[Congressional Bills 114th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3981 Introduced in House (IH)]
<DOC>
114th CONGRESS
1st Session
H. R. 3981
To amend the Internal Revenue Code of 1986 to prevent tax-related
identity theft and tax fraud, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
November 5, 2015
Mr. Pascrell (for himself, Mr. Blumenauer, Mr. Thompson of California,
and Mr. Larson of Connecticut) introduced the following bill; which was
referred to the Committee on Ways and Means, and in addition to the
Committees on Energy and Commerce, the Judiciary, Financial Services,
and Appropriations, for a period to be subsequently determined by the
Speaker, in each case for consideration of such provisions as fall
within the jurisdiction of the committee concerned
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to prevent tax-related
identity theft and tax fraud, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; ETC.
(a) In General.--This Act may be cited as the ``Identity Theft and
Tax Fraud Prevention Act of 2015''.
(b) Table of Contents.--The table of contents of this Act is as
follows:
Sec. 1. Short title; etc.
TITLE I--PROTECTING VICTIMS OF TAX-RELATED IDENTITY THEFT
Sec. 101. Expedited refunds for identity theft victims.
Sec. 102. Single point of contact for identity theft victims.
Sec. 103. Enhancements to IRS PIN Program.
Sec. 104. Electronic filing opt out.
Sec. 105. Taxpayer notification of suspected identity theft.
TITLE II--SHUTTING DOWN ABUSIVE IDENTITY THEFT AND TAX FRAUD SCHEMES
Sec. 201. Restrictions on ability to use prepaid cards for tax fraud.
Sec. 202. Limitation on multiple tax refunds to the same account.
TITLE III--ADDING CRITICAL NEW PROTECTIONS TO SAFEGUARD SOCIAL SECURITY
NUMBERS
Sec. 301. Reducing medical identity theft.
Sec. 302. Prohibition of the display, sale, or purchase of Social
Security numbers.
Sec. 303. Criminal penalties for the misuse of a Social Security
number.
Sec. 304. Civil actions and civil penalties.
TITLE IV--STRENGTHENING LAWS AND IMPROVING ENFORCEMENT AGAINST TAX-
RELATED IDENTITY THEFT
Sec. 401. Criminal penalty for using a false identity in connection
with tax fraud.
Sec. 402. Increased penalty for improper disclosure or use of
information by preparers of returns.
Sec. 403. Authority to transfer Internal Revenue Service appropriations
to combat tax fraud.
Sec. 404. Local law enforcement liaison.
Sec. 405. Extend Internal Revenue Service authority to require
truncated social security numbers on Form
W-2.
Sec. 406. Clarification with respect to regulation of Federal tax
return preparers.
Sec. 407. Authentication of users of electronic services accounts.
Sec. 408. Identity verification by tax return preparers required.
TITLE V--ACCELERATING TRANSITION TO A REAL-TIME TAX SYSTEM THAT
PROTECTS TAXPAYERS AND REDUCES FRAUD
Sec. 501. Improvement in access to information in the National
Directory of New Hires for tax
administration purposes.
Sec. 502. Plan of action for transitioning to a real-time tax system.
TITLE I--PROTECTING VICTIMS OF TAX-RELATED IDENTITY THEFT
SEC. 101. EXPEDITED REFUNDS FOR IDENTITY THEFT VICTIMS.
Not later than 180 days after the date of the enactment of this
Act, the Secretary of the Treasury, or the Secretary's delegate, shall
establish a plan of action to reduce the administrative time required
to process and resolve cases of identity theft in connection with tax
returns, including the issuance of refunds to legitimate taxpayers, to
no more than 90 days, on average.
SEC. 102. SINGLE POINT OF CONTACT FOR IDENTITY THEFT VICTIMS.
Not later than 180 days after the date of the enactment of this
Act, the Secretary of the Treasury, or the Secretary's delegate, shall
establish new procedures to ensure that any taxpayer whose return has
been delayed or otherwise adversely affected due to identity theft has
a single point of contact at the Internal Revenue Service throughout
the processing of his or her case. The single point of contact shall
track the case of the taxpayer from start to finish and coordinate with
other specialized units to resolve case issues as quickly as possible.
