[House Report 113-576]
[From the U.S. Government Publishing Office]
113th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 113-576
======================================================================
STOPPING TAX OFFENDERS AND PROSECUTING IDENTITY THEFT ACT OF 2014
_______
September 8, 2014.--Committed to the Committee of the Whole House on
the State of the Union and ordered to be printed
_______
Mr. Goodlatte, from the Committee on the Judiciary,
submitted the following
R E P O R T
together with
DISSENTING VIEWS
[To accompany H.R. 744]
[Including cost estimate of the Congressional Budget Office]
The Committee on the Judiciary, to whom was referred the
bill (H.R. 744) to provide effective criminal prosecutions for
certain identity thefts, and for other purposes, having
considered the same, reports favorably thereon with an
amendment and recommends that the bill as amended do pass.
CONTENTS
Page
The Amendment.................................................... 2
Purpose and Summary.............................................. 2
Background and Need for the Legislation.......................... 3
Hearings......................................................... 5
Committee Consideration.......................................... 5
Committee Votes.................................................. 5
Committee Oversight Findings..................................... 6
New Budget Authority and Tax Expenditures........................ 7
Congressional Budget Office Cost Estimate........................ 7
Duplication of Federal Programs.................................. 8
Disclosure of Directed Rule Makings.............................. 8
Performance Goals and Objectives................................. 8
Advisory on Earmarks............................................. 8
Section-by-Section Analysis...................................... 8
Changes in Existing Law Made by the Bill, as Reported............ 9
Dissenting Views................................................. 10
The Amendment
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Stopping Tax Offenders and Prosecuting
Identity Theft Act of 2014'' or the ``STOP Identity Theft Act of
2014''.
SEC. 2. USE OF DEPARTMENT OF JUSTICE RESOURCES WITH REGARD TO TAX
RETURN IDENTITY THEFT.
(a) In General.--The Attorney General should make use of all existing
resources of the Department of Justice, including any appropriate task
forces, to bring more perpetrators of tax return identity theft to
justice.
(b) Considerations To Be Taken Into Account.--In carrying out this
section, the Attorney General should take into account the following:
(1) The need to concentrate efforts in those areas of the
country where the crime is most frequently reported.
(2) The need to coordinate with State and local authorities
for the most efficient use of their laws and resources to
prosecute and prevent the crime.
(3) The need to protect vulnerable groups, such as veterans,
seniors, and minors (especially foster children) from becoming
victims or otherwise used in the offense.
SEC. 3. VICTIMS OF IDENTITY THEFT MAY INCLUDE ORGANIZATIONS.
Chapter 47 of title 18, United States Code, is amended--
(1) in section 1028--
(A) in subsection (a)(7), by inserting ``(including
an organization)'' after ``another person''; and
(B) in subsection (d)(7), in the matter preceding
subparagraph (A), by inserting ``or other person''
after ``specific individual''; and
(2) in section 1028A(a)(1), by inserting ``(including an
organization)'' after ``another person''.
SEC. 4. IDENTITY THEFT FOR PURPOSES OF TAX FRAUD.
Section 1028(b)(3) of title 18, United States Code, is amended--
(1) in subparagraph (B), by striking ``or'' at the end;
(2) in subparagraph (C), by inserting ``or'' after the
semicolon; and
(3) by adding at the end the following:
``(D) during and in relation to a felony under
section 7206 or 7207 of the Internal Revenue Code of
1986;''.
SEC. 5. REPORTING REQUIREMENT.
Not later than 180 days after the date of the enactment of this Act,
the Attorney General shall submit to the Committees on the Judiciary of
the House of Representatives and the Senate a report that contains the
following information:
(1) Information readily available to the Department of
Justice about trends in the incidence of tax return identity
theft.
(2) Recommendations on additional statutory tools that would
aid in the effective prosecution of tax return identity theft.
(3) The status on implementing the recommendations of the
Department's March 2010 Audit Report 10-21 entitled ``The
Department of Justice's Efforts to Combat Identity Theft''.
