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Fraudulent Maryland Tax Returns on the Rise

MD Comptroller Flags Record Number of Fraudulent Returns

Maryland Comptroller Peter Franchot has continued to shine a spotlight on the growing problem of fraudulent tax returns by publicizing the alarming rate at which his office has flagged suspect filings, starting with the very earliest weeks of this year’s processing season. According to Franchot, Maryland officials detected a greater number of such returns during the initial three weeks of this year than in all of 2007, a phenomenon which gives cause for real worry among revenue authorities.

The Maryland tax attorneys at Rosenberg Martin Greenberg stand ready to help taxpayers in the state guard against fraud and ensure full compliance with all state and federal filing and reporting requirements.

Growing tally of flagged tax returns in 2016

According to data released by the Comptroller’s office, in the first three weeks of 2016, 615 returns were placed under additional scrutiny for suspected fraud, with this group of filings accounting for over $780,000. This figure is particularly noteworthy because it represents an upward departure from the total number of flagged returns in the entirety of 2007, in which 314 returns worth approximately $650,000 were set aside for closer investigation.

Franchot made this data public as a way to underscore the growing epidemic of tax crimes and fraud, not just in Maryland, but also on a national basis. During 2015, the Comptroller’s office flagged roughly 20,000 suspect returns with a combined value of over $38 million. This push is part of a larger, proactive stance by Franchot, who in the early part of this year also halted state acceptance of returns filed by 11 individual preparers at 14 distinct locations. This move was due to suspicions of fraudulent activity often sparked by unusually high refund totals, inflated or undocumented expense deductions, questionable dependent claims and inaccurate wage reporting.

State officials are particularly concerned about the rise in fraudulent tax activity due to its ability to place public budgetary processes in jeopardy and to improperly reduce available revenue. Furthermore, fraud of this type can severely damage the credit records of innocent taxpayers whose identities have been stolen in order to carry out false filing schemes.

Key factors underlying increase in potential fraud

Maryland authorities suggest that there are a number of elements at play in the apparent rise in fraudulent tax filings. Among these factors are widespread identity theft activity, computer system breaches and the broader availability of and access to individuals’ personal information afforded to almost anyone who wishes to obtain it. Franchot noted that at least one notable Maryland state employee had been victimized in this way simply because publicly available salary data enabled a scam artist to secure the necessary information to carry out the criminal act.

Franchot calls for greater fraud prevention initiatives

While it is certainly true that the shift toward electronic filing of tax returns has made it simpler and faster for authorities to spot and subsequently flag suspect cases, Comptroller Franchot is also championing the adoption of taxpayer protection legislation designed to further empower Maryland’s tax enforcement capabilities. The proposed legislation would extend the statute of limitations applicable to tax crimes, limit public access to state employee salary data and establish strict sanctions for preparers caught making fraudulent filings.

Sound, seasoned guidance for taxpayers across Maryland

The increase in tax fraud in Maryland and across the country is undoubtedly cause for real concern and is something which demands vigilance by all. The effects of these types of offenses on impacted individuals can be extremely serious and lasting in nature. As a result, the professionals at Rosenberg Martin Greenberg remain ready and willing to assist individual and business taxpayers statewide with filing and compliance guidance, tax audit assistance and planning strategies formulated to achieve the most beneficial outcomes possible, year in and year out. To schedule a confidential consultation, contact us at 410.727.6600.

Rosenberg Martin Greenberg

25 South Charles Street, 21st Floor MD 21201
Phone: 410-727-6600
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Rosenberg Martin Greenberg

705 Melvin Avenue Annapolis, MD 21401
Phone: 410-727-6600
Map & Directions