Governor Hogan, Comptroller Franchot Announce Taxpayer Protection Act of 2017

Legislation will strengthen efforts to prevent tax fraud, protect taxpayers
ANNAPOLIS, MD (January 19, 2017) – Governor Larry Hogan and Comptroller Peter Franchot today announced their support and plans for the administration to introduce the Taxpayer Protection Act of 2017, legislation that will provide greater protections to Maryland taxpayers from tax fraud and identity theft. The proposed legislation will strengthen the ability of the Office of the Comptroller to prevent tax fraud, protect taxpayer information, and hold fraudulent filers and tax preparers accountable.

“Tax fraud is real, it’s unacceptable, and it often unfairly targets some of our most vulnerable citizens,” said Governor Hogan. “This legislation makes key reforms to protect Marylanders from predatory tax practices and safeguard taxpayers’ private information.”

“As Comptroller, my top priority continues to be protecting taxpayers from the devastating consequences of tax fraud and identity theft,” said Comptroller Franchot. “The provisions in the Taxpayer Protection Act will grant my office additional statutory powers that bolster our existing efforts to prevent financial criminals from preying on innocent and hardworking Marylanders.”

During his remarks at the Taxpayer Security Summit at the University of Baltimore on Thursday, Comptroller Franchot thanked Governor Hogan for including the Taxpayer Protection Act as part of his administration’s legislative package. The summit – which included state and federal tax administrators, private sector leaders, and consumer advocacy groups – focused on how the public, private, and nonprofit sectors can work collaboratively to combat tax fraud in Maryland.

Since 2007, the Comptroller’s Office has identified and blocked more than 76,000 fraudulent returns – worth more than $174 million – from being processed. The Comptroller’s Questionable Returns Detection Team (QRDT) utilizes an analytics-driven fraud detection model that has enhanced the agency’s ability to identify potential fraudulent tax returns. In 2016, the Comptroller’s Office received national awards from Drexel University, CIO.com, and StateScoop, which recognized the effectiveness of the agency’s fraud detection technology.

The Taxpayer Protection Act will build upon the Comptroller’s Office’s existing efforts to aggressively combat tax fraud. The legislation will allow the Comptroller’s Office and the State of Maryland to keep pace with the rapidly increasing fraud schemes and growing threats to sensitive data. The bill grants additional statutory responsibilities to the Field Enforcement Division of the Comptroller’s Office to investigate potential incidents of tax fraud and allow the agency to seek injunctions against tax preparers suspected of fraudulent and criminal practices in an effort to protect consumers from financial harm.

In addition, the legislation extends the statute of limitations for tax crimes to six years from the current three years, matching the statute of limitations under the Internal Revenue Code for federal tax crimes. This extension will allow sufficient time to properly investigate fraud cases, which often involve highly sophisticated schemes.

The bill also seeks to hold unscrupulous tax preparers accountable by placing greater legal responsibility on predatory tax preparers who use unknowing taxpayers to commit fraud. The legislation adds a penalty for fraudulent tax return preparers and provides legal authority to issue injunctions against fraudulent tax preparers in order to protect consumers during ongoing investigations.

Furthermore, the Taxpayer Protection Act prohibits tax professionals from employing an individual to provide tax preparation services who is not registered with the Board of Tax Preparers through the Department of Labor, Licensing, and Regulation. Finally, the bill authorizes the Office of the Comptroller to disclose certain tax information to the State Board of Individual Tax Preparers, the U.S. Internal Revenue Service, and the U.S. Department of Justice. This provision allows the Comptroller’s Office to work with state and federal government entities to take swift legal action against tax return preparers who have been found to have been engaging in fraudulent activity.

MEDIA CONTACTS: Alan Brody, 410-260-6346 (office) 443-924-1473 (cell)

 

Comptroller Franchot Announces Opening of 2017 Tax Filing Season

Individual Tax Returns Will Begin Processing January 23

CAPTION: Comptroller Peter Franchot speaks with Taxpayer Services employees Xochil Llama, left, and Dana Hopkins during a visit to his agency’s Revenues Administration Division (RAD). Deputy Comptroller Sharonne Bonardi and RAD Director Wayne Green joined the Comptroller.