Purpose and Summary
H.R. 744 increases the penalty for Federal identity theft
offenses committed during and in relation to tax fraud and
clarifies that, in addition to individuals, businesses and
organizations can be considered victims of Federal identity
theft offenses. H.R. 744 encourages the Department of Justice
to dedicate additional resources, including the use of
investigative task forces, to address tax return identity theft
and coordinate investigations with state and local law
enforcement agencies and requires the Department to submit a
report on the trends in tax return identity theft,
recommendations for additional improvements to Federal law, and
the status of the Department's implementation of the DOJ IG's
2010 report entitled ``The Department of Justice's Efforts to
Combat Identity Theft.''
Background and Need for the Legislation
Like other forms of identity theft, tax return identity
theft is a rapidly growing problem in the United States. As a
general matter, this crime is committed when an individual uses
the Social Security Number and other information of another
individual to file a false tax return with the Internal Revenue
Service (``IRS'') or fraudulently claims someone as a dependent
in order to receive a refund.
Tax return identity theft is often committed by gangs and
organized crime organizations who defraud large groups of
people.\1\ These groups see it as a low-risk, high-return crime
that often carries low penalties. Tax fraud is also being
committed at high rates by prison inmates. In 2012, there were
more than 173,000 fraudulent tax returns filed by inmates.\2\
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\1\Written Statement of Nina E Olson, National Taxpayer Advocate,
Hearing on Tax Fraud by Identity Theft, Part 2: Statute, Progress, and
Potential Solutions, Subcommittee on Fiscal Responsibility and Economic
Growth, Committee on Finance, March 20, 2012.
\2\Stephen Olemacher, Tax Fraud a Popular Pastime Among Prison
Inmates, Associated Press, January 17, 2013. See, http://
bigstory.ap.org/article/tax-fraud-popular-pastime-among-prison-
inmates .
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Criminals obtain Social Security Numbers from various
sources, including medical facilities, schools, insurance
companies, and pension funds. Another common source for Social
Security Numbers is the Social Security Administration's Death
Master File, a list containing the full name, Social Security
Number, date of birth, and some address information for every
person who dies in the United States that is published each
year. In one instance, scam artists allegedly established a
fake job placement company and used the information they
learned from 300 victims to obtain more than $450,000 in
returns from the IRS.\3\ The fraudulent returns are either paid
to the scam artist in the form of a check, direct deposit, or
debit cards. Debit cards are particularly dangerous because
once a refund is issued in that form, it is extremely difficult
to trace.
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\3\Identity Theft Tops List of Tax Scams, http://www.cnbc.com/id/
47077876/Identity_Theft_
Tops_List_of_Tax_Scams .
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The IRS detected 580,000 fake returns among the 2013
returns alone, for which the IRS would have paid over $3.6
billion in fraudulent claims had the perpetrators not been
caught.\4\ In Fiscal Year 2013, the IRS initiated 1,492
identity theft related criminal investigations; this is an
increase of 66 percent over investigations initiated in FY
2012.\5\ The IRS estimates that it prevented refunds for 96% of
these known fraudulent returns.\6\ However, there are
potentially a great many other fraudulent returns that are not
detected. Fraudulent returns are often not detected because the
IRS does not verify W-2 forms until after a refund is paid.
Detection is also difficult when the identity stolen is not an
active income tax-filer, either because the person is deceased
or because he is not required to pay Federal income taxes. In
those cases, the victim is not notified of the fraud when he
attempts to file a return and, thus, does not in turn notify
the IRS of the fraud.
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\4\Delvin Barrett and John McKinnon, Identity Theft Triggers a
Surge in Tax Fraud, Wall St. Journal, February 23, 2014. See, http://
online.wsj.com/news/articles/SB100014240527023048347
04579401411935878556 .
\5\IRS Combats Identity Theft and Refund Fraud on Many Fronts, See
http://www.irs.gov/uac/Newsroom/IRS-Combats-Identity-Theft-and-Refund-
Fraud-on-Many-Fronts-2014 .
\6\Id.
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The billions of dollars in fraudulent tax returns that are
paid each year harm the taxpayers as a whole because, in many
cases, the IRS pays two refunds--one to the scam artist, and
one to the actual taxpayer. Tax return identity theft also can
be devastating to the individual victims, who must prove their
own identities to the IRS and, oftentimes, wait months or years
to receive refunded money that is rightfully owed to them. In
some instances, individual victims have faced enforcement
actions by the IRS due to fraudulent returns filed by scam
artists under the taxpayer's name. And recipients of Social
Security disability payments could potentially face the loss of
these benefits because the Social Security Administration uses
tax returns as proof that someone is working.
