This bill would seek to reduce identity theft from federal tax forms by requiring the Internal Revenue Service (IRS) to take steps to guard against fraudulent tax returns and refund claims.
There are three actions specific steps that the IRS would be directed to take to improve the security of taxpayer information:
Require that Form 1099, which reports non-employee compensation, be filed by February 15 the year after the calendar year in which the money was earned;
Require taxpayers be notified by the Dept. of the Treasury if there’s an unauthorized use of their taxpayer identity and any criminal charges filed;
Require a taxpayer identifying number on W-2 forms instead of a Social Security number;
Impose a criminal penalty on a person who willfully misuses another person’s taxpayer identity.
The IRS would be required to:
Ensure that taxpayers who are the victims of identity theft have a centralized point of contact at the IRS;
Implement a program to allow a taxpayer who has filed an identity theft claim to choose to prevent the processing of any tax return filed electronically by someone claiming to be the taxpayer;
Report every two years to congressional committees about taxpayer identity theft and tax refund fraud, in addition to actions taken to combat it.
Additionally, this legislation would give the IRS access to information in the National Directory of New Hires for the sole purpose of identifying and preventing fraudulent tax return filings and refund claims.