ANNAPOLIS, MD (January 12, 2017) – Comptroller Peter Franchot announced today that Maryland will begin processing personal income tax returns for Tax Year 2016 on January 23, 2017, the same day the Internal Revenue Service (IRS) begins accepting returns. In an ongoing effort to combat tax fraud, the agency will not immediately process a state tax return if W-2 information is not on file. Employers are required to report wage information to the Comptroller on or before Jan. 31.

“When Americans have been directly affected by fraud, identity theft, data breaches and other financial crimes, the security of the Maryland taxpayer remains my top priority this tax season,” Franchot said. “Making sure W-2 information is on file at the time a return is received is in keeping with that effort. Last year, my agency stopped processing state tax returns from more than 60 companies whose purpose was to prey on the vulnerable, the homeless and those with limited financial means. I will continue to lead the charge against these unscrupulous practices this tax season.”

Last year, the Maryland Comptroller’s office stopped accepting income tax returns from 61 companies doing business in 68 locations, including 23 different Liberty Tax Service franchises, for submitting numerous highly suspicious returns. Collectively, they filed thousands of state returns that the agency believed to be fraudulent. Processing of business tax returns began Jan. 6.

The 2016 tax return filing deadline this year, which coincides with the IRS deadline, is Tuesday, April 18, rather than the traditional April 15 deadline which falls on a Saturday this year. Since Emancipation Day is observed on April 17 in the District of Columbia, the IRS pushed the filing deadline to Tuesday April 18. Taxpayers are encouraged to file their returns electronically for the fastest possible processing of their claims and to ensure they receive all possible refunds. A list of approved vendors for use in filing your electronic return can be found at www.marylandtaxes.com.

Free state tax assistance is available at all of the agency’s 12 taxpayer service offices, Monday through Friday, 8:30 a.m. to 4:30 p.m. A list of office locations can be found at www.marylandtaxes.com. For more information on any tax-related matter, please visit the Comptroller’s website at www.marylandtaxes.com or call 1-800-MD-TAXES (1-800-638-2937) or 410-260-7980 in Central Maryland.

MEDIA CONTACTS:
Peter Hamm 410-260-7060 (office) or 443-414-3083 (cell)
Alan Brody 410-260-6346 (office) or 443-924-1473 (cell)

Security Awareness for Taxpayers: The Tax Community Needs Your Help

ANNAPOLIS, Md. (January 10, 2017) – The Maryland Comptroller’s Office and the federal Internal Revenue Service are doing everything they can to protect Marylanders from identity theft. But officials at both agencies urge Marylanders to take steps necessary to protect their personal and financial data.

Cybercriminals continue to steal enormous amounts of personal data from outside the tax system and to use that data to file fraudulent tax returns or commit other crimes while impersonating the victims.
Comptroller Peter Franchot urges Marylanders to take these steps to protect themselves and their data:

Keep Computers Secure
• Use security software and make sure it updates automatically; essential tools include using a firewall, virus/malware protection and file encryption for sensitive data.
• Treat personal information like cash, don’t leave it lying around.
• Taxpayers should check out companies to find out who they are really dealing with.
• Give personal information only over encrypted websites – look for “https” addresses.
• Use strong passwords and protect them.
• Back up their files.

Avoid Phishing and Malware
• Avoid phishing emails, texts or calls that appear to be from the IRS, tax companies and other well-known business; instead, go directly to their websites.
• Marylanders should not open attachments in emails unless they know who sent it and what it is.
• Download and install software only from known, trusted websites.
• Use a pop-up blocker.
• Families should talk about safe computing practices.

Protect Personal Information

Citizens should not routinely carry their Social Security card or any documents with their SSN. They should not overshare personal information on social media. Information about past addresses, a new car, a new home and one’s children help identity thieves pose as someone they’re not. Maryland citizens should keep old tax returns and tax records under lock and key or encrypted, if electronic. They should shred tax documents before trashing.