The IRS reports that it is taking a number of steps to
prevent, detect, and prosecute tax return identity theft. These
include:
LImplementing identity theft screening filters
designed to spot fake returns before a refund is
issued. As of March 2012, these filters have stopped
potentially fraudulent returns worth $1.15 billion in
refunds.\7\
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\7\Testimony of Steven T. Miller, Deputy Commissioner for Services
and Enforcement, Internal Revenue Service, Before the Senate Committee
on Finance, Subcommittee on Fiscal Responsibility and Economic Growth,
March 20, 2012.
LIssuing identification numbers to taxpayers
whose identities have been stolen in order to
facilitate their income tax filing and prevent others
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from stealing their identity.
LImplementing procedures for using personal
information gathered by law enforcement to flag
taxpayer accounts that may be subject to identity
theft.
LExpanding how the IRS uses lists of prisoners
in order to stop inmates from filing false returns.
LEstablishing a specialized unit for identity
theft within the IRS's Criminal Investigation division.
A 2012 report released by the Treasury Inspector General
for Tax Administration, however, found that the IRS was falling
short on its efforts to combat identity theft. Among the issues
cited by the Inspector General are the length of time the IRS
takes to resolve a case, the inadequacy of communications with
victims, confusing and conflicting internal advice on how to
handle such cases, and evidence that the IRS does not use the
information it has to identify trends in identity theft in
order to prevent future crimes.\8\
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\8\Most Taxpayers Whose Identities Have Been Stolen to Commit
Refund Fraud Do Not Receive Quality Customer Service, Treasury
Inspector General for Tax Administration, May 3, 2012.
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During full Committee consideration of H.R. 744, Mr. Scott
(D-VA) offered an amendment to section 3 of the bill. The
amendment would replace the existing mandatory sentences in the
Aggravated Identity Theft statute (18 U.S.C. 1028A) with
statutory maximum sentences, but only for those aggravated
identity thefts committed against organizations. The mandatory
sentences would continue to apply to those aggravated identity
thefts committed against individuals. Section 3 of H.R. 744
makes a technical clarification to the identity theft and
aggravated identity theft statutes to ensure that these
statutes apply to identity thefts committed against both
individuals and organizations. Not-for-profit organizations and
businesses are not immune to identity theft schemes, and they
should not be excluded from the protections afforded victims in
our Federal criminal law.
Aggravated identity thefts are those committed in
furtherance of specific, enumerated felonies. Congress
specifically designed this statute to assign a determinate
penalty for identity theft committed in furtherance of one of
these felonies and to require such penalty to run consecutively
to the penalty imposed for the underlying felony.
Mr. Scott argued that his amendment would assign higher
penalties for aggravated identity thefts committed against
organizations than those provided by the underlying statute.
But this claim is true in number only. While the penalties
contemplated by Mr. Scott's amendment (4 years or 10 years)
are, indeed, higher than the existing mandatory sentences in
current law (2 years or 5 years), they are statutory maximum
penalties and, therefore, assign only the top of the sentencing
range that a Federal judge may apply. In practice, a Federal
judge would be free to impose a sentence well below the maximum
prescribed by Mr. Scott's amendment and even below the
mandatory sentences currently required for aggravated identity
thefts.\9\ Those who are found guilty of aggravated identity
theft should be held accountable as required by the law
regardless of whether their victim was an individual or an
organization.
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\9\See U.S. Sentencing Guidelines Manual Sec. 2B1.6(a) (2013).
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Hearings
The Committee on the Judiciary held no hearings on H.R.
744.
Committee Consideration
On July 16, 2014, the Committee met in open session and
ordered the bill H.R. 744 favorably reported with an amendment,
by voice vote, a quorum being present.
Committee Votes
In compliance with clause 3(b) of rule XIII of the Rules of
the House of Representatives, the Committee advises that the
following rollcall votes occurred during the Committee's
consideration of H.R. 744.