SEC. 103. ENHANCEMENTS TO IRS PIN PROGRAM.
(a) In General.--The Secretary of the Treasury, or the Secretary's
delegate, shall issue a personal identification number to any
individual requesting protection from identity theft-related tax fraud
after the individual's true identity has been established and verified.
(b) Report.--Not later than 360 days after the date of the
enactment of this Act, the Secretary of the Treasury shall submit to
Congress a report analyzing the effectiveness of the program described
in subsection (a) in reducing tax fraud.
SEC. 104. ELECTRONIC FILING OPT OUT.
Not later than 180 days after the date of the enactment of this
Act, the Secretary of the Treasury, or the Secretary's delegate, shall
implement 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 a person
purporting to be such a person.
SEC. 105. TAXPAYER NOTIFICATION OF SUSPECTED IDENTITY THEFT.
(a) In General.--Chapter 77 of the Internal Revenue Code of 1986 is
amended by adding at the end the following new section:
``SEC. 7529. NOTIFICATION OF SUSPECTED IDENTITY THEFT.
``If the Secretary determines that there was an unauthorized use of
the identity of any taxpayer, the Secretary shall--
``(1) as soon as practicable and without jeopardizing an
investigation relating to tax administration, notify the
taxpayer, and
``(2) if any person is criminally charged by indictment or
information relating to such unauthorized use, notify such
taxpayer as soon as practicable of such charge.''.
(b) Clerical Amendment.--The table of sections for chapter 77 of
the Internal Revenue Code of 1986 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.
TITLE II--SHUTTING DOWN ABUSIVE IDENTITY THEFT AND TAX FRAUD SCHEMES
SEC. 201. RESTRICTIONS ON ABILITY TO USE PREPAID CARDS FOR TAX FRAUD.
(a) Accounts With Elevated Risk of Identity Theft.--
(1) In general.--Not later than 360 days after the date of
the enactment of this Act, the Federal primary financial
regulatory agencies, in consultation with the Secretary of the
Treasury, shall jointly prescribe regulations requiring newly
issued deposit or transaction account numbers, as the case may
be, to be distinguishable between verified accounts and at-risk
accounts.
(2) Definitions.--As used in this section--
(A) the term ``at-risk account'' means any deposit
account or transaction account, including accounts
associated with a prepaid access arrangement, that is
not a verified account;
(B) the term ``primary financial regulatory
agency'' has the same meaning as in section 2(12) of
the Dodd-Frank Wall Street Reform and Consumer
Protection Act (12 U.S.C. 5301(12)); and
(C) the term ``verified account'' means any deposit
account or transaction account in which the identity of
the account holder and any prepaid access customer
associated with the account is verified by--
(i) customer identification procedures that
comply with section 5318(l) of title 31, United
States Code; and
(ii) direct review of an original,
unexpired government-issued form of
identification bearing a photograph or similar
safeguard, such as a driver's license or
passport.
(b) GAO Audit of Debit Card Issuers To Ensure Compliance With
Customer Identification Requirements.--
(1) Review and evaluation.--The Comptroller General of the
United States shall review and evaluate the effectiveness of
the current Customer Identification Program rules implementing
the customer identification program requirements under section
5318(l) of title 31, United States Code, as such rules apply to
the prepaid card industry.
(2) Required considerations.--The review and evaluation
required under paragraph (1) shall--
(A) consider whether weaknesses in current customer
identification programs are contributing to identity
theft and financial loss, particularly with respect to
tax fraud; and
(B) review whether--
(i) current risk-based standards for
customer identification are the best means to
prevent criminal use of prepaid cards and
provide sufficient guidance and certainty to
the sellers and providers of prepaid access;
(ii) current exclusions from customer
identification requirements, such as exclusions
for government benefit programs, are
appropriate; and
(iii) Federal regulatory agencies exercise
adequate oversight and supervision of customer
identification practices of the prepaid card
industry.
