- It requires the IRS to notify a taxpayer that there may have been unauthorized use of the taxpayer’s identity – in the course of a tax fraud investigation.
- It cracks down on misleading websites that seek to get personal information by imitating the IRS, by increasing both civil and criminal penalties for these offenses. Con artists are bilking consumers out of thousands of dollars in tax refunds by targeting the 136 million people who file over the Internet. They lure victims by setting up bogus sites that imitate the IRS in order to steal both personal information and tax refunds. A convicted identity thief recently testified before Congress on how he wracked up more than $1 million -- cheating taxpayers. The IRS expects more than half of tax returns to be filed electronically this year.
- The bill would simplify tax filing requirements for businesses owned jointly by husbands and wives -- permitting both the husband and wife to be credited for the payment of Social Security and Medicare taxes (under current law only the spouse filing a return can claim those taxes) and making it easier for spouses to file as sole proprietors and not as a partnership.
- It would also strengthen IRS outreach to make sure that people know that they are entitled to tax refunds or to payments under the Earned Income Tax Credit (EITC). Approximately 25 percent of households eligible for the EITC in 1999 did not claim it, and working Americans may have lost out on approximately $8 billion in unclaimed earned income credits in 2004. [General Accountability Office, 2001; Joint Economic Committee, 4/16/07]
- It also increases taxpayer protections from "predatory" providers of refund anticipation loans, gives taxpayers more time to recover property seized improperly by the IRS, and works to stop the widespread tax fraud pulled off by inmates of federal prisons.
Taxpayer Protection
On April 17, 2007, the House passed the Taxpayer Protection Act (H.R. 1677) that increases IRS outreach to provide taxpayers with stronger protections from identity theft and tax fraud.