1. An amendment by Mr. Scott of Virginia to replace the
existing mandatory penalties in 18 U.S.C. 1028A with statutory
maximum penalties for offenses under this section committed
against organizations. Defeated by a rollcall vote of 12 to 16.
ROLLCALL NO. 1
------------------------------------------------------------------------
Ayes Nays Present
------------------------------------------------------------------------
Mr. Goodlatte (VA), Chairman................... X
Mr. Sensenbrenner, Jr. (WI).................... X
Mr. Coble (NC)................................. X
Mr. Smith (TX)................................. X
Mr. Chabot (OH)................................ X
Mr. Bachus (AL)................................
Mr. Issa (CA).................................. X
Mr. Forbes (VA)................................
Mr. King (IA).................................. X
Mr. Franks (AZ)................................ X
Mr. Gohmert (TX)............................... X
Mr. Jordan (OH)................................ X
Mr. Poe (TX)...................................
Mr. Chaffetz (UT).............................. X
Mr. Marino (PA)................................ X
Mr. Gowdy (SC)................................. X
Mr. Labrador (ID).............................. X
Ms. Farenthold (TX)............................
Mr. Holding (NC)............................... X
Mr. Collins (GA)............................... X
Mr. DeSantis (FL)..............................
Mr. Smith (MO)................................. X
[Vacant].......................................
Mr. Conyers, Jr. (MI), Ranking Member.......... X
Mr. Nadler (NY)................................
Mr. Scott (VA)................................. X
Ms. Lofgren (CA)............................... X
Ms. Jackson Lee (TX)...........................
Mr. Cohen (TN)................................. X
Mr. Johnson (GA)............................... X
Mr. Pierluisi (PR)............................. X
Ms. Chu (CA)................................... X
Mr. Deutch (FL)................................ X
Mr. Gutierrez (IL).............................
Ms. Bass (CA)..................................
Mr. Richmond (LA).............................. X
Ms. DelBene (WA)............................... X
Mr. Garcia (FL)................................
Mr. Jeffries (NY)..............................
Mr. Cicilline (RI)............................. X
------------------------
Total...................................... 12 16
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Committee Oversight Findings
In compliance with clause 3(c)(1) of rule XIII of the Rules
of the House of Representatives, the Committee advises that the
findings and recommendations of the Committee, based on
oversight activities under clause 2(b)(1) of rule X of the
Rules of the House of Representatives, are incorporated in the
descriptive portions of this report.
New Budget Authority and Tax Expenditures
Clause 3(c)(2) of rule XIII of the Rules of the House of
Representatives is inapplicable because this legislation does
not provide new budgetary authority or increased tax
expenditures.
Congressional Budget Office Cost Estimate
In compliance with clause 3(c)(3) of rule XIII of the Rules
of the House of Representatives, the Committee sets forth, with
respect to the bill, H.R. 744, the following estimate and
comparison prepared by the Director of the Congressional Budget
Office under section 402 of the Congressional Budget Act of
1974:
U.S. Congress,
Congressional Budget Office,
Washington, DC, July 25, 2014.
Hon. Bob Goodlatte, Chairman,
Committee on the Judiciary,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 744, the ``STOP
Identity Theft Act of 2013.''
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Mark
Grabowicz, who can be reached at 226-2860.
Sincerely,
Douglas W. Elmendorf,
Director.
Enclosure
cc:
Honorable John Conyers, Jr.
Ranking Member
H.R. 744--STOP Identity Theft Act of 2013.
As ordered reported by the House Committee on the Judiciary
on July 16, 2014.
H.R. 744 would direct the Department of Justice (DOJ) to
better utilize its existing resources to combat identity theft
related to the filing of tax returns. The department currently
allocates its funding to investigate and prosecute a wide range
of criminal activity, including identity theft. CBO expects
that the legislation could result in a reallocation of DOJ
resources, but we estimate that implementing the bill would
have no significant net cost to the Federal Government.
Enacting H.R. 744 would not affect direct spending or revenues;
therefore, pay-as-you-go procedures do not apply.
H.R. 744 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act and
would not affect the budgets of state, local, or tribal
governments.
The CBO staff contact for this estimate is Mark Grabowicz.
The estimate was approved by Theresa Gullo, Deputy Assistant
Director for Budget Analysis.
