The House has passed legislation that would toughen the penalties for criminals who engage in identity theft through stolen tax returns.

H.R. 744, the Stopping Tax Offenders and Prosecuting Identity Theft Act of 2014, also known as the STOP Identity Theft Act, passed the House by voice vote. The bill was introduced by Rep. Debbie Wasserman Schultz, D-Fla., with co-sponsorship from Lamar Smith, R-Texas, and Bob Goodlatte, R-Va.

Since 2009, tax return identity theft has cost taxpayers nearly $21 billion dollars, with Florida leading the nation in identity theft from stolen tax returns, Wasserman Schultz’s office noted. According to a recent Treasury Department report, instances of taxpayer identity theft skyrocketed nationwide in the past year, increasing from approximately 1.1 million stolen returns in 2011 to more than 1.8 million in 2012, a 69 percent increase. 

“Currently tax return identity theft is a low-risk, high-reward crime, but it wreaks emotional and financial havoc on hardworking taxpayers, particularly South Florida seniors and veterans, and costs the federal government billions of dollars,” Wasserman Schultz said in a statement. “My legislation brings together several measures to strengthen criminal penalties and increase the prosecution rate of tax return identity thieves.”

The STOP Identity Theft Act would amend the identity theft statute to increase the maximum penalties for the crime of tax return identity theft. The bill would also expand the definition of an identity theft victim to include businesses and charitable organizations that have their identities stolen and used in “phishing” schemes to extract sensitive information from unsuspecting taxpayers.

In addition, the bill would require better coordination between the Justice Department and state and local law enforcement to make the most efficient use of the law and resources. The Justice Department would be asked to report back on trends in tax-return identity theft, the department’s progress on prosecuting these crimes, and recommendations for additional legal tools to combat it.

“Too many hard-working Americans rely on their tax returns to pay the bills and contribute to their savings, and law enforcement must be given the tools and resources to better protect the public by going after these criminals,” said Wasserman Schultz.  

Legislation aimed at preventing tax refund identity theft was introduced in the Senate last month by the leaders of the Srnate Finance Committee, chairman Ron Wyden, D-Ore., and ranking Republican member Orrin Hatch, R-Utah (see Senators Introduce Bill to Prevent Tax Refund Theft). Their bill is known as the Tax Refund Theft Prevention Act of 2014.

Register or login for access to this item and much more

All Accounting Today content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access