A new bill introduced in the Senate would raise the criminal penalties for people who try to steal the tax refunds of others by using their Social Security or Taxpayer Identification Number.
The bill, introduced last Thursday by Sen. Bill Nelson, D-Fla., would make it a felony punishable by up to five years in prison and a fine of no less than $25,000 to use another taxpayer’s SSN or TIN.
The bill would also require the Internal Revenue Service to develop a nationwide PIN system that victims of identity theft could use on their tax returns. In addition, the bill would protect the Social Security numbers of deceased taxpayers by restricting public access to them. The IRS would also be required to improve its cooperation with state and local law enforcement in identity theft cases, among other things.
The changes had been sought by law enforcement authorities for some time. Nelson started working on the issue this year after inmates at a Florida prison were caught in a massive scam using tax forms to claim bogus tax refunds (see
“I have filed legislation to stop this rip-off of the taxpayers and our country’s Treasury where people are stealing others’ ID, then sending in a tax return in order to get a tax refund,” said Nelson in a
Taxpayer identity theft is a growing problem for the IRS and tax practitioners. Many practitioners need to spend months trying to get refunds for their clients that criminals have stolen. Nelson’s bill could provide an important tool for both the IRS and law enforcement authorities to clamp down and put a stop to it.