The Comptroller of Maryland has recently taken significant action in the fight against identity fraud and tax crime in Maryland.  The Comptroller estimates that it has stopped nearly $152 million in tax fraud since 2007 and is working to prevent further losses.  The Comptroller has suspended processing of electronic and paper income tax returns from 59 private return preparers at 66 locations.  These suspensions were imposed based on a high volume of questionable returns received.  The Comptroller pointed to indications of fraud such as inflated itemized deductions, wages, withholding figures and business expenses; improperly claimed dependents; and claimed refunds significantly exceeding those in previous years.

Taxpayers should be suspicious if their return preparer deducts their fees from the refund or refuses to sign or identify themselves on the return as preparer.  Taxpayers are ultimately responsible for the accuracy of their returns and should seek out reputable return preparers.  Taxpayers should review the contents of their return for accuracy before filing, as the filing of a false return could result in substantial civil ramifications including penalties, interest and the suspension of driver’s and professional licenses.

In addition, the Taxpayer Protection Act, which was introduced on January 21, 2016, if passed, would mandate that many Maryland criminal tax offenses will now be considered felonies instead of misdemeanors.  The legislation would increase the statute of limitations for tax crimes to six years, allowing the State significantly more time to investigate and prosecute offenders.  Those engaged in tax fraud will be aggressively pursued by Maryland, in addition to the IRS and U.S. Department of Justice.  The attorneys in the Tax Controversy Group at Rosenberg Martin Greenberg LLP stand ready to advise and assist clients on these and other tax matters.