House vote targets false IRS Web sites, e-mails

Politicians target Web sites like IRS.com, which they say are misleading.

The U.S. House of Representatives on Tuesday voted to punish commercial Web sites and e-mail senders that falsely portray themselves as having ties with the Internal Revenue Service.

The regulation is part of the so-called Taxpayer Protection Act, which passed by a 407-7 vote in the U.S. House of Representatives.

"It is an important first step in standing up, really standing up, for the American taxpayer," Rep. John Lewis (D-Ga.), one of the bill's chief sponsors, said on the House floor Tuesday afternoon.

Another section of the bill targets ID fraud: it would require the IRS to notify taxpayers "as soon as practicable" if the agency discovers an individual's information may have been accessed and used in an unauthorized manner.

The idea is to "prevent Internet domains from using the Treasury Department's name or symbol, which is usually done to trick people into giving out sensitive personal or financial information," said Rep. Jim Ramstad (R-Minn.), who voiced support for the bill on the House floor. "Clearly this should not be allowed."

Federal law already prohibits use of Treasury Department names and symbols commercially in a way that "could reasonably be interpreted or construed as conveying the false impression" that a site is associated with the federal agency itself. Current law does not exclude the Internet.

Still, supporters of the Taxpayer Protection Act claimed the new requirement is necessary because existing law isn't strict enough to deter such activity in an online setting.

Specifically, the new bill would subject misleading information transmitted electronically to the toughest level of monetary penalties, which already apply to "broadcast" or "telecast" misuses of Treasury Department names or symbols. That means violators who spread their message through Web sites or e-mails could face up to $25,000 in civil penalties and up to a year in prison.

The emergence of IRS-related Web scams is hardly new, and the IRS has issued repeated warnings about "phishing" e-mails masquerading as official documents. Phishing e-mail messages are already illegal.

More recently, the agency also issued a statement cautioning taxpayers to beware Internet domain names that use the IRS acronym or other names but do not end with a .gov designation.

Hundreds of Web sites may be affected by the new rules, should they also pass muster in the Senate. But one site that has been singled out for criticism by politicians--it came up repeatedly during Tuesday's floor debate--is IRS.com. InterSearch Group, the San Francisco-based company that operates the site, has vigorously disputed any wrongdoing.

"At the top and bottom of every single page, it says we are not the Internal Revenue Service, we are owned and operated by a private entity," Jennifer Drimmer, the company's legal affairs director, said in a telephone interview.

That may not matter, as existing law says enforcers need not consider whether disclaimers are present when deciding whether violations have occurred. But Drimmer said the company firmly believes its site would not be "reasonably" confused with an official IRS property.

"People pay for tax help services everywhere," Drimmer said. "People knock on H&R Block's door, Intuit's door, people pay for tax services because it helps them get through the process. We are basically a search engine pointing people towards that (help)."

IRS.com, which bills itself as the Web's No. 1 source of independent tax information, has recorded 25 million visitors since InterSearch acquired the domain name for $5 million in September 2005, according to the company.

InterSearch representatives even accepted an invitation to ring the opening bell of the American Stock Exchange, on which the company is listed, on Tuesday morning in an effort to "symbolize our commitment to the financial services vertical of Internet commerce."

Not all politicians, however, agree that InterSearch is benign. It's clear IRS.com was "built to deceive" and is just the sort of site Congress intended to target, Rep. Earl Pomeroy (D-N.D.) said on the House floor Tuesday.

The congressman added, "I think a business that preys upon the public with misleading domain names is no business you want to celebrate in ringing the bell of a great stock exchange."

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