Duplication of Federal Programs
No provision of H.R. 744 establishes or reauthorizes a
program of the Federal Government known to be duplicative of
another Federal program, a program that was included in any
report from the Government Accountability Office to Congress
pursuant to section 21 of Public Law 111-139, or a program
related to a program identified in the most recent Catalog of
Federal Domestic Assistance.
Disclosure of Directed Rule Makings
The Committee estimates that H.R. 744 specifically directs
to be completed no specific rule makings within the meaning of
5 U.S.C. 551.
Performance Goals and Objectives
The Committee states that pursuant to clause 3(c)(4) of
rule XIII of the Rules of the House of Representatives, H.R.
744 would provide additional tools for the effective criminal
prosecution of tax return identity theft.
Advisory on Earmarks
In accordance with clause 9 of rule XXI of the Rules of the
House of Representatives, H.R. 744 does not contain any
congressional earmarks, limited tax benefits, or limited tariff
benefits as defined in clause 9(e), 9(f), or 9(g) of Rule XXI.
Section-by-Section Analysis
Section 1--Short Title. This section cites the short title
of the Act as the Stopping Tax Offenders and Prosecuting
Identity Theft Act of 2013 or the STOP Identity Theft Act of
2014.
Section 2--Use of Department of Justice Resources with
Regard to Tax Return Identity Theft. This section encourages
the Department of Justice to dedicate additional resources,
including the use of investigative task forces, to address tax
return identity theft. The section encourages the Department to
focus its resources in areas with a high rate of tax return
identity theft, to coordinate investigations with state and
local law enforcement agencies, and to protect vulnerable
victims, including veterans, seniors and minors.
Section 3--Victims of Identity Theft May Include
Organizations. This section amends the Federal identity theft
statutes (18 U.S.C. Sec. 1028 and 1028A) to clarify that the
victims of such an offense includes not just individuals, but
businesses and organizations as well.
Section 4--Identity Theft for Purposes of Tax Fraud. This
section amends the Federal identity theft statute (18 U.S.C.
Sec. 1028) to authorize a statutory maximum sentence of 20
years for identity thefts committed during and in relation to
tax fraud under sections 7206 or 7207 of the Internal Revenue
Code.
Section 5--Reporting Requirement. This section instructs
the Department of Justice to issue to the House and Senate
Judiciary Committees within 180 days of enactment a report on
the trends in tax return identity theft, recommendations for
additional improvements to Federal law, and the status of the
Department's implementation of the DOJ IG's 2010 report
entitled ``The Department of Justice's Efforts to Combat
Identity Theft.''
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italics, existing law in which no change
is proposed is shown in roman):
TITLE 18, UNITED STATES CODE
* * * * * * *
PART I--CRIMES
* * * * * * *
CHAPTER 47--FRAUD AND FALSE STATEMENTS
* * * * * * *
Sec. 1028. Fraud and related activity in connection with identification
documents, authentication features, and information
(a) Whoever, in a circumstance described in subsection (c)
of this section--
(1) * * *
* * * * * * *
(7) knowingly transfers, posseses, or uses, without
lawful authority, a means of identification of another
person (including an organization) with the intent to
commit, or to aid or abet, or in connection with, any
unlawful activity that constitutes a violation of
Federal law, or that constitutes a felony under any
applicable State or local law; or
* * * * * * *
(b) The punishment for an offense under subsection (a) of
this section is--
(1) * * *
* * * * * * *
(3) a fine under this title or imprisonment for not
more than 20 years, or both, if the offense is
committed--
(A) * * *
(B) in connection with a crime of violence
(as defined in section 924(c)(3)); [or]
(C) after a prior conviction under this
section becomes final; or
(D) during and in relation to a felony
under section 7206 or 7207 of the Internal
Revenue Code of 1986;
* * * * * * *
(d) In this section and section 1028A--
(1) * * *
* * * * * * *
(7) the term ``means of identification'' means any
name or number that may be used, alone or in
conjunction with any other information, to identify a
specific individual or other person, including any--
(A) * * *
* * * * * * *
Sec. 1028A. Aggravated identity theft
(a) Offenses.--
(1) In general.--Whoever, during and in relation to
any felony violation enumerated in subsection (c),
knowingly transfers, possesses, or uses, without lawful
authority, a means of identification of another person
(including an organization) shall, in addition to the
punishment provided for such felony, be sentenced to a
term of imprisonment of 2 years.