The IRS urges citizens to watch out for IRS impersonators. Officials there say “the IRS will not call you with threats of jail or lawsuits. The IRS will not send you an unsolicited email suggesting you have a refund or that you need to update your account. The IRS will not request any sensitive information online. These are all scams, and they persistent and change frequently. Don’t fall for them. Forward IRS-related scam emails to phishing@irs.gov. Report IRS-impersonation telephone calls at www.tigta.gov.”

Additional steps:
• Citizens should check their credit report at least annually and check their bank and credit card statements often;
• Citizens should review their Social Security Administration records annually. They can sign up for My Social Security at www.ssa.gov.
• If someone is an identity theft victim whose tax account is affected, they should review http://www.irs.gov/identitytheft for details.

For more information, visit IRS.gov.

 

Nominations for ‘Bright Lights Award’ still open

Franchot to highlight businesses or nonprofits emphasizing innovation

ANNAPOLIS, Md. (January 9, 2016) – Nominations for the “Bright Lights Award for Innovation and Entrepreneurship,” to be presented by Comptroller Peter Franchot in each of Maryland’s 23 counties and Baltimore City, will continue to be accepted through January 31.

This new award recognizes and celebrates innovation in the private and nonprofit sectors that strengthen Maryland’s economy, generate jobs and tax revenue and foster new ideas that more effectively deliver services and products within the marketplace.

“Maryland is well positioned to lead the nation back to prosperity thanks to the accumulated brainpower in every corner of our state,” said Comptroller Franchot. “It’s important we recognize these innovators who, through their creativity and willingness to assume risk, are changing the way we experience the world.”

Nominations will be accepted through the end of January; self-submissions are welcome. The award will be presented at a public ceremony in each jurisdiction honoring the recipient’s achievements fostering innovation in their field. Businesses or nonprofits of any size and any type are eligible for the award. The nomination form, which can be found here, should detail how the candidate is transforming their industry through innovation and what future opportunities may exist to expand its application.

 

Media Contact: Alan Brody, 410-260-6346 (office), 443-924-1473 (cell)

 

Daily Fantasy Sports Now Regulated in Md. to Ensure Fairness, Protect Consumers

Regulations Don’t Apply to Casual, Season-Long Fantasy Sports Games

ANNAPOLIS, Md. (January 3, 2017) – With daily fantasy sports games drawing in hundreds of thousands of Marylanders, regulations took effect Monday, January 2, to help ensure the games are fair and that winners pay appropriate Maryland taxes.

“Daily online fantasy sports games have a significant presence in Maryland,” Maryland Comptroller Peter Franchot said. “It is entirely appropriate that we enforce basic rules to ensure the games are fair, anti-competitive abuses are declared out of bounds, and appropriate taxes are paid.”

The new Maryland regulations:

• Ban daily fantasy sports game participation by Marylanders under 18; professional athletes in games of their individual sport; and employees, principals, officers, directors or contractors of fantasy sports operators (or members of those individuals’ immediate families).

• Ban games based on amateur or college sports.

• Require game operators to clearly identify players that are highly experienced.

• Ban the use by players of third-party created anti-competitive “scripts” – mini-programs which experienced players are currently using to gain advantages that are unfair to more casual players.

• Limit participants to a maximum of $1,000 in deposits per month unless they proactively ask the operator to raise their limit – and certify to the operator they have the financial ability to afford losses which may result from daily fantasy sports competition play at the higher deposit level requested.

• Bar game operators from extending any credit to a player.

• Require game operators to hold player funds separate from company operating funds and to establish a reserve fund sufficient to pay all prizes offered to winning Fantasy Sports players.

• Prohibit game operators from depicting minors, students and school or college settings in their advertisements.

• Require game operators to notify Marylanders of their potential tax obligations, and require game operators to comply with State and Federal data security laws.

The regulations apply only to daily fantasy sports contests, not the traditional, season-long fantasy leagues run by companies like Yahoo and ESPN that attract office coworkers, softball teammates or church groups.

Daily fantasy sports are a subset of Internet-based fantasy sports games. Players compete against other players by building teams of professional athletes from a particular sports league or competition. The players earn points based on the actual statistical performance of those athletes in real-world competitions.

