Senate Bill Would Toughen Penalties for Tax ID Theft

Senate Judiciary Committee Chairman Chuck Grassley, R-Iowa, has introduced legislation to combat tax refund theft by identity thieves.

The Tax Return Identity Theft Protection Act of 2016 would strengthen the existing penalties for identity thieves, establish tougher sentences for crimes against vulnerable and frequently targeted groups, and clarify the state-of-mind proof requirement that has prevented some identity thieves from being held accountable.

Grassley’s bill seeks to deter tax return identity theft and other related fraud by increasing the maximum punishment for such crimes to a term of 20 years in prison. In addition to tax return identity theft, these offenses include stealing a victim’s identity to conspire to defraud the government, file a false claim against the government, or steal public money, property or records. The bill would also stiffen the penalties for crimes against vulnerable groups that government watchdogs have identified as frequently targeted by identity thieves. These groups include the aging and low-income populations, along with members of the military.

With regard to the state-of-mind proof requirement, the bill would clarify that prosecutors would only need to prove that an individual charged with identity theft under certain statutes “knowingly” used a means of identification that was not legitimately issued to that individual, regardless of whether the individual knew the identification belonged to another person.

“Tax refunds can be a silver lining for many Americans during tax season, but they’ve also attracted the attention of fraudsters and identity thieves,” Grassley said in a statement Thursday. “These crooks use stolen personal tax information to swoop in and seize the tax refunds of unwitting Americans early in the season before the victims ever file. The crime is costing Americans billions of dollars annually, and can take many months to correct. My bill discourages this unscrupulous behavior by increasing penalties, especially when the victim is particularly vulnerable.”

Identity thieves successfully stole $5.75 billion in fraudulent tax refunds in the 2013 tax year, according to Internal Revenue Service estimates, with another $24 billion in theft that was prevented. Taxpayers whose returns were compromised wait 278 days on average for the account to be corrected and their return reissued. Identity theft victims spend on average six months and $1,300 to correct their records.