* * * * * * *
Dissenting Views
INTRODUCTION
H.R. 744, the ``Stopping Tax Offenders and Prosecuting
Identity Theft Act'' or the ``STOP Identity Theft Act,''
encourages the Department of Justice to increase its efforts to
fight tax return identity theft and makes a number of changes
to the existing identity theft statutes with the goal of
enhancing the ability of prosecutors to bring charges against
perpetrators of this type of crime. While well-intentioned, the
bill raises longstanding concerns we have with mandatory
minimum sentencing by expanding the scope of possible
defendants who would be subject to the existing mandatory
penalty of the aggravated identity theft statute, 18 U.S.C.
Sec. 1028A. For this reason, and those stated below, we are
unable to support this legislation and respectfully dissent.
DESCRIPTION AND BACKGROUND
H.R. 744 is primarily intended to combat the serious
problem of tax return identity theft. Like other forms of
identity theft, tax fraud through identity theft is a growing
problem in the United States. This crime is committed when an
individual uses the Social Security Number and other
information of another individual to file a false tax return
with the Internal Revenue Service (``IRS'') or fraudulently
claims someone as a dependant in order to receive a refund. Tax
fraud through identity theft is often committed by gangs and
organized crime organizations who defraud large groups of
people.\1\ These groups see it as a low-risk, high-return
crime. Tax fraud is also being committed at high rates by
prison inmates. In 2009, there were 1,464 fraudulent tax
returns filed by inmates.\2\
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\1\Tax Fraud by Identity Theft, Part 2: Statute, Progress, and
Potential Solutions: Hearing Before the Subcomm. on Fiscal
Responsibility and Economic Growth of the S. Comm. on Finance, 112th
Cong. (2012) (written statement of Nina E Olson, National Taxpayer
Advocate).
\2\Senators Press IRS to Stop Prisoner Tax Fraud, Accounting Today,
Jan. 19, 2011, available at http://www.accountingtoday.com/news/
Senators-Press-IRS-Stop-Prisoner-Tax-Fraud-56973-1.html.
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The IRS detected 940,000 fake returns among the 2010
returns alone, for which the IRS would have paid more than $6.5
billion in fraudulent payments if the fake returns had not been
detected and stopped.\3\ The IRS estimates, however, that it
did pay as much as $5.2 billion in fraudulent refunds for
unidentified fake tax returns filed for 2010.\4\
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\3\Identity Theft and Tax Fraud: Joint Hearing before the Subcomm.
on Oversight and the Subcomm. on Social Security of the H. Comm. on
Ways and Means, 112th Cong. (2012) (testimony of J. Russell George,
Treasury Inspector General for Tax Administration).
\4\Id.
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This bill encourages the Department of Justice to bring
more prosecutions of tax return identity theft; expands the
definition of victims of identity theft to include
organizations in addition to individuals; requires the Justice
Department to report on the incidence of tax return identity
theft and enforcement efforts; and adds tax fraud as a
predicate for identity theft under 18 U.S.C. Sec. 1028(b). A
detailed section-by-section analysis of the bill as reported
follows:
Sec. 1. Short Title. Section 1 sets forth the short title
of the bill as the Stopping Tax Offenders and Prosecuting
Identity Theft Act of 2013 or STOP Identity Theft Act of 2013.
Sec. 2. Use of Department of Justice Resources with Regard
to Tax Return Identity Theft. Section 2 encourages the
Department of Justice to dedicate additional resources,
including the use of investigative task forces, to address tax
return identity theft. The section encourages the Department to
focus its resources in areas of the country with a high rate of
tax return identity theft, to coordinate investigations with
state and local law enforcement agencies, and to protect
vulnerable victims, including veterans, seniors, and minors.