(3) Report to congress.--Not later than 360 days after the
date of the enactment of this Act, the Comptroller General of
the United States shall submit to Congress a report--
(A) on the findings of the review and evaluation
required under paragraph (1); and
(B) containing any recommendations or proposals for
legislative or administrative action to improve the
customer identification practices of the prepaid card
industry.
SEC. 202. LIMITATION ON MULTIPLE TAX REFUNDS TO THE SAME ACCOUNT.
(a) In General.--Not later than 180 days after the date of the
enactment of this Act, the Secretary of the Treasury, or the
Secretary's delegate, shall issue regulations that restrict the
delivery or deposit of multiple tax refunds from the same tax year to
the same individual account or mailing address.
(b) Exception.--The regulation promulgated under subsection (a)
shall provide that the restrictions shall not apply in cases and
situations where the Secretary determines there is not a likelihood of
tax fraud.
TITLE III--ADDING CRITICAL NEW PROTECTIONS TO SAFEGUARD SOCIAL SECURITY
NUMBERS
SEC. 301. REDUCING MEDICAL IDENTITY THEFT.
(a) Reduction in Reliance on Social Security Account Numbers in
Electronic Health Records.--Section 3002 of the Public Health Service
Act (42 U.S.C. 300jj-12) is amended by adding at the end the following:
``(f) Authorization To Develop Certification Standards.--
``(1) Plan.--
``(A) Development.--The HIT Policy Committee shall
develop a plan to provide for a reliable nationwide
health information technology infrastructure that
precludes the use of an individual's social security
account number for data matching, coordination of
benefits, billing, and research purposes.
``(B) Report to congress.--Not later than 1 year
after the date of the enactment of this subsection, the
HIT Policy Committee shall submit to Congress a report
detailing the plan developed under paragraph (1),
together with recommendations for such legislation and
administrative action as the HIT Policy Committee
determines appropriate.
``(2) Incorporation.--Not later than 5 years after the date
of the enactment of this subsection, the Secretary, in
consultation with the HIT Standards Committee and following
notice and comment rulemaking, shall incorporate the plan
developed under paragraph (1)(A) in certification criteria and
use all means available to impose the plan on non-certified
health information systems.''.
(b) Improved Security Standards.--
(1) In general.--Section 1173(d)(1) of the Social Security
Act (42 U.S.C. 1320d-2(d)(1)) is amended--
(A) in subparagraph (A)(v), by striking ``and'' at
the end;
(B) in subparagraph (B), by striking the period at
the end and inserting ``; and''; and
(C) by adding at the end the following new
subparagraph:
``(C) require a health care provider to
discontinue, over an established period of time, the
storage of an individual's social security account
number after the individual's eligibility and financial
responsibility for specific services has been
determined, except when--
``(i) the individual's ability to pay for
such services is in doubt;
``(ii) the individual's social security
account number is needed for the coordination
of benefits for services rendered prior to the
effective date of this subparagraph; or
``(iii) the health insurance claim number
of the individual contains the individual's
full social security account number.''.
(2) Effective date.--The amendments made by paragraph (1)
shall take effect 90 days after the date that is 4 years after
the date of the enactment of this Act.
(c) Report.--Not later than 1 year after the date of the enactment
of this Act, the Secretary of Health and Human Services shall submit to
Congress a report on the state of information security at medical
offices and facilities. Such report shall include recommendations for
such legislative actions as the Secretary determines appropriate to
help prevent identity theft at such offices and facilities.
SEC. 302. PROHIBITION OF THE DISPLAY, SALE, OR PURCHASE OF SOCIAL
SECURITY NUMBERS.
(a) Prohibition.--
(1) In general.--Chapter 47 of title 18, United States
Code, is amended by inserting after section 1028A the
following:
``Sec. 1028B. Prohibition of the display, sale, or purchase of Social
Security numbers
``(a) Definitions.--In this section:
``(1) Display.--The term `display' means to intentionally
communicate or otherwise make available (on the Internet or in
any other manner) to the general public an individual's Social
Security number.
