[Congressional Record Volume 163, Number 195 (Thursday, November 30, 2017)]
[Senate]
[Pages S7612-S7615]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
SA 1770. Mr. NELSON submitted an amendment intended to be proposed by
him to the bill H.R. 1, to provide for reconciliation pursuant to
titles II and V of the concurrent resolution on the budget for fiscal
year 2018; which was ordered to lie on the table; as follows:
At the end of title I, add the following:
Subtitle F--Identity Theft and Tax Fraud Prevention
SEC. 16001. SHORT TITLE; DEFINITION.
(a) Short Title.--This subtitle may be cited as the
``Identity Theft and Tax Fraud Prevention Act of 2017''.
(b) Secretary.--In this subtitle, the term ``Secretary''
means the Secretary of the Treasury or the Secretary's
delegate.
PART I--IDENTITY THEFT AND TAX REFUND FRAUD PREVENTION
Subpart A--General Provisions
SEC. 16101. GUIDELINES FOR STOLEN IDENTITY REFUND FRAUD
CASES.
(a) In General.--Not later than 6 months after the date of
the enactment of this Act, the Secretary, in consultation
with the National Taxpayer Advocate, 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 fraud.
(b) Standards and Procedures To Be Considered.--The
guidelines described in subsection (a) may include--
(1) standards for--
(A) the average length of time in which a case involving
stolen identity refund fraud should be resolved,
(B) the maximum length of time, on average, 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 refund, and
(C) 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 case,
(2) standards for opening, assigning, reassigning, or
closing a case involving stolen identity refund fraud, and
(3) procedures for implementing and accomplishing the
standards described in paragraphs (1) and (2), and measures
for evaluating such procedures and determining whether such
standards have been successfully implemented.
SEC. 16102. CRIMINAL PENALTY FOR MISAPPROPRIATING TAXPAYER
IDENTITY IN CONNECTION WITH TAX FRAUD.
(a) In General.--Section 7206 is amended--
(1) by striking ``Any person'' and inserting the following:
``(a) In General.--Any person'', and
(2) by adding at the end the following new subsection:
``(b) Misappropriation of Identity.--Any person who
willfully misappropriates another person's taxpayer identity
(as defined in section 6103(b)(6)) for the purpose of making
any list, return, account, statement, or other document
submitted to the Secretary under the provisions of this title
shall be guilty of a felony and, upon conviction thereof,
shall be fined not more than $250,000 ($500,000 in the case
of a corporation) or imprisoned not more than 5 years, or
both, together with the costs of prosecution.''.
(b) Identity Protection Personal Identification Number.--
Section 6109 is amended by inserting after subsection (d) the
following new subsection:
``(e) Identity Protection Personal Identification Number.--
``(1) In general.--For purposes of this section, the term
`identifying number' shall include an identity protection
personal identification number, as defined in paragraph (2).
``(2) 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 identity.''.
(c) Effective Date.--The amendments made by subsection (a)
shall apply to offenses committed on or after the date of the
enactment of this Act.
SEC. 16103. INCREASED PENALTY FOR IMPROPER DISCLOSURE OR USE
OF INFORMATION BY PREPARERS OF RETURNS.
(a) In General.--Section 6713 is amended--
(1) by redesignating subsections (b) and (c) as subsections
(c) and (d), respectively, and
(2) by inserting after subsection (a) the following new
subsection:
``(b) Enhanced Penalty for Improper Use or Disclosure
Relating to Identity Theft.--
``(1) In general.--In the case of a disclosure or use
described in subsection (a) that is made in connection with a
crime relating to the misappropriation of another person's
taxpayer identity (as defined in section
[[Page S7613]]
6103(b)(6)), whether or not such crime involves any tax
filing, subsection (a) shall be applied--
``(A) by substituting `$1,000' for `$250', and
``(B) by substituting `$50,000' for `$10,000'.
``(2) Separate application of total penalty limitation.--
The limitation on the total amount of the penalty under
subsection (a) shall be applied separately with respect to
disclosures or uses to which this subsection applies and to
which it does not apply.''.