Daily fantasy sports are an accelerated variety of these fantasy sports in which contests are conducted over short-term periods such as a week or a day instead of over an entire season. They are usually marketed as a “contest,” with winners receiving a share of a pre-determined pot of dollars funded by the players’ collective entry fees.

In 2012, the Maryland General Assembly passed legislation asserting that fantasy sports were not subject to state prohibitions against wagering and delegated authority to the Comptroller to adopt regulations to carry out the provisions of the law. The popularity of the games have grown exponentially.

Maryland’s regulations are similar to those in effect in states that have taken action. Rules on the activity are still relatively new.

You can view the regulations here.

MEDIA CONTACTS: Peter Hamm, 410-260-7060 (office) or 443-414-3083 (cell)

Alan Brody, 410-260-6346 (office) or 443-924-1473 (cell)

Tax Preparedness Series: What to Do Before the Tax Year Ends on Dec. 31

ANNAPOLIS (December 28, 2016) – As tax filing season approaches, the Internal Revenue Service is reminding taxpayers there are things they should do now to get ready for filing season.

For most taxpayers, Dec. 31 is the last day to take actions that will impact their 2016 tax returns. For example, charitable contributions are deductible in the year made. Donations charged to a credit card before the end of 2016 count for the 2016 tax year, even if the bill isn’t paid until 2017. Checks to a charity count for 2016 as long as they are mailed by the last day of the year.

Taxpayers who are over age 70½ are generally required to receive payments from their individual retirement accounts and workplace retirement plans by the end of 2016, though a special rule allows those who reached 70½ in 2016 to wait until April 1, 2017 to receive them. Most workplace retirement account contributions should be made by the end of the year, but taxpayers can make 2016 IRA contributions until April 18, 2017. For 2016, the limit for a 401(k) is $18,000. For traditional and Roth IRAs, the limit is $6,500 if age 50 or older and up to $15,500 for a Simple IRA for age 50 or older.

Taxpayers who have moved should tell the U.S. Postal Service, their employers and the IRS. To notify the IRS, mail IRS Form 8822, Change of Address, to the address listed on the form’s instructions. For taxpayers who purchase health insurance through the Health Insurance Marketplace, they should also notify the Marketplace when they move out of the area covered by their current Marketplace plan.

For name changes due to marriage or divorce, notify the Social Security Administration (SSA) so the new name will match IRS and SSA records. Also notify the SSA if a dependent’s name changed. A mismatch between the name shown on your tax return and the SSA records can cause problems in the processing of your return and may even delay your refund.

Effective Jan. 1, 2017, any Individual Taxpayer Identification Number (ITIN) not used at least once on a tax return in the past three years will no longer be valid for use on a return. In addition, an ITIN with middle digits 78 or 79 will also expire on Jan. 1. Those with expiring ITINs who need to file a return in 2017 must renew their ITIN. Affected ITIN holders can avoid delays by starting the renewal process now.

Taxpayers should allow seven weeks from Jan. 1, 2017, or the mailing date of the Form W-7, whichever is later, for the IRS to notify them of their ITIN application status – nine to 11 weeks if taxpayers wait to submit Form W-7 during the peak filing season, or send it from overseas. Those who fail to renew before filing a return could face a delayed refund and may be ineligible for some important tax credits. For more information, including answers to frequently-asked questions, visit the ITIN information page on IRS.gov.

Keeping copies of tax returns is important as the IRS makes changes to protect taxpayers and authenticate their identity. Beginning in 2017, taxpayers using a software product for the first time may need their Adjusted Gross Income amount from a prior tax return to verify their identity. Taxpayers can learn more about how to verify their identity and electronically sign their tax return at Validating Your Electronically Filed Tax Return.

For more information, visit IRS.gov.

Franchot Announces New ‘Bright Lights Award’

Nominations sought for businesses or nonprofits that emphasize innovation

ANNAPOLIS, Md. (December 21, 2016) – Comptroller Peter Franchot today announced his office is accepting nominations for a new award paying tribute to business and nonprofit leaders and organizations that foster innovation in their fields.

The “Bright Lights Award for Innovation and Entrepreneurship” will recognize and celebrate innovation in the private and nonprofit sectors that strengthen Maryland’s economy, generate jobs and tax revenue and develop new ideas that more effectively deliver services and products within the marketplace.