``(2) Person.--The term `person' means any individual,
partnership, corporation, trust, estate, cooperative,
association, or any other entity.
``(3) Purchase.--The term `purchase' means providing
directly or indirectly, anything of value in exchange for a
Social Security number.
``(4) Sale.--The term `sale' means obtaining, directly or
indirectly, anything of value in exchange for a Social Security
number.
``(5) State.--The term `State' means any State of the
United States, the District of Columbia, Puerto Rico, the
Northern Mariana Islands, the United States Virgin Islands,
Guam, American Samoa, and any territory or possession of the
United States.
``(b) Limitation on Display.--No person may display any
individual's Social Security number to the general public without the
affirmatively expressed consent of the individual.
``(c) Limitation on Sale or Purchase.--Except as otherwise provided
in this section, no person may sell or purchase any individual's Social
Security number without the affirmatively expressed consent of the
individual.
``(d) Prerequisites for Consent.--In order for consent to exist
under subsection (b) or (c), the person displaying or seeking to
display, selling or attempting to sell, or purchasing or attempting to
purchase, an individual's Social Security number shall--
``(1) inform the individual of the general purpose for
which the number will be used, the types of persons to whom the
number may be available, and the scope of transactions
permitted by the consent; and
``(2) obtain the affirmatively expressed consent
(electronically or in writing) of the individual.
``(e) Exceptions.--
``(1) In general.--Nothing in this section shall be
construed to prohibit or limit the display, sale, or purchase
of a Social Security number--
``(A) required, authorized, or excepted under any
Federal law;
``(B) for a public health purpose, including the
protection of the health or safety of an individual in
an emergency situation;
``(C) for a national security purpose;
``(D) for a law enforcement purpose, including the
investigation of fraud and the enforcement of a child
support obligation;
``(E) if the display, sale, or purchase of the
number is for a use occurring as a result of an
interaction between businesses, governments, or
business and government (regardless of which entity
initiates the interaction), including--
``(i) the prevention of fraud (including
fraud in protecting an employee's right to
employment benefits);
``(ii) the facilitation of credit checks or
the facilitation of background checks of
employees, prospective employees, or
volunteers;
``(iii) the retrieval of other information
from other businesses, commercial enterprises,
government entities, or private nonprofit
organizations; or
``(iv) when the transmission of the number
is incidental to, and in the course of, the
sale, lease, franchising, or merger of all, or
a portion of, a business;
``(F) if the transfer of such a number is part of a
data matching program involving a Federal, State, or
local agency; or
``(G) if such number is required to be submitted as
part of the process for applying for any type of
Federal, State, or local government benefit or program.
``(2) Rule of construction.--Nothing in this subsection
shall be construed as permitting a professional or commercial
user to display or sell a Social Security number to the general
public.
``(f) Limitation.--Nothing in this section shall prohibit or limit
the display, sale, or purchase of Social Security numbers as permitted
under title V of the Gramm-Leach-Bliley Act (15 U.S.C. 6801 et seq.),
or for the purpose of affiliate sharing as permitted under the Fair
Credit Reporting Act (15 U.S.C. 1681 et seq.), except that no entity
regulated under such Acts may make Social Security numbers available to
the general public, as may be determined by the appropriate regulators
under such Acts. For purposes of this subsection, the general public
shall not include affiliates or unaffiliated third-party business
entities as may be defined by the appropriate regulators.''.
(2) Conforming amendment.--The chapter analysis for chapter
47 of title 18, United States Code, is amended by inserting
after the item relating to section 1028 the following:
``1028B. Prohibition of the display, sale, or purchase of Social
Security numbers.''.
(b) Study; Report.--
(1) In general.--The Attorney General shall conduct a study
and prepare a report on all of the uses of Social Security
numbers permitted, required, authorized, or excepted under any
Federal law. The report shall include a detailed description of
the uses allowed as of the date of enactment of this Act, the
impact of such uses on privacy and data security, and shall
evaluate whether such uses should be continued or discontinued
by appropriate legislative action.
