By Yaël Ossowski | Florida Watchdog
ST. PETERSBURG — If Sen. Bill Nelson had his way, local police departments across the country would not only be empowered to go after criminals breaking local laws, but also enforce federal tax crimes related to fraud and identity theft.
The Identity Theft and Tax Fraud Prevention Act, introduced by Nelson on July 25, would allocate upwards of $10 million to the Internal Revenue Service for enforcement of “potential” cases of tax fraud across the nation.
The bill outlines a procedure for creating a local law enforcement liaison in the IRS who would coordinate with police and sheriff’s deputies in towns and cities dealing with tax fraud issues.
The bill also would dramatically increase the penalty for fumbled tax paperwork by the tax preparer—upwards of $100,000.
The bill is co-sponsored by conservative stalwart U.S. Sen. Tom Coburn, R-Oka., who has made a reputation by bringing attention to egregious waste, fraud and abuse at the federal level.
The proposal awaits revision in the Senate Finance Committee.
The same bill was submitted in 2011 by Nelson and co-sponsors Sen. Sherrod Brown, D-Ohio, and Sen. Dick Durbin, D-Illinois. A similar measure was introduced in the House by fellow Floridians U.S. Rep. Kathy Castor, D-District 11, and U.S. Rep. Richard Nugent, R-District 5.
Nelson’s office did not return calls to Florida Watchdog.
Nelson frequently has said the federal government needs to give more resources to local authorities to crack down on tax and identify fraud.
“What makes these investigations so difficult is that the federal tax laws are so restrictive that they are unable to share any tax information with local law enforcement,” Tampa Police Chief Jane Castor said at a Sept. 2, 2011, news conference announcing Operation Rainmaker, the joint federal-local police investigation that nabbed 49 suspected tax fraudsters in Hillsborough County.
Chief Castor spent her time describing how strained the local authorities are when it comes to cracking down on tax-related crimes.
“We’re asking investigators to look into these crimes with a blindfold and their hands tied behind their back,” the police chief said, seemingly inviting a legislative response from lawmakers.
Right on queue, Nelson introduced the first Senate bill not more than a week later.
“The sheriffs came forward and said ‘look, if we had resources, we could assist the federal government in investigating these people putting out these bogus tax returns’,” said Steven Walk, a business tax consultant in Tampa. “This is to specifically help sheriffs find people who are filing these fake tax returns who then use the money in the drug trade. These are criminals.”
Walk points out that the core issue is that local law enforcement officers do not have the resources and procedures to go after people who break the U.S. tax code.
“The local authorities are trying to help the federal government — the IRS, FBI, U.S. Attorney’s Office — to capture these people, but it takes time and they have different local laws,” Walk told Florida Watchdog.
But critics argue that the convoluted tax system has created the incentive for individuals to stoop to such schemes, and it is unclear how more legislation will make the problem disappear.
“The IRS can’t just crack down on everybody,” said Steven Klitzner, a Miami tax attorney. “From the IRS’ standpoint, they’re levying more than ever before, they’re even doing more seizures than ever before and they’re doing everything to collect more. Local authorities are only able to go so far.”
Klitzner pointed out that while federal tax agencies must adhere to strict guidelines, the same burden does not fall on local authorities when it comes to enforcing tax laws.
“The taxpayers’ rights must respected by these agencies, but it isn’t so clear with local law enforcement,” he told Florida Watchdog. “This could create a problem because these issues aren’t for the amateurs. For every problem you try to close up, a new problem emerges.”
He admitted that Nelson’s bill might be a good start, but he remains skeptical as to what the ultimate effect will be, specifically because the tax code remains complex and complicated.
“They can do all that, but nothing is going to really fix the problem. The government can only do so much.”
Read more: Florida Watchdog