Effort to Crackdown on Theft of Tax Refunds Gain Momentum

Press Release

A new tax-reform proposal that the head of the U.S. Senate Finance Committee issued today includes measures aimed at stopping the dramatic increase in ID thieves stealing tax refunds.

The identity theft measures are based on legislation introduced by U.S. Sen. Bill Nelson (D-FL) and are part of a broader tax-reform initiative from Finance Committee Chairman Max Baucus, a Montana Democrat. The overall goal of Baucus's proposal is to simplify the country's current tax system that's become riddled with loopholes for special interests and corporations.

"It's encouraging the chairman recognizes the importance of dealing with ID theft," Nelson said today. "Too many taxpayers are having their tax refunds swiped by identity thieves."

While it's encouraging that renewed emphasis is being placed on Nelson's legislation, the prospects for passage of the broader tax plan in a divided Congress remain uncertain.

"Just trying to make something happen by taking the initiative," Baucus has told reporters.

Nelson first got involved in the issue of tax-related identity theft two years ago after hearing numerous complaints from Florida taxpayers, mainly in Tampa and Orlando, who fell victim to the scheme. The Florida Democrat held two hearings in the Senate Finance subcommittee he chaired to investigate the issue, then prepared and filed bipartisan legislation to try to deter identity theft by increasing the penalties imposed on criminals caught filing fraudulent tax returns using someone else's identity.

Nelson's measures, as included in the tax-reform proposal unveiled today, would:

Require the IRS to establish a single point-of-contact for victims
Create new penalties for anyone who misuses another person's identity to receive a fraudulent refund. The fraudster could be fined up to $250,000 and sent to prison for up to 5 years.
Establish procedures to accelerate information matching, so the IRS can catch attempts at fraud before the tax refund is sent out.
Protect the personal information of deceased Americans, which is currently released to the public on a weekly basis by the Social Security Administration.
Require an examination of the IRS's current Identity Theft PIN program and the feasibility of its expansion. The IRS Identity Theft PIN program protects individuals who have been victimized by identity thieves, ensuring that only tax returns with the PIN are accepted by the IRS.

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