(2) Report.--Not later than 1 year after the date of the
enactment of this Act, the Attorney General shall report to
Congress findings under this subsection. The report shall
include such recommendations for legislation based on criteria
the Attorney General determines to be appropriate.
(c) Effective Date.--The amendments made by this section shall take
effect on the date that is 30 days after the date on which the final
regulations promulgated under section 1028B of title 18, United States
Code, are published in the Federal Register.
SEC. 303. CRIMINAL PENALTIES FOR THE MISUSE OF A SOCIAL SECURITY
NUMBER.
(a) Prohibition of Wrongful Use as Personal Identification
Number.--No person may obtain any individual's Social Security number
for purposes of locating or identifying an individual with the intent
to physically injure, harm, or use the identity of the individual for
any illegal purpose.
(b) Criminal Sanctions.--Section 208(a) of the Social Security Act
(42 U.S.C. 408(a)) is amended--
(1) in paragraph (8), by inserting ``or'' after the
semicolon; and
(2) by inserting after paragraph (8) the following:
``(9) except as provided in subsections (e) and (f) of
section 1028B of title 18, United States Code, knowingly and
willfully displays, sells, or purchases (as those terms are
defined in section 1028B(a) of title 18, United States Code)
any individual's Social Security account number without having
met the prerequisites for consent under section 1028B(d) of
title 18, United States Code; or
``(10) obtains any individual's Social Security number for
the purpose of locating or identifying the individual with the
intent to injure or to harm that individual, or to use the
identity of that individual for an illegal purpose;''.
SEC. 304. CIVIL ACTIONS AND CIVIL PENALTIES.
(a) Civil Action in State Courts.--
(1) In general.--Any individual aggrieved by an act of any
person in violation of this Act or any amendments made by this
Act may, if otherwise permitted by the laws or rules of the
court of a State, bring in an appropriate court of that State--
(A) an action to enjoin such violation;
(B) an action to recover for actual monetary loss
from such a violation, or to receive up to $500 in
damages for each such violation, whichever is greater;
or
(C) both such actions.
It shall be an affirmative defense in any action brought under
this paragraph that the defendant has established and
implemented, with due care, reasonable practices and procedures
to effectively prevent violations of the regulations prescribed
under this Act. If the court finds that the defendant willfully
or knowingly violated the regulations prescribed under this
subsection, the court may, in its discretion, increase the
amount of the award to an amount equal to not more than 3 times
the amount available under subparagraph (B).
(2) Statute of limitations.--An action may be commenced
under this subsection not later than the earlier of--
(A) 5 years after the date on which the alleged
violation occurred; or
(B) 3 years after the date on which the alleged
violation was or should have been reasonably discovered
by the aggrieved individual.
(3) Nonexclusive remedy.--The remedy provided under this
subsection shall be in addition to any other remedies available
to the individual.
(b) Civil Penalties.--
(1) In general.--Any person who the Attorney General
determines has violated any section of this Act or any of the
amendments made by this Act shall be subject, in addition to
any other penalties that may be prescribed by law--
(A) to a civil penalty of not more than $5,000 for
each such violation; and
(B) to a civil penalty of not more than $50,000, if
the violations have occurred with such frequency as to
constitute a general business practice.
(2) Determination of violations.--Any willful violation
committed contemporaneously with respect to the Social Security
numbers of 2 or more individuals by means of mail,
telecommunication, or otherwise, shall be treated as a separate
violation with respect to each such individual.
