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Tax identity scams targeted in Senate proposal

U.S. Sen. Bill Nelson West (R-FL) addresses supporters during his victory rally in Orlando, Florida, November 6, 2012. REUTERS/Scott A. Mill
U.S. Sen. Bill Nelson West (R-FL) addresses supporters during his victory rally in Orlando, Florida, November 6, 2012. REUTERS/Scott A. Mill

By Kim Dixon

WASHINGTON (Reuters) - Legislation to combat use of taxpayer data in tax refund fraud scams was introduced on Thursday by a senator from Florida, an epicenter of the scams as they spread across the United States.

The proposal would require the Internal Revenue Service to figure out within three months how to shorten the time it takes for fraud victims to get tax refunds and to let taxpayers opt out of electronic filing once they have been targeted.

"We cannot allow victims of ID theft and tax fraud to be victimized again by a system encumbered by red tape," Democratic Senator Bill Nelson said in a statement on his legislation.

The deadline for filing taxes in the United States is April 15.

Late last month, the IRS broadened a crackdown on tax-related identity theft that began in Florida to include all 50 states, allowing local law-enforcement officers limited access to IRS documents.

The IRS is devoting more time and money to combat identity theft. The agency says it prevented $20 billion in attempted tax refund frauds in fiscal 2012, up from $14 billion a year earlier.

The bill would require actions by several government agencies, including financial regulators and Medicare, to tighten controls on the use of personal information.

The fate of the effort is unclear because the issue has not risen to the top of budget and other battles consuming Washington.

A similar bill has been filed in the House of Representatives.

(Editing by Kevin Drawbaugh and Mohammad Zargham)

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