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Senate Dem wants stiffer identity theft penalties
A Senate Democrat is pushing for stiffer criminal penalties for those who steal identities for tax purposes, a situation the government says has been rising in recent years.
Under Sen. Bill Nelson’s legislation, to be introduced upon Congress's return to Washington, someone who uses a stolen identity to file a tax return could face up to five years in jail. The measure also looks to safeguard dead taxpayers’ Social Security numbers, and to better protect taxpayers who notify the IRS in advance that their identities have been compromised.
"We’ve got to put a stop to ID thieves who rip off taxpayers and cause severe hardships for their victims,” Nelson, a Florida Democrat, said in a statement. “Tougher laws and better enforcement are needed to keep this problem from becoming an epidemic.”
Nelson’s Senate Finance subcommittee on Fiscal Responsibility has held hearings on taxpayer identity theft in recent months, as has a House Oversight subcommittee
The Government Accountability Office, Congress’s investigative arm, found in a report released several months ago that taxpayer identity theft had mushroomed in recent years, increasing from roughly 52,000 cases in 2008 to around 250,000 two years later.
The Justice Department makes the final call on whether a criminal case goes forward.
The GAO noted that the IRS has implemented a new screening process that catches tens of thousands of fraudulent returns a year, and the agency itself stresses that a taxpayer’s information usually has already been compromised by the time the IRS gets involved.
“I realize that in the process of increasing our efforts to block attempts by identity thieves to exploit the tax system, there have been inconveniences and frustrations created for honest, hardworking American taxpayers,” Doug Shulman, the IRS commissioner, said in June before the House Oversight subcommittee on Government Relations. “For that, I am deeply sympathetic.”
Generally speaking, taxpayer identity theft occurs in two ways: Either a taxpayer’s information is used to file a fraudulent tax return, or is utilized by someone else to secure employment.
Under Nelson’s legislation, the IRS would broaden a pilot program that allows taxpayers who know their identities have been stolen to use a PIN number to ensure the correct return is processed. It would also allow those taxpayers to opt out of electronic filing.
The bill would also restrict public access to dead taxpayers’ information for at least a year after their death.
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