[Congressional Record Volume 164, Number 114 (Monday, July 9, 2018)]
[Senate]
[Pages S4844-S4845]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Ms. COLLINS (for herself and Mr. Jones):
  S. 3186. A bill to require the Internal Revenue Service to establish, 
incrementally over five years, a nationwide program to provide personal 
identification numbers to taxpayers to help prevent tax-related 
identity theft; to the Committee on Finance.
  Ms. COLLINS. Mr President, I am pleased to introduce with my 
colleague from Alabama, Senator Jones, the Taxpayer Identity Protection 
Act of 2018, a bill that seeks to help prevent American taxpayers and 
seniors from falling victim to identity theft and tax refund fraud.
  As of May 17, the IRS had received more than 141.5 million individual 
income tax returns for the 2018 filing season. Of that number, nearly 
75 percent were eligible for refunds. These refunds are not a gift from 
the Federal government--they are the return of funds belonging to 
taxpayers that were over-withheld from their paychecks last year. In 
the past few months, millions of American families have been eagerly 
awaiting these tax refunds, money they may need to pay off debts, 
medical bills, and plug gaps in the family budget. Unfortunately, for 
many Americans these refunds have not yet come.
  Taxpayers are not the only ones eagerly awaiting these refunds. 
Criminals have figured out that, in many instances, it is cheaper and 
easier for them to steal taxpayers' identities and hijack their tax 
refunds than it is to traffic in drugs or rob banks.
  Identity theft-refund fraud occurs when a criminal files a false tax 
return using a stolen Social Security Number and other sensitive 
personal information from sources like hospitals, schools, or assisted 
living facilities, often by recruiting employees to steal that 
information. The fraudster then uses this information to prepare 
fraudulent tax returns.
  The thieves make sure to file early, as soon as the tax filing season 
opens in January, to increase the odds that they can get a refund 
before the real taxpayer files his or her return. The criminals are 
known to hold what they call ``make it rain parties,'' where they bring 
stolen laptops to a motel room with Internet access, and work together 
churning-out scores of fake returns.
  These fraudsters work under the premise of ``file early, file 
often.'' Once the thieves file the fraudulent tax return, the IRS 
processes it and issues a refund. With each refund worth on average 
$2,778, the money can add up quickly.
  This is not a victimless crime. Last year, the Federal Trade 
Commission received more than 371,000 complaints of identity theft, 
including 82,000 complaints related to employment or tax-refund fraud. 
Taxpayers who have their refunds hijacked by fraudsters often have to 
wait years to get the refunds to which they are legally entitled. Many 
are re-victimized year after year. A substantial number become victims 
of other forms of identity theft. Worst of all, victims are often the 
most vulnerable: elderly citizens who earn so little they are not even 
required to file a tax return. The IG estimates that 76,000 low-income 
elderly citizens were victims of tax-fraud identity theft in 2010 
alone.
  In 2016, the Lewiston Sun Journal published a story about a couple, 
Rick Zaccaro and his wife, Bonnie Washuk, who were victims of tax 
refund fraud. They had filed their taxes in late January 2015, and when 
Rick, a retired financial analyst for the Postal Service, was checking 
the status of their return online in early February, he learned that 
they were the victims of identity theft. Someone had filed and claimed 
a tax refund using their names, dates of birth, and Social Security 
Numbers. That claim was paid while their legitimate tax filing, with 
their appropriate W2s, was in limbo. It took months of worrying, frozen 
bank accounts, and a lot of calls to multiple government offices for 
them to try and straighten things out. When they did finally receive 
their refund, they also received something called an Identity 
Protection Personal Identification Number--better known as an IP PIN.
  To provide relief to some victims of identity theft, the IRS began 
issuing IP PINs to eligible taxpayers in fiscal year 2011. An IP PIN is 
a six-digit number assigned to eligible taxpayers that allows their tax 
returns and refunds to be processed without delay and helps prevent the 
misuse of their Social Security Numbers on fraudulent income tax 
returns. If a return is e-filed with their Social Security Number and 
an incorrect or missing IP PIN, the IRS's system automatically rejects 
the tax return until it is submitted with the correct IP PIN or they 
file on paper. If the same conditions occur on a paper-filed return, 
the IRS will delay its processing and any refund that may be due while 
the IRS determines if the return actually belongs to the taxpayer.
  In addition to victims of identity theft, in 2013, the IRS began a 
pilot

[[Page S4845]]

program in which it offered IP PINs to all taxpayers, not just those 
who were victims of identity theft, who filed their federal tax returns 
as residents of Florida, Georgia, or the District of Columbia. 
According to the IRS, these three locations have the highest per-capita 
percentage of tax-related identity theft in the country. Taxpayers in 
these three jurisdictions are not required to use an IP PIN but may 
opt-in to the program if they want the extra layer of identity 
protection.
  In preparation for the 2018 Filing Season, the IRS issued nearly 3.5 
million IP PINs to taxpayers, up from 770,000 in 2013. According to the 
IRS, as of February 28, 2018, it had rejected approximately 7,376 
fraudulent e-filed tax returns, and as of March 15, 2018, it had 
stopped 1,442 paper-filed tax returns from posting to the Master File.
  The Taxpayer Identity Protection Act of 2018 would expand and make 
permanent the IRS's IP PIN pilot program to help combat identity theft 
refund fraud across the nation. Specifically, our bill would authorize 
the IRS to incrementally expand its pilot program nationally, in 
phases, over a five-year period. Scaling out the program would give all 
taxpayers the opportunity to further protect themselves from falling 
victim to tax refund fraud and identity theft, while also saving 
taxpayers billions of dollars every year. The IP PIN pilot program has 
worked to protect against identity theft and the IRS supports its 
expansion over the next five-years. I urge my colleagues on both sides 
of the aisle to support the adoption of Taxpayer Identity Protection 
Act of 2018.

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