(b) Criminal Penalty.--Section 7216(a) is amended by
striking ``$1,000'' and inserting ``$1,000 ($100,000 in the
case of a disclosure or use to which section 6713(b)
applies)''.
(c) Effective Date.--The amendments made by this section
shall apply to disclosures or uses on or after the date of
the enactment of this Act.
SEC. 16104. NOTIFICATION OF SUSPECTED IDENTITY THEFT.
(a) In General.--Chapter 77 is amended by adding at the end
the following new section:
``SEC. 7529. NOTIFICATION OF SUSPECTED IDENTITY THEFT.
``If the Secretary determines that there has been or may
have been an unauthorized use of the identity of any
individual, the Secretary shall, without jeopardizing an
investigation relating to tax administration--
``(1) as soon as practicable, notify the individual of such
determination and provide--
``(A) instructions on how to file a report with law
enforcement regarding the unauthorized use of the identity of
the individual,
``(B) 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 investigation,
``(C) information regarding actions the individual may take
in order to protect the individual from harm relating to such
unauthorized use, and
``(D) an offer of identity protection measures to be
provided to the individual by the Internal Revenue Service,
such as the use of an identity protection personal
identification number (as defined in section 6109(e)), and
``(2) at the time the information described in paragraph
(1) is provided (or, if not available at such time, as soon
as practicable thereafter), issue additional notifications to
such individual (or such individual's designee) regarding--
``(A) whether an investigation has been initiated in
regards to such unauthorized use,
``(B) whether the investigation substantiated an
unauthorized use of the identity of the individual, and
``(C) whether--
``(i) any action has been taken against a person relating
to such unauthorized use, or
``(ii) any referral has been made for criminal prosecution
of such person and, to the extent such information is
available, whether such person has been criminally charged by
indictment or information.''.
(b) Clerical Amendment.--The table of sections for chapter
77 is amended by adding at the end the following new item:
``Sec. 7529. Notification of suspected identity theft.''.
(c) Effective Date.--The amendments made by this section
shall apply to determinations made after the date of the
enactment of this Act.
SEC. 16105. 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 serve
as the primary source of contact for State and local law
enforcement authorities with respect to tax-related identity
theft and other tax fraud matters, having duties that shall
include--
(1) receiving information from State and local law
enforcement authorities,
(2) responding to inquiries from State and local law
enforcement authorities,
(3) administering authorized information-sharing
initiatives with State or local law enforcement authorities
and reviewing the performance of such initiatives,
(4) ensuring any information provided through authorized
information-sharing initiatives with State or local law
enforcement authorities is used only for the prosecution of
identity theft-related crimes and not re-disclosed to third
parties, and
(5) any other duties as delegated by the Commissioner of
Internal Revenue.
Subpart B--Administrative Authority To Prevent Identity Theft and Tax
Refund Fraud
SEC. 16111. AUTHORITY TO TRANSFER INTERNAL REVENUE SERVICE
APPROPRIATIONS TO COMBAT TAX FRAUD.
(a) In General.--For any fiscal year, in addition to any
other authority to transfer amounts appropriated to an
Internal Revenue Service account, the Commissioner of
Internal Revenue (referred to in this section as the
``Commissioner'') may transfer not more than $10,000,000 to
any 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, detecting, and resolving potential cases of
tax fraud, which may include educating taxpayers about common
tax fraud scams and how to protect themselves from such
scams.
(b) Limitation.--The Commissioner shall not transfer any
amounts described in subsection (a) unless the Commissioner
has determined that taxpayer services provided by the
Internal Revenue Service to the public (including telephone
operations, forms and publications, and similar types of
taxpayer assistance) will not be impaired by such transfer.
SEC. 16112. STREAMLINED CRITICAL PAY AUTHORITY FOR
INFORMATION TECHNOLOGY POSITIONS.
