House Committee Passes IRS Legislation on Identity Theft, Missing Children and Tax-Exempt Donors

The House Ways and Means Committee has passed three bills related to the Internal Revenue Service in the areas of taxpayer identity theft, recovery of missing children, and donor information for tax-exempt organizations.

“We’re here today to advance more commonsense solutions that make sure the IRS is serving all Americans not working against them,” said House Ways and Means Committee chairman Kevin Brady, R-Texas. “…Simply put, these proposals put the best interests of children and taxpayers first.”

The Stolen Identity Refund Fraud Prevention Act (H.R. 3832) lays out actions the IRS must take to combat the growing problem of identity theft. It helps victims by making it easier to work with the IRS to resolve identity theft cases and requires the IRS to notify a taxpayer whose identity was compromised.

“Tax-related ID theft is an evolving criminal activity that targets innocent taxpayers nationwide and robs the Treasury of billions of dollars each year,” said bill sponsor Rep. Jim Renacci, R-Ohio, who had his identity stolen during tax season last year. “While I am aware that not every tax-related ID theft problem is best served with a Congressional solution, this legislation is an important step in fighting ID theft and better protecting victims.”

The committee unanimously approved the Stolen Identity Refund Fraud Prevention Act after adopting several amendments offered by Reps. John Lewis, D-Ga., and Bill Pascrell, D-N.J.

The committee also unanimously passed the Recovering Missing Children Act (H.R. 3209), which will help local law enforcement agencies find missing or exploited children using information from the IRS.

“According to the National Center for Missing and Exploited Children, more than 200,000 children are abducted by family members every year,” said Rep. Erik Paulsen, R-Minn., who sponsored the bill. “We owe it to these children to make sure that law enforcement agencies have every tool at their disposal to effectively investigate and solve these crimes … The bipartisan [legislation includes] missing children cases as an acceptable instance when law enforcement, with a warrant, can work with the IRS to secure tax information crucial to solving a crime.”

However, the third piece of legislation provoked more controversy among the Republicans and Democrats on the committee.

The Preventing IRS Abuse and Protecting Free Speech Act (H.R. 5053) would protect the identities of taxpayers who donate to tax-exempt organizations by eliminating the Schedule B, which Republicans on the committee contended the IRS has used to improperly target the groups during the Tea Party targeting scandal. The bill would prevent the IRS from collecting the identity of donors who contribute to tax-exempt organizations.

“This bill prohibits the IRS from collecting donor information on the Schedule B form,” said Rep. Peter Roskam, R-Ill., who sponsored the bill. “The Schedule B is not needed for taxpayer administration. In fact, the IRS has indicated they were considering eliminating the requirement themselves. Tax-exempt groups should not be forced to expend precious resources on unnecessary documentation and tax administration rather than focusing on their charitable missions. The IRS has not demonstrated the capacity to safeguard confidential information in the past. There is no reason we should send them any more sensitive information than they need to do their job.”

Rep. Sander Levin, D-Mich., the ranking Democrat on the committee, spoke out against this piece of legislation, although he supported the other two bills.

“After the Citizens United Supreme Court decision in 2010, there was a sharp rise in undisclosed money in federal elections, which has created opportunities for influence-buying and corruption,” he said. “This bill potentially opens the door for unlimited, secret money from foreign governments or individuals to be funneled into our elections. Currently, foreign money cannot be legally given or spent in our elections. And the only real protection we have against the use of foreign money by politically active 501(c)(4) organizations is that they must disclose their donors to the IRS. Instead of working to move us forward on this problem of undisclosed money in elections—to make the whole system more transparent—this bill moves us backward.”

Democrats pointed out that an official working for Charles and David Koch, two of the biggest donors to Republican candidates, sent a letter Thursday to Republican members of the Ways and Means Committee asking them to support H.R. 5053.