Originally Posted: www.marylandtaxes.com — Photo: marylandtaxes.com
Comptroller Calls for Quick Action to Protect Maryland Taxpayers
ANNAPOLIS, Md. (January 28, 2016) – A day after announcing that his agency was no longer accepting questionable tax returns from seven businesses in the Baltimore region, Maryland Comptroller Peter Franchot went before the Senate Budget and Taxation Committee today to discuss tax fraud and identity theft and to outline the key provisions of his top legislative priority, The Taxpayer Protection Act. The proposed legislation would provide the Comptroller’s Office with enhanced tools to protect taxpayers’ information, prevent fraud and hold fraudsters accountable.
“Tax fraud and identity theft represent the single greatest risk facing taxpayers today. It has become the defining challenge for federal and state tax administrators throughout the nation, and there is no greater priority for me and the members of my team,” Franchot said.
Comptroller Franchot also updated the committee on his agency’s ongoing efforts to combat tax fraud and identity theft. The Comptroller’s Taxpayer Protection Act is the latest in a series of actions he has taken to combat fraud, which has made the Maryland Comptroller’s Office a national leader on this issue. Over the past nine years, the Comptroller’s Office has made unprecedented investments in dedicated personnel and advanced technology and has employed sophisticated fraud detection techniques through the agency’s state-of-the-art data warehouse.
On Wednesday, the Comptroller announced that his agency has stopped processing tax returns from Liberty Tax Service at six locations in Baltimore and one in Dundalk. With his highly-trained personnel and sophisticated fraud detection technology, the agency stopped and prevented 1,100 fraudulent tax returns from being processed and traced them to these businesses. A full-scale investigation has begun and the information has been shared with the Office of the Attorney General and the Department of Labor, Licensing and Regulation.
Since 2007, the Comptroller’s Office has stopped more than $153 million in tax fraud. Nationally, the Internal Revenue Service estimates nearly $25 billion worth of tax fraud schemes annually. In 2015, the Comptroller’s Office has stopped 19,150 fraudulent returns totaling more than $39 million, compared to 314 fraudulent returns worth approximately $657,000 in 2007. Already this calendar year, the Comptroller’s Office has detected and prevented 615 fraudulent returns worth $780,000.
“These financial criminals are now more sophisticated and brazen than ever before, and for that reason the threats to taxpayer security have never been greater. In order to protect Maryland taxpayers from harm, we need every possible legal tool at our disposal, which is why I’m urging the General Assembly to pass the Taxpayer Protection Act as soon as possible.”
The Taxpayer Protection Act will:
• Place greater legal responsibility on tax preparers to properly file returns.
• Extend the statute of limitations for tax crimes to six years from the current three years to allow sufficient time to investigate fraud cases in what are commonly highly sophisticated schemes.
• Add fraudulent return preparer penalty.
• Provide legal authority to issue injunctions against preparers under investigation for fraud to protect consumers during investigations.
• Specifically include tax fraud to the existing enforcement responsibilities of the agency’s Field Enforcement Division under the Tax General Article.
• Change the due date for businesses to submit withholding files to the Comptroller’s Office to January 31 from February 28 each year to assure accurate taxpayer data and more reliable fraud detection.
This past November, the Comptroller signed a Memorandum of Understanding in collaboration with the IRS, state departments of revenue and the tax services industry to protect taxpayers from the burdens associated with identity theft and refund fraud.