[Congressional Record Volume 157, Number 132 (Thursday, September 8, 2011)]
[Senate]
[Pages S5461-S5462]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. NELSON of Florida:
  S. 1534. A bill to prevent identity theft and tax fraud; to the 
Committee on Finance.
  Mr. NELSON of Florida. Mr. President, today I am filing legislation 
aimed at stopping criminals from filing fraudulent tax returns with 
stolen Social Security numbers.
  Specifically, the bill unveiled today would make it a felony 
punishable by as much as five years in Federal prison and/or a fine of 
no less than $25,000 for using another's Social Security number or 
other identifiable information to file a federal tax return and 
increases penalties for negligent or reckless disclosure of taxpayer 
information by tax preparers; require the IRS to develop a nationwide 
PIN system in which identity theft victims can receive a pin number to 
put on their tax return; and, allow identity theft victims to ``opt-
out'' of electronic filing of their Federal tax returns; protect Social 
Security numbers of deceased taxpayers by restricting public access to 
the records; direct an investigation by the Treasury Inspector General 
for Tax Administration to examine the role of prepaid debt cards and 
commercial tax software in facilitating fraudulent tax refunds; and 
permanently extend the information-sharing authority between the IRS 
and Federal and state correction authorities needed to prevent inmate 
tax fraud and require the agency to work specifically with state and 
local law enforcement officials on criminal investigative matters that 
involve violations at Federal and State or local level.

[[Page S5462]]

  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 1534

       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 ``Identify Theft and Tax Fraud 
     Prevention Act''.

     SEC. 2. 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. 3. 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. 4. PIN SYSTEM FOR PREVENTION OF IDENTITY THEFT TAX 
                   FRAUD.

       (a) In General.--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. 5. 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. 6. 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. 7. 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 or 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. 8. 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. 9. 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. 10. EXTENSION OF AUTHORITY TO DISCLOSE CERTAIN RETURN 
                   INFORMATION TO PRISON OFFICIALS.

       (a) In General.--Section 6103(k)(10) of the Internal 
     Revenue Code of 1986 is amended by striking subparagraph (D).
       (b) Report From Federal Bureau of Prisons.--Not later than 
     6 months after the date of the enactment of this Act, the 
     head of the Federal Bureau of Prisons shall submit to 
     Congress a detailed plan on how it will use the information 
     provided from the Secretary of Treasury under section 
     6103(k)(10) of the Internal Revenue Code of 1986 to reduce 
     prison tax fraud.
       (c) Sense of Senate Regarding State Prison Authorities.--It 
     is the sense of the Senate that the heads of State agencies 
     charged with the administration of prisons should --
       (1) develop plans for using the information provided by the 
     Secretary of Treasury under section 6103(k)(10) of the 
     Internal Revenue Code of 1986 to reduce prison tax fraud, and
       (2) coordinate with the Internal Revenue Service with 
     respect to the use of such information.

     SEC. 11. 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.

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