Stopping Tax Offenders and Prosecuting (STOP) Identity Theft Bill of 2014

Identity theft is a problem that affects millions of Americans and that nondescript number is growing exponentially. Years ago, there were fewer people filing fewer fraudulent returns, but now, with the ease of e-file and the lax security of some office’s document retention procedures, there are thousands of people who have built a type of network for tax fraud. These tax scheme patterns are tracked, albeit inadequately, but once the perpetrators are caught, the penalty is hefty. Many tax fraudsters serve more time than murderers.

Commissioner Koskinen blames the government’s inability to anticipate the easy acquisition of social security numbers.  The government seemingly blames the unfortunate state of the IRS, including poor leadership and issues of internal corruption relating to political party, and continues to cut the budget of the IRS.

Working in the underbelly of the tax industry gives a person a vantage point that is not often seen by people outside of the industry. As Commissioner Koskinen stated, “If you don’t allow them to use a prepaid card, they are going to have to get a check and they’ll have to pay someone a lot of money to cash that check. So you are disadvantaging a significant amount of the population.” Unfortunately, so many prepaid debit cards are untraceable and the IRS is unable to distinguish a untraceable, prepaid debit card from a legitimate bank account that can receive tax refunds. But, the IRS does not want to discontinue sending refunds to debit cards because many Americans use them instead of bank accounts.

Instead of taking away refundable credits and DE-incentivizing tax theft, the Government Accountability Office suggests earlier filing of employer tax forms and truncated social security numbers on tax statements. Surely, that’ll fix the problem.