarity of the language used by the ,internal ,revenue ,service for notifying taxpayers who are potential or known victims of stolen identity refund fraud1 and 7#b7 the systems employed by the ,internal ,revenue ,service for generating stolen identity refund fraud notifications4 7b7 ,report on taxpayer authentication and identity theft outreach and education ,not later than ,september #cj1 #bjbj1 the ,comptroller ,general of the ,united ,states shall submit to the ,committee on ,ways and ,means of the ,house of ,representatives and the ,committee on ,finance of the ,senate a report evaluating the following3 7#a7 ,progress made by the ,internal ,revenue ,service on identity theft outreach and education to individuals1 businesses1 ,state agencies1 and other external organizations4 7#b7 ,the study described in section #aba7;c77#b7 of this ,act4 ,,ii ,improvements to ,electronic ,filing of ,tax ,returns #bja4 ,study on feasibility of blocking electronically filed tax returns ,not later than #ahj days after the date of the enactment of this ,act1 the ,secretary shall report to the ,committee on ,ways and ,means of the ,house of ,representatives and the ,committee on ,finance of the ,senate on the feasibility of implementing a program under which a person who has filed an identity theft affidavit with the ,secretary may elect to prevent the processing of any ,federal tax return submitted in an electronic format by anyone purporting to be such person1 including a recommendation on whether to implement such a program4 #bjb4 ,enhancements to ,,irs ,,pin ,program ,not later than ,july #a1 #bjai1 the ,secretary shall establish a program to issue1 upon request1 an identity protection personal identification number 7as described in section #faji7;e77#b7 of the ,internal ,revenue ,code of #aihf 7as added by section #ajb7;b7 of this ,act77 to any individual after the individual's identity has been verified to the satisfaction of the ,secretary4 #bjc4 ,increasing 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 #fjaa is amended by adding at the end the following new paragraph3 7#e7 ,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 #bjai1 #bej1 7,b7 in the case of returns and statements relating to calendar year #bjai1 #bjj1 7,c7 in the case of returns and statements relating to calendar year #bjbj1 #aej1 7,d7 in the case of returns and statements relating to calendar year #bjba1 #ajj1 7,e7 in the case of returns and statements relating to calendar year #bjbb1 #ej1 and 7,f7 in the case of returns and statements relating to calendar years after #bjbb1 #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 any individual income tax return which is prepared and filed 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,b7 and by redesignating subparagraph 7,c7 as subparagraph 7,b74 7d7 ,effective date ,the amendments made by this section shall apply to returns the due date for which 7determined without regard to extensions7 is after ,december #ca1 #bjag4 #bjd4 ,internet platform for ,form #ajii filings 7a7 ,in general ,not later than ,january #a1 #bjba1 the ,secretary 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 ,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 ,january #a1 #bjai1 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 #bje4 ,requirement that electronically prepared paper returns include scannable code 7a7 ,in general ,subsection 7e7 of section #fjaa1 as amended by section #bjc7;b7 of this ,act1 is amended by adding at the end the following new paragraph3 7#f7 ,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#f74 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 #bjag4 #bjf4 ,authentication of users of electronic services accounts ,beginning #ahj days after the date of the enactment of this ,act1 the ,secretary shall 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 tools4 ,july #ab1 #bjaf,read twice and placed on the calendar