(3) Enforcement procedures.--The provisions of section
1128A of the Social Security Act (42 U.S.C. 1320a-7a), other
than subsections (a), (b), (f), (h), (i), (j), (m), and (n) and
the first sentence of subsection (c) of such section, and the
provisions of subsections (d) and (e) of section 205 of such
Act (42 U.S.C. 405) shall apply to a civil penalty action under
this subsection in the same manner as such provisions apply to
a penalty or proceeding under section 1128A(a) of such Act (42
U.S.C. 1320a-7a(a)), except that, for purposes of this
paragraph, any reference in section 1128A of such Act (42
U.S.C. 1320a-7a) to the Secretary shall be deemed to be a
reference to the Attorney General.
TITLE IV--STRENGTHENING LAWS AND IMPROVING ENFORCEMENT AGAINST TAX-
RELATED IDENTITY THEFT
SEC. 401. CRIMINAL PENALTY FOR USING A FALSE IDENTITY IN CONNECTION
WITH TAX FRAUD.
(a) In General.--Section 7206 of the Internal Revenue Code of 1986
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) Use of False 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) Aggravated Identity Theft.--Section 1028A(c) of title 18,
United States Code, is amended by striking ``or'' at the end of
paragraph (10), by striking the period at the end of paragraph (11) and
inserting ``; or'', and by adding at the end the following new
paragraph:
``(12) section 7206(b) of the Internal Revenue Code of 1986
(relating to use of false identity in connection with tax
fraud).''.
(c) Effective Date.--The amendments made by this section shall
apply to offenses committed after the date of the enactment of this
Act.
SEC. 402. 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. 403. AUTHORITY TO TRANSFER INTERNAL REVENUE SERVICE APPROPRIATIONS
TO COMBAT TAX FRAUD.
For any fiscal year, the Commissioner of Internal Revenue 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.
SEC. 404. 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.
SEC. 405. EXTEND INTERNAL REVENUE SERVICE AUTHORITY TO REQUIRE
TRUNCATED SOCIAL SECURITY NUMBERS ON FORM W-2.
(a) In General.--Paragraph (2) of section 6051(a) of the Internal
Revenue Code of 1986 is amended by striking ``his social security
number'' and inserting ``an identifying number for the employee''.
(b) Effective Date.--The amendment made by this section shall take
effect on the date of the enactment of this Act.
SEC. 406. CLARIFICATION WITH RESPECT TO REGULATION OF FEDERAL TAX
RETURN 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) regulate--
``(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 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. 407. AUTHENTICATION OF USERS OF ELECTRONIC SERVICES ACCOUNTS.
(a) In General.--The Commissioner of Internal Revenue shall
establish a program to 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.
(b) Report.--The Commissioner of Internal Revenue shall report to
the Committee on Finance of the Senate and the Committee on Ways and
Means of the House of Representatives, not later than 1 year after the
date of the enactment of this Act, on any further legislative
recommendations to prevent fraud relating to the Internal Revenue
Service e-Services tools, including an authorized e-file provider
program.
SEC. 408. IDENTITY VERIFICATION BY TAX RETURN PREPARERS REQUIRED.
(a) In General.--Section 6695 of the Internal Revenue Code of 1986
is amended by adding at the end the following new subsection:
``(i) Failure To Verify Taxpayer Identity.--Any person who is a tax
return preparer with respect to any return or claim for refund who
fails to verify (in such manner and with such documentation as the
Secretary shall provide) the identity of the taxpayer with respect to
such return or claim for refund shall pay a penalty of $500 for each
such failure.''.
(b) Effective Date.--The amendment made by this section shall apply
to returns or claims for refund filed after December 31, 2014.
TITLE V--ACCELERATING TRANSITION TO A REAL-TIME TAX SYSTEM THAT
PROTECTS TAXPAYERS AND REDUCES FRAUD
SEC. 501. IMPROVEMENT IN ACCESS TO INFORMATION IN 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 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. 502. PLAN OF ACTION FOR TRANSITIONING TO A REAL-TIME TAX SYSTEM.
Not later than 270 days after the date of the enactment of this
Act, the Secretary of the Treasury, or the Secretary's delegate, shall
submit to Congress a report analyzing and outlining options and
potential timelines for moving toward a tax system that reduces burdens
on taxpayers and decreases tax fraud through real-time information
matching.
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