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Title II — Stolen Identity Fraud Prevention

S. 3246 · 115th Congress · Jul 19, 2018 · Lineage

II Stolen Identity Fraud Prevention

A Identity Theft and Tax Refund Fraud Prevention

I General Provisions

Sec. 2001 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. 2002 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 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.

II Administrative Authority To Prevent Identity Theft and Tax Refund Fraud

Sec. 2011 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. 2012 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 October 1, 2018, and ending on September 30, 2023, 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 October 1, 2018, and ending on September 30, 2023”; 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 October 1, 2018, and ending on September 30, 2023”;
(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 October 1, 2018, and ending on September 30, 2023”; 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. 2013 Access to the National Directory of New Hires to identify and prevent fraudulent tax return filings and claims for refund

(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 for the purposes of—

“(A) administering section 32 of the Internal Revenue Code of 1986,

“(B) verifying a claim with respect to employment in a tax return, and

“(C) identifying and preventing fraudulent tax return filings and claims for refund under 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. 2014 Repeal of provision regarding certain tax compliance procedures and reports

Section 2004 of the Internal Revenue Service Restructuring and Reform Act of 1998 (26 U.S.C. 6012 note) is repealed.

B Improvements to Electronic Filing of Tax Returns

Sec. 2101 Identity protection personal identification numbers

Not later than 5 years after the date of the enactment of this Act, the Secretary shall establish a program to issue, upon the request of any individual, a number which may be used in connection with such individual’s social security number (or other identifying information with respect to such individual as determined by the Secretary) to assist the Secretary in verifying such individual’s identity.

Sec. 2102 Electronic filing of returns

(a)
In general— Section 6011(e)(2)(A) is amended by striking “250” and inserting “the applicable number of”.
(b)
Applicable number— Section 6011(e) is amended by striking paragraph (5) and inserting the following new paragraphs:

“(5) Applicable number

“(A) In general—For purposes of paragraph (2)(A), the applicable number shall be—

“(i) except as provided in subparagraph (B), in the case of calendar years before 2020, 250,

“(ii) in the case of calendar year 2020, 100, and

“(iii) in the case of calendar years after 2020, 10.

“(B) Special rule for partnerships for 2018 and 2019—In the case of a partnership, for any calendar year before 2020, the applicable number shall be—

“(i) in the case of calendar year 2018, 200, and

“(ii) in the case of calendar year 2019, 150.

“(6) Partnerships required to file on magnetic media—Notwithstanding paragraph (2)(A), the Secretary shall require partnerships having more than 100 partners to file returns on magnetic media.”

(c)
Returns filed by a tax return preparer— Section 6011(e)(3) is amended by adding at the end the following new subparagraph:

“(D) Exception for certain preparers located in areas without internet access—The Secretary may waive the requirement of subparagraph (A) if the Secretary determines, on the basis of an application by the tax return preparer, that the preparer cannot meet such requirement by reason of being located in a geographic area which does not have access to internet service (other than dial-up or satellite service).”

(d)
Effective date— The amendments made by this section shall take effect on the date of the enactment of this Act.

Sec. 2103 Internet platform for Form 1099 filings

(a)
In general— Not later than January 1, 2023, the Secretary shall make available an Internet website or other electronic media, with a user interface and functionality similar to the Business Services Online Suite of Services provided by the Social Security Administration, that will provide access to resources and guidance provided by the Internal Revenue Service and will allow persons to—
(1)
prepare and file Forms 1099;
(2)
prepare Forms 1099 for distribution to recipients other than the Internal Revenue Service; and
(3)
maintain a record of completed and submitted Forms 1099.
(b)
Electronic services treated as supplemental; application of security standards— The Secretary shall ensure that the services described in subsection (a)—
(1)
are a supplement to, and not a replacement for, other services provided by the Internal Revenue Service to taxpayers; and
(2)
comply with applicable security standards and guidelines.

Sec. 2104 Requirement that electronically prepared paper returns include scannable code

(a)
In general— Subsection (e) of section 6011, as amended by section 2102(b) of this Act, is amended by adding at the end the following new paragraph:

“(7) 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 (7)”.
(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, 2019.

Sec. 2105 Authentication of users of electronic services accounts

Beginning 180 days after the date of the enactment of this Act, the Secretary shall 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.