House approves bill to curb identity theft

The House has voted to approve a bill that would require the Internal Revenue Service to notify taxpayers if it suspects identity theft and strengthen efforts to fight scams. The Taxpayer Assistance and Simplification Act of 2008 also would repeal the IRS’ authority to use private agencies to collect outstanding tax debts and would simplify some tax-related  provisions.The bill, introduced by Rep. Charles Rangel (D-N.Y.), chairman of the Ways and Means Committee, and Rep. John Lewis (D-Ga.), chairman of that committee’s Oversight Subcommittee, passed by a 238-179 vote April 15.The legislation aims to provide protections to taxpayers and also would prohibit the misuse of the Treasury Department's names and symbols on Web sites and phishing schemes that try to convince taxpayers to share their personal information.“As millions of people finish their tax returns, file and pay their taxes, the bill before us makes our federal tax system fairer,” Rangel said, adding that the bill’s provisions follow recommendations made by the IRS’ National Taxpayer Advocate.Critics have said the IRS’ private debt collector program is expensive, and taxpayers have reported aggressive collection tactics by contractors performing tasks typically done by IRS employees. Lewis said the program is “an imprudent outsourcing of an inherent government function that to date has spent $75 million to collect just $35 million.”The IRS has used the private agencies since 2006 to collect money in what the agency considers easy cases in which taxpayers do not dispute the owed taxes. With contractors focusing on the straightforward cases, IRS employees can focus on more complex tax cases.Meanwhile, the legislation faces opposition in the Senate. The Senate Finance Committee must approve the measure. However, that panel's ranking member, Sen. Charles Grassley (R-Iowa), is a strong supporter of the private debt collection program. The CBE Group, one of the two contractors, is based in Iowa.Grassley urged critics of the collection program to consider the IRS’ poor track record in collecting the $345 billion of owed taxes.