Sec. 3. Victims of Identity Theft May Include
Organizations. Section 3 amends the Federal identity theft
statute (18 U.S.C. Sec. 1028) and the aggravated identity theft
statute (18 U.S.C. Sec. 1028A), as requested by the Department
of Justice, to clarify that the victims of such an offense
include not just individuals, but businesses and organizations
as well. Depending on the circumstances of the offense and the
purpose for which the identity theft is perpetrated, the
maximum penalty for the basic identity theft provision is 30
years in prison. However, the aggravated identity theft
statute, which applies when the theft of the identity of
another person facilitates certain types of conduct, such as
theft of public money, false personation of citizenship, and
acquisition of a firearm, provides for a mandatory additional
2-year sentence. When the conduct facilitated by the identity
theft is an offense related to crimes of terrorism, the
mandatory additional sentence under the aggravated identity
theft statute is 5 years.
Sec. 4. Identity Theft for Purposes of Tax Fraud. Section 4
amends the Federal identity theft statute to provide sentences
of up to 20 years in prison for those who engage in identity
theft during and in relation to certain tax fraud offenses.
Sec. 5. Reporting Requirement. Section 5 instructs the
Justice Department to submit, within 180 days of enactment, a
report to the Committees on the Judiciary of the House of
Representatives and the Senate concerning trends in the
incidence of tax return identity theft, recommendations on
additional statutory tools that would aid in the prosecution of
tax return identity theft, and the status of implementation of
recommendations concerning combating identity theft included in
a 2010 report of the Inspector General of the Department of
Justice.
CONCERNS WITH H.R. 744
H.R. 744's proposed changes to the aggravated identity
theft statute would compound the unjust sentencing scheme in
that statute. In section 3, the bill would amend the primary
Federal identity theft statute (18 U.S.C. Sec. 1028) and the
aggravated identity theft statute (18 U.S.C. Sec. 1028A) to
provide that these statutes prohibit identity theft against
organizations, in addition to the current prohibition related
to the theft of identities of individuals. While extending the
protections against identity theft to organizations may be a
worthy goal, this section unfortunately expands the application
of the mandatory sentences provided in 18 U.S.C. Sec. 1028A.
The statute currently provides for a mandatory 2-year sentence
for identity theft that facilitates certain crimes and a
mandatory 5-year sentence when the conduct facilitated by the
identity theft is an offense related to crimes of terrorism.
In order to address this flaw, Congressman Robert C.
``Bobby'' Scott (D-VA) offered an amendment at markup that
would have prevented this extension of the mandatory sentences.
The amendment provided that, instead of the mandatory terms of
imprisonment for offenses against organizations under the
aggravated identity theft statute, judges would be allowed to
impose sentences of up to 4 and 10 years, which is double the
current mandatory amounts, but without being mandatory in
nature. Judges should be permitted to exercise their
constitutional role as neutral arbiters imposing a proportional
sentence that is sufficient but not greater than necessary to
accomplish the deterrent and rehabilitative goals of
punishment. Because the amendment was defeated by a vote of 12
to 16, the bill as reported by the Committee retains this flaw
concerning mandatory sentencing.
The extension of the 2-year and 5-year mandatory sentences
in H.R. 744, even if it may only apply to a limited number of
cases, is problematic. Mandatory minimum sentences are the
wrong way to determine punishment under this or any other
statute because they not only lead to unjust outcomes for
individuals, but also have serious systemic consequences by
contributing to the problem of overincarceration. As of
September 2010, 75,579 Federal prisoners--more than one-third
(39.4%)--were serving mandatory minimum sentences.\5\ This
represents a 155% increase from the number of Federal prisoners
serving mandatory minimum sentences in 1995 (29,603).\6\ Since
Congress enacted harsh mandatory minimums in the 1980s, the
Federal prison population has exploded by over 800% to more
than 216,000 by June, 2014.\7\
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\5\United States Sentencing Commission, Report to Congress:
Mandatory Minimum Penalties in the Federal Criminal System, at 148
(Oct. 2011), available at http://www.ussc.gov/sites/
default/files/pdf/news/congressional-testimony-and-reports/mandatory-
minimum-penalties/201110
31-rtc-pdf/Chapter_07.pdf.
\6\Id. at 81, available at http://www.ussc.gov/sites/default/files/
pdf/news/congressional-
testimony-and-reports/mandatory-minimum-penalties/20111031-rtc-pdf/
Chapter_04.pdf.