(a) Authority.--Section 9503(a) of title 5, United States
Code, is amended--
(1) in the matter preceding paragraph (1), by striking
``the Secretary of the Treasury'' and all that follows
through ``establish'' and inserting ``the Secretary of the
Treasury may, during the period beginning on the date of the
enactment of the Identity Theft and Tax Fraud Prevention Act
of 2017 and ending on September 30, 2022, establish'', and
(2) in paragraph (1)(B), 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 Service''.
(b) Recruitment, Retention, Relocation Incentives, and
Relocation Expenses.--Section 9504 of title 5, United States
Code, is amended--
(1) in subsection (a)--
(A) by striking ``Before September 30, 2013'' and inserting
``During the period beginning on the date of the enactment of
the Identity Theft and Tax Fraud Prevention Act of 2017 and
ending on September 30, 2022'', and
(B) by inserting ``for employees holding positions
described in section 9503(a)(1)'' after ``incentives'', and
(2) in subsection (b)--
(A) by striking ``Before September 30, 2013'' and inserting
``During the period beginning on the date of the enactment of
the Identity Theft and Tax Fraud Prevention Act of 2017 and
ending on September 30, 2022'',
(B) by striking ``employees transferred or reemployed'' and
inserting ``employees holding positions described in section
9503(a)(1) who are transferred or reemployed during such
period'', and
(C) by striking ``section 9502 or 9503 after June 1, 1998''
and inserting ``section 9503 during such period''.
(c) Performance Awards for Senior Executives.--Section
9505(a) of title 5, United States Code, is amended--
(1) by striking ``Before September 30, 2013'' and inserting
``During the period beginning on the date of the enactment of
the Identity Theft and Tax Fraud Prevention Act of 2017 and
ending on September 30, 2022'', and
(2) by striking ``significant functions'' and inserting
``the information technology operations''.
(d) Effective Date.--The amendments made by this section
shall apply to payments made on or after the date of the
enactment of this Act.
SEC. 16113. ACCESS TO THE NATIONAL DIRECTORY OF NEW HIRES FOR
TAX ADMINISTRATION PURPOSES.
(a) In General.--Paragraph (3) of section 453(i) of the
Social Security Act (42 U.S.C. 653(i)) is amended to read as
follows:
``(3) Administration of federal tax laws.--The Secretary of
the Treasury shall have access to the information in the
National Directory of New Hires solely for purposes of
administering the Internal Revenue Code of 1986.''.
(b) Effective Date.--The amendment made by this section
shall take effect on the date of the enactment of this Act.
SEC. 16114. USE OF INFORMATION IN DO NOT PAY INITIATIVE IN
PREVENTION OF IDENTITY THEFT REFUND FRAUD.
The Secretary shall use the information available under the
Do Not Pay Initiative established under section 5 of the
Improper Payments Elimination and Recovery Improvement Act of
2012 (31 U.S.C. 3321 note) to help prevent identity theft
refund fraud.
SEC. 16115. MINIMUM STANDARDS FOR PROFESSIONAL TAX PREPARERS.
(a) In General.--Subsection (a) of section 330 of title 31,
United States Code, is amended--
(1) by striking paragraph (1) and inserting the following:
``(1) establish minimum standards regulating--
``(A) the practice of representatives of persons before the
Department of the Treasury; and
``(B) the practice of tax return preparers; and'', and
(2) in paragraph (2)--
(A) by inserting ``or tax return preparer'' after
``representative'' each place it appears, and
(B) by inserting ``or in preparing their tax returns,
claims for refund, or documents in connection with tax
returns or claims for refund'' after ``cases'' in
subparagraph (D).
(b) Authority to Sanction Regulated Tax Return Preparers.--
Subsection (b) of section 330 of title 31, United States
Code, is amended--
(1) by striking ``before the Department'',
(2) by inserting ``or tax return preparer'' after
``representative'' each place it appears, and
(3) in paragraph (4), by striking ``misleads or threatens''
and all that follows and inserting ``misleads or threatens--
``(A) any person being represented or any prospective
person being represented; or
``(B) any person or prospective person whose tax return,
claim for refund, or document in connection with a tax return
or claim for refund, is being or may be prepared.''.
