Section 1 Short title
This Act may be cited as the “Protecting American Taxpayers from Fraud Act of 2015”.
Protecting American Taxpayers from Fraud Act of 2015
A BILL
To direct the Secretary of the Treasury to develop guidance and procedures for the recovery of refunds relating to tax return preparer fraud.
Sec. 2 Purpose
The purpose of this Act is to address predatory practices in low income communities by some tax return preparers.
Sec. 3 Referral procedures for recovery of refunds for taxpayers defrauded by employees or agents of tax preparation firms
The Secretary of the Treasury (or the Secretary’s delegate) shall develop referral procedures for, and establish a liaison to, tax preparation firms to seek recovery of refunds for taxpayers defrauded by employees or agents of tax preparation firms. In developing such procedures, the Secretary (or the Secretary’s delegate) shall ensure that there is coordination among the following entities within the Internal Revenue Service: Taxpayer Advocate Service, Wage & Investment Division, Criminal Investigation, Office of the Chief Counsel, Return Preparer Office, and Office of Professional Responsibility.
Sec. 4 Comprehensive guidance for the treatment of all claims for refunds relating to tax return preparer fraud
In general— The Secretary of the Treasury (or the Secretary’s delegate) shall develop comprehensive guidance for the treatment by the Internal Revenue Service of all claims for refunds relating to tax return preparer fraud. Such guidance shall provide a clear description the rights and responsibilities of taxpayers, including the following:
Mitigation— Actions taken by the taxpayer to prevent the preparer fraud or to minimize the loss.
Restitution— Actions taken by the taxpayer to receive restitution relating to tax return preparer fraud and whether the taxpayer has received any restitution.
Substantiation— Actions taken by the taxpayer to substantiate a claim of fraud, including one or more of the following, if available:
Providing a copy of the unaltered return of tax (if provided by the preparer).
Providing a business card, flyer, or other advertisement with the preparer’s contact information.
Providing a copy of any refund traces requested.
Providing a copy of bank statements showing the expected refund was not deposited into the victim’s account.
Providing a taxpayer statement regarding the fraud, which shall be signed under penalties of perjury.
Filing a report or complaint with local law enforcement authorities.
Guidance relating to restitution— The Secretary shall, in the guidance developed for restitution—
place the emphasis on restitution received by the taxpayer and making the taxpayer whole relative to the cash value of assets that have already been transferred to the taxpayer,
not reduce restitution on the basis of either anticipated or court mandated (but not yet collected) payments, and
provide for a claw-back procedure to ensure that restitution ultimately paid to the taxpayer, subsequent to the restitution provided by the Internal Revenue Service, would be remitted to the Internal Revenue Service.