Stolen Identity Refund Fraud Prevention Act of 2016

This bill amends the Internal Revenue Code to require the Department of the Treasury and the Internal Revenue Service to take several actions to prevent and respond to tax-related identity theft and tax fraud.

(Sec. 2) The Department of the Treasury must establish and maintain an office at the Internal Revenue Service (IRS) and procedures to ensure that any taxpayer whose return has been delayed or otherwise adversely affected due to identity theft has a centralized point of contact throughout the processing of the case. The office must coordinate with other IRS offices to resolve the case as quickly as possible.

(Sec. 3) If the IRS determines that there was an unauthorized use of a taxpayer's identity, it must notify the taxpayer as soon as practicable without jeopardizing any investigation related to tax administration. The notice must include: (1) instructions for filing a police report, and (2) forms to allow law enforcement officials to access the taxpayer's personal information. The IRS must also notify the taxpayer as soon as practicable if criminal charges are brought against any person with respect to the unauthorized use of the identity.

(Sec. 4) The IRS must submit to Congress a feasibility study regarding a program under which a person who has filed an identity theft affidavit with the IRS may elect to prevent the processing of any federal tax return submitted in an electronic format by that taxpayer or a person purporting to be that taxpayer.

(Sec. 5) To help prevent identity theft tax refund fraud, the IRS must use information available from the Do Not Pay Initiative established by the Improper Payments Elimination and Recovery Improvement Act of 2012.

(Sec. 6) The IRS must report to Congress biannually on fraud involving the use of a misappropriated taxpayer identity to claim tax refunds and IRS detection, prevention, and enforcement activities undertaken with respect to the fraud. The report must provide an update on the implementation of this bill and identify the need for any further legislation to protect taxpayer identities.

The first biannual report must include: (1) an assessment of the agency's progress on identity theft outreach and education, and (2) the results of a feasibility study on the costs and benefits of enhancing its taxpayer authentication approach to the electronic tax return filing process.

(Sec. 7) The IRS must establish and report to Congress on an information sharing and analysis center to centralize, standardize, and enhance data compilation and analysis to facilitate sharing actionable data and information with respect to identity theft.

(Sec. 8) The IRS must establish within the Criminal Investigation Division of the IRS the position of Local Law Enforcement Liaison to interact with state and local law enforcement authorities to:

• receive information,
• respond to inquiries,
• administer and review the performance of information-sharing initiatives,
• ensure any information provided through the initiatives is used only for the prosecution of identity theft-related crimes and not re-disclosed to third parties, and
• carry out other duties relating to tax-related identity theft prevention.

(Sec. 9) The Inspector General for Tax Administration must report to Congress regarding identity theft phone scams under which individuals attempt to obtain personal information over the phone from taxpayers by falsely claiming to be calling from or on behalf of the IRS.

(Sec. 10) The IRS must provide the following information to taxpayers who are on hold during a taxpayer service telephone call: (1) basic information about common identity theft tax scams, (2) directions on where to report such activities, and (3) tips on how to protect against identity theft tax scams.

(Sec. 11) No additional funds are authorized to carry out the requirements of this bill.

Stolen Identity Refund Fraud Prevention Act of 2016

This bill amends the Internal Revenue Code to require the Department of the Treasury and the Internal Revenue Service to take several actions to prevent and respond to tax-related identity theft and tax fraud.

(Sec. 2) The Department of the Treasury must establish and maintain an office at the Internal Revenue Service (IRS) and procedures to ensure that any taxpayer whose return has been delayed or otherwise adversely affected due to identity theft has a centralized point of contact throughout the processing of the case. The office must coordinate with other IRS offices to resolve the case as quickly as possible.

(Sec. 3) If the IRS determines that there was an unauthorized use of a taxpayer's identity, it must notify the taxpayer as soon as practicable without jeopardizing any investigation related to tax administration. The notice must include: (1) instructions for filing a police report, and (2) forms to allow law enforcement officials to access the taxpayer's personal information. The IRS must also notify the taxpayer as soon as practicable if criminal charges are brought against any person with respect to the unauthorized use of the identity.

(Sec. 4) The IRS must submit to Congress a feasibility study regarding a program under which a person who has filed an identity theft affidavit with the IRS may elect to prevent the processing of any federal tax return submitted in an electronic format by that taxpayer or a person purporting to be that taxpayer.

(Sec. 5) The bill establishes criminal penalties for using a false identity in connection with tax fraud by including the offense within the felony of aggravated identity theft.

(Sec. 6) To help prevent identity theft tax refund fraud, the IRS must use information available from the Do Not Pay Initiative established by the Improper Payments Elimination and Recovery Improvement Act of 2012.

(Sec. 7) The IRS must report to Congress biannually on fraud involving the use of a misappropriated taxpayer identity to claim tax refunds and IRS detection, prevention, and enforcement activities undertaken with respect to the fraud. The report must provide an update on the implementation of this bill and identify the need for any further legislation to protect taxpayer identities.

The first biannual report must include: (1) an assessment of the agency's progress on identity theft outreach and education, and (2) the results of a feasibility study on the costs and benefits of enhancing its taxpayer authentication approach to the electronic tax return filing process.

(Sec. 8) The IRS must establish and report to Congress on an information sharing and analysis center to centralize, standardize, and enhance data compilation and analysis to facilitate sharing actionable data and information with respect to identity theft.

(Sec. 9) The IRS must establish within the Criminal Investigation Division of the IRS the position of Local Law Enforcement Liaison to interact with state and local law enforcement authorities to:

• receive information,
• respond to inquiries,
• administer and review the performance of information-sharing initiatives,
• ensure any information provided through the initiatives is used only for the prosecution of identity theft-related crimes and not re-disclosed to third parties, and
• carry out other duties relating to tax-related identity theft prevention.

(Sec. 10) The Inspector General for Tax Administration must report to Congress regarding identity theft phone scams under which individuals attempt to obtain personal information over the phone from taxpayers by falsely claiming to be calling from or on behalf of the IRS.

(Sec. 11) The IRS must provide the following information to taxpayers who are on hold during a taxpayer service telephone call: (1) basic information about common identity theft tax scams, (2) directions on where to report such activities, and (3) tips on how to protect against identity theft tax scams.

Stolen Identify [sic] Refund Fraud Prevention Act of 2015

This bill amends the Internal Revenue Code to: (1) require returns relating to employee wage statements, payment of wages in the form of group-term life insurance, and any payments required to be reported on Form 1099-MISC with respect to non-employee compensation to be filed on or before February 15 of the year following the calendar year to which such returns relate; (2) require the Department of the Treasury to notify a taxpayer of an unauthorized use of the identity of such taxpayer and any criminal charges relating to such unauthorized use; (3) require a taxpayer identifying number on W-2 forms instead of a Social Security number; and (4) impose a criminal penalty on any person who willfully misappropriates another person's taxpayer identity.

The Internal Revenue Service (IRS) shall: (1) ensure that taxpayers who have been adversely affected by identity theft have a centralized point of contact at the IRS, (2) implement a program to allow a taxpayer who has filed an identity theft affidavit to elect to prevent the processing of any tax return submitted in an electronic format by the taxpayer or a person purporting to be the taxpayer, and (3) report biannually to congressional tax committees on taxpayer identity theft and tax refund fraud and actions taken to combat it.

The bill amends the Social Security Act to allow 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 claims for tax refunds.