[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[H.R. 531 Introduced in House (IH)]

113th CONGRESS
  1st Session
                                H. R. 531

               To prevent identity theft and tax crimes.


_______________________________________________________________________


                    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.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Tax Crimes and Identity Theft 
Prevention Act''.

SEC. 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.

SEC. 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.

SEC. 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.

SEC. 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.

SEC. 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.

SEC. 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.

SEC. 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.

SEC. 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.

SEC. 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.''.

SEC. 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.

SEC. 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.

SEC. 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.

SEC. 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.
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