\7\Bureau of Prisons, Historical Information, at http://
www.bop.gov/about/history/ and Inmate Statistics: Offenses, at http://
www.bop.gov/about/statistics/statistics_inmate_offenses.jsp.
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In addition, higher than warranted sentences resulting from
mandatory minimum sentencing strain public finances. For
example, the average cost of incarceration for a Federal inmate
in fiscal year 2011 was $28,893.40.\8\ In fact, the U.S.
Department of Justice has referred to the increased year-to-
year spending on Federal prisons as ``unsustainable'' and a
threat to public safety.\9\ For fiscal year 2014, close to a
third (28.8%) of the Justice Department's $27.7 billion budget
is earmarked for Federal prisons and detention.\10\ Every
dollar expended on lengthy mandatory minimum incarcerations is
a dollar that cannot be spent on crime prevention, victim
services, training, investigation, and prosecution.\11\ Absent
smarter sentencing policies and reformation of mandatory
minimum sentences, prison populations and their associated
costs will continue to escalate.\12\ We need to take steps to
ensure that sentences are appropriately severe, but are not set
beyond levels that no longer serve legitimate criminal justice
purposes.
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\8\Bureau of Prisons, Annual Determination of Average Cost of
Incarceration, 78 Fed. Reg. No. 52 at 16711 (Mar. 18, 2013), available
at http://www.gpo.gov/fdsys/pkg/FR-2013-03-18/pdf/2013-06139.pdf.
\9\Michael E. Horowitz, Inspector General, Top Management and
Performance Challenges Facing the Dep't of Justice--2013, at http://
www.justice.gov/oig/challenges/2013.htm.
\10\U.S. Senate Committee on Appropriations, Summary: Fiscal Year
2014 Omnibus Appropriations Bill 5-7 (Jan. 13, 2014), at http://
www.appropriations.senate.gov/news.cfm?
method=news.view&id=5aa8e660-f52e-4074-945f-9618eb963ae9.
\11\Id.
\12\Horowitz, supra n.7.
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This is one reason why the Committee's bipartisan Over-
Criminialization Task Force was authorized in 2013 to ``assess
our current Federal criminal statutes and make recommendations
for improvements.''\13\ While the Committee examines the
information and testimony gathered by the Task Force and
continues to study a range of issues related to the criminal
justice system, including the penalties in the Federal criminal
code, we should not, as this bill would do, expand mandatory
minimum sentencing.
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\13\U.S. House of Representatives, Committee on the Judiciary,
Press Release, Feb. 5, 2014, available at http://judiciary.house.gov/
index.cfm/2014/2/house-judiciary-committee-reauthorizes-bipartisan-
over-criminalization-task-force.
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In addition to the serious concerns related to mandatory
minimum sentencing, we question the need for Section 4 of the
bill, which would amend the Federal identity theft statute, 18
U.S.C. Sec. 1028, to allow for penalties of up to 20 years
imprisonment for violations of that statute involving certain
tax fraud offenses in the Internal Revenue Code. It appears
that the current statutes, including the underlying identity
theft statute and the mail and wire fraud statutes, 18 U.S.C.
Sec. Sec. 1341 and 1343, may adequately apply to and provide
appropriate penalties for instances of tax return identity
theft. In fact, the mail and wire fraud statutes already
provide for lengthy prison sentences of up to 20 years for each
violation.
While tax return identity theft is a serious problem that
defrauds both individuals and their government, the most
effective means of addressing this crime may well be better
enforcement of current law. If Federal prosecutors are not
prosecuting offenders as often as they should, then we should
encourage them to do more and provide them with the resources
to do so.
CONCLUSION
Tax return identity theft is a serious problem and Congress
has an interest in ensuring Federal law enforcement authorities
are vigorously combating it. While H.R. 744 is a well-
intentioned effort to address this problem, it is flawed
because it expands the scope of possible defendants who would
be subject to mandatory minimum sentencing, an unjust and
unwise policy that leads to rising prison populations and
strained public finances.
For the foregoing reasons, we respectfully dissent.
John Conyers, Jr.
Robert C. ``Bobby'' Scott.
Zoe Lofgren.
Henry C. ``Hank'' Johnson, Jr.