(c) Tax Return Preparer Defined.--Section 330 of title 31,
United States Code, is
[[Page S7614]]
amended by adding at the end the following new subsection:
``(e) Tax Return Preparer.--For purposes of this section--
``(1) In general.--The term `tax return preparer' has the
meaning given such term under section 7701(a)(36) of the
Internal Revenue Code of 1986.
``(2) Tax return.--The term `tax return' has the meaning
given to the term `return' under section 6696(e)(1) of the
Internal Revenue Code of 1986.
``(3) Claim for refund.--The term `claim for refund' has
the meaning given such term under section 6696(e)(2) of such
Code.''.
SEC. 16116. 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 912 of title 18, United States Code, 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 law.
Subpart C--Reports
SEC. 16121. IRS REPORT ON STOLEN IDENTITY REFUND FRAUD.
(a) In General.--Not later than September 30, 2018, and
every even-numbered calendar year thereafter through
September 30, 2026, 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 1986, as based on the most recent data that
is available.
(b) Contents.--The report described in subsection (a) shall
include--
(1) a discussion of the detection, prevention, and
enforcement activities undertaken by the Internal Revenue
Service with respect to such fraud, including--
(A) efforts to combat stolen identity refund fraud,
including an update on the victims' assistance unit (or any
equivalent unit),
(B) an update on Internal Revenue Service efforts and
results associated with limiting multiple refunds to the same
financial account and physical address, with appropriate
exceptions, and
(C) Internal Revenue Service efforts associated with other
avenues for addressing stolen identity refund fraud,
(2) information regarding the average and maximum amounts
of time that elapsed before resolution of a victim's case,
(3) an analysis of ways to accelerate information matching
in order to prevent stolen identity refund fraud,
(4) an update on the implementation of the relevant
provisions of this Act and the amendments made by this Act,
and
(5) identification of any further legislation to protect
taxpayer resources and information, including preventing tax
refund fraud related to the Internal Revenue Service's e-
Services tools and electronic filing identification numbers.
(c) Additional Information for the First Report.--The first
report required under this section shall include--
(1) an assessment of the progress made by the Internal
Revenue Service on identity theft outreach and education to
individuals, businesses, State agencies, and other external
organizations, and
(2) 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 process.
SEC. 16122. REPORT ON STATUS OF THE IDENTITY THEFT TAX REFUND
FRAUD INFORMATION SHARING AND ANALYSIS CENTER.
Not later than 90 days after the date of the enactment of
this Act, 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--
(1) whether the Identity Theft Tax Refund Fraud Information
Sharing and Analysis Center (referred to in this section as
the ``Center'') is fully operational,
(2) if the Center is not fully operational, what steps are
necessary for the Center to be fully operational and an
estimate of when the Center will be fully operational, and
(3) any challenges that remain for effective sharing of
information between the public and private sectors and
efforts that are being undertaken to address such challenges.
SEC. 16123. REPORT ON IRS IMPOSTER PHONE SCAM.
(a) In General.--Not later than 1 year after the date of
the enactment of this Act, the Inspector General for Tax
Administration, in consultation with the Federal
Communications Commission and the Federal Trade Commission,
shall submit a report to Congress regarding identity theft
phone scams under which individuals attempt to obtain
personal information over the phone from taxpayers by falsely
claiming to be calling from or on behalf the Internal Revenue
Service.
(b) Contents of Report.--Such report shall include--
(1) a description of the nature and form of such scams,
(2) an estimate of the number of taxpayers contacted
pursuant to, and the number of taxpayers who have been
victims of, such scams,
(3) an estimate of the amount of wrongful payments obtained
from such scams, and
(4) details of potential solutions to combat and prevent
such scams, including best practices from the private sector
and technological solutions.
PART II--IMPROVEMENTS TO ELECTRONIC FILING OF TAX RETURNS
SEC. 16201. STUDY ON FEASIBILITY OF BLOCKING ELECTRONICALLY
FILED TAX RETURNS.
