Senate panel to consider tax fraud bill

The Senate Finance Committee will consider a bipartisan measure aimed at curbing tax refund fraud next week, the panel announced on Friday.

The measure the committee will take up Wednesday, from Finance Chairman Orrin HatchOrrin Grant HatchOrrin Hatch Foundation seeking million in taxpayer money to fund new center in his honor Mitch McConnell has shown the nation his version of power grab Overnight Health Care — Presented by PCMA — Utah Senate votes to scale back Medicaid expansion | Virginia abortion bill reignites debate | Grassley invites drug execs to testify | Conservative groups push back on e-cig crackdown MORE (R-Utah) and Sen. Ron WydenRonald (Ron) Lee WydenHigh stakes as Trump, Dems open drug price talks Dem lawmaker: 'Trump's presidency is the real national emergency' Dems introduce bill to take gender-specific terms out of tax code to make it LGBT-inclusive MORE (D-Ore.), would make more than a dozen changes aimed at beefing up tax fraud efforts.

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Tax return fraud has exploded in recent years and is now one of the largest problems facing the IRS. The Government Accountability Office has estimated that identity thieves stole around $5.8 billion in refunds from unsuspecting taxpayers in 2013. 

Hatch and Wyden's bill would strengthen IRS requirements to inform taxpayers if their identity has been stolen, allow the agency to require at least truncated Social Security numbers on tax forms and increase criminal penalties for fraudulently stealing an identity. In all, the bill would raise around $286 million over a decade.

The measure serves to give the IRS more power to fight tax fraud, even as Republicans on Capitol Hill still believe that the agency targeted conservatives for their political beliefs and have worked to slash its budget.

For instance, the legislation explicitly gives the IRS the authority to regulate paid tax return preparers. A federal court struck down a program overseeing preparers last year, saying the agency had overreached in starting the initiative and needed congressional approval. At the time, several Republicans said they had no interest in giving the IRS more power over anyone.

"Since this threat will not end, Congress should take appropriate bipartisan action to implement needed legislative policies that will better protect taxpayers and shield taxpayer dollars from thieves," Hatch said in a statement.

“The wave of organized crime targeting taxpayers and their hard-earned money is seemingly relentless, and there’s a lot of work to be done making sure that our laws, agencies and taxpayers themselves are able to fight back," added Wyden, the Finance Committee's top Democrat.

The Finance action will come months after the IRS also acknowledged that hundreds of thousands of taxpayers could have had sensitive information compromised during a widespread breach of an agency system giving people access to previous returns.