Not later than 180 days after the date of the enactment of
this Act, 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 person,
including a recommendation on whether to implement such a
program.
SEC. 16202. ENHANCEMENTS TO IRS PIN PROGRAM.
Not later than July 1, 2019, the Secretary shall establish
a program to issue, upon request, an identity protection
personal identification number (as described in section
6109(e)(2) of the Internal Revenue Code of 1986 (as added by
section 16102(b) of this Act)) to any individual after the
individual's identity has been verified to the satisfaction
of the Secretary.
SEC. 16203. INCREASING ELECTRONIC FILING OF RETURNS.
(a) In General.--Subparagraph (A) of section 6011(e)(2) is
amended by striking ``250'' and inserting ``the applicable
number of''.
(b) Applicable Number.--Subsection (e) of section 6011 is
amended by adding at the end the following new paragraph:
``(5) Applicable number.--For purposes of paragraph (2)(A),
the applicable number is--
``(A) in the case of returns and statements relating to
calendar years before 2020, 250,
``(B) in the case of returns and statements relating to
calendar year 2020, 200,
``(C) in the case of returns and statements relating to
calendar year 2021, 150,
``(D) in the case of returns and statements relating to
calendar year 2022, 100,
``(E) in the case of returns and statements relating to
calendar year 2023, 50, and
``(F) in the case of returns and statements relating to
calendar years after 2023, 20.''.
(c) Returns Filed by a Tax Return Preparer.--
(1) In general.--Subparagraph (A) of section 6011(e)(3) is
amended to read as follows:
``(A) 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 media. The Secretary
may waive the requirement of the preceding sentence if the
Secretary determines, on the basis of an application by the
tax return preparer, that the preparer cannot meet such
requirement based on technological constraints (including
lack of access to the Internet).''.
(2) Conforming amendment.--Paragraph (3) of section 6011(e)
is amended by striking subparagraph (B) and by redesignating
subparagraph (C) as subparagraph (B).
(d) Effective Date.--The amendments made by this section
shall apply to returns the due date for which (determined
without regard to extensions) is after December 31, 2018.
SEC. 16204. INTERNET PLATFORM FOR FORM 1099 FILINGS.
(a) In General.--Not later than January 1, 2022, the
Secretary shall make available an Internet website or other
electronic media, similar to the Business Services Online
Suite of Services provided by the Social Security
Administration, that will provide taxpayers access to
resources and guidance provided by the Internal Revenue
Service and will allow taxpayers to--
(1) prepare and file Forms 1099,
(2) prepare Forms 1099 for distribution to recipients other
than the Internal Revenue Service, and
(3) create and maintain necessary taxpayer records.
(b) Early Implementation for Forms 1099-MISC.--Not later
than January 1, 2020, the Internet website under subsection
(a) shall be available in a partial form that will allow
taxpayers to take the actions described in such subsection
with respect to Forms 1099-MISC required to be filed or
distributed by such taxpayers.
SEC. 16205. REQUIREMENT THAT ELECTRONICALLY PREPARED PAPER
RETURNS INCLUDE SCANNABLE CODE.
(a) In General.--Subsection (e) of section 6011, as amended
by section 16203(b) of this Act, is amended by adding at the
end the following new paragraph:
``(6) Special rule for returns prepared electronically and
submitted on paper.--The Secretary shall require that any
return of tax which is prepared electronically, but is
printed and filed on paper, bear a code which can, when
scanned, convert such return to electronic format.''.
(b) Conforming Amendment.--Paragraph (1) of section 6011(e)
is amended by striking ``paragraph (3)'' and inserting
``paragraphs (3) and (6)''.
(c) Effective Date.--The amendments made by this section
shall apply to returns of tax the due date for which
(determined without regard to extensions) is after December
31, 2018.
SEC. 16206. AUTHENTICATION OF USERS OF ELECTRONIC SERVICES
ACCOUNTS.
Beginning 180 days after the date of the enactment of this
Act, the Secretary shall
[[Page S7615]]
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 tools.
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