“Maryland is well-positioned to lead the nation back to prosperity thanks to the accumulated brainpower in every corner of our state,” said Comptroller Franchot. “It’s important we recognize these innovators who, through their creativity and willingness to assume risk, are changing the way we experience the world.”

Nominations will be accepted through January 31. One winner will be selected from each of Maryland’s 23 counties and Baltimore City. Businesses or nonprofits of any size are eligible for the award. The nomination form, which can be found here, should detail how the candidate is transforming their industry through innovation and what future opportunities may exist to expand its application.

 

Media Contact: Alan Brody, 410-260-6346 (office), 443-924-1473 (cell)

 

Tax Preparedness Series: Tax Records – What to Keep

ANNAPOLIS (December 14, 2016) – As tax filing season approaches, the Internal Revenue Service has information for taxpayers who wonder how long to keep tax returns and other documents.

Generally, the IRS recommends keeping copies of tax returns and supporting documents at least three years. Some documents should be kept up to seven years in case a taxpayer needs to file an amended return or if questions arise. Keep records relating to real estate up to seven years after disposing of the property.

Health care information statements should be kept with other tax records. Taxpayers do not need to send these forms to IRS as proof of health coverage. The records taxpayers should keep include records of any employer-provided coverage, premiums paid, advance payments of the premium tax credit received and type of coverage. Taxpayers should keep these – as they do other tax records – generally for three years after they file their tax returns.

Whether stored on paper or kept electronically, the IRS urges taxpayers to keep tax records safe and secure, especially any documents bearing Social Security numbers. The IRS also suggests scanning paper tax and financial records into a format that can be encrypted and stored securely on a flash drive, CD or DVD with photos or videos of valuables.

Now is a good time to set up a system to keep tax records safe and easy to find when filing next year, applying for a home loan or financial aid. Tax records must support the income, deductions and credits claimed on returns. Taxpayers need to keep these records if the IRS asks questions about a tax return or to file an amended return.

It is even more important for taxpayers to have a copy of last year’s tax return as the IRS makes changes to authenticate and protect taxpayer identity. Beginning in 2017, some taxpayers who e-file will need to enter either the prior-year Adjusted Gross Income or the prior-year self-select PIN and date of birth. If filing jointly, both taxpayers’ identities must be authenticated with this information. The AGI is clearly labeled on the tax return. Learn more at Validating Your Electronically Filed Tax Return.

Taxpayers who need tax information can request a free transcript for the past three tax years. The ‘Get Transcript’ tool on IRS.gov is the fastest way to get a transcript.

If taxpayers are still keeping old tax returns and receipts stuffed in a shoebox in the back of the closet, they might want to rethink that approach. Keep tax, financial and health records safe and secure whether stored on paper or kept electronically. When records are no longer needed for tax purposes, ensure the data is properly destroyed to prevent the information from being used by identity thieves.

If disposing of an old computer, tablet, mobile phone or back-up hard drive, keep in mind it includes files and personal data. Removing this information may require special disk utility software. More information is available on IRS.gov at How long should I keep records?.

 

IRS Advice to Those with Expiring ITINs: Apply Now to Avoid Refund Delays; Agency Offers Tips To Avoid Common Errors

ANNAPOLIS (December 9, 2016) – The Internal Revenue Service urges any taxpayer with an expiring Individual Taxpayer Identification Number (ITIN) and a need to file a return in the upcoming filing season to file a renewal application in the next few weeks to avoid refund and processing delays. In addition, the IRS encouraged people to check their renewal application, Form W-7, carefully before filing and offered tips for avoiding common errors being seen.

ITINs are used by people who have tax-filing or payment obligations under U.S. law but are not eligible for a Social Security number. Under a recent law change by Congress, any ITIN not used on a tax return at least once in the past three years will expire on Jan. 1, 2017. In addition, any ITIN with middle digits of either 78 or 79 (9NN-78-NNNN or 9NN-79-NNNN) also will expire on that date.

This means that anyone with an expiring ITIN should act now to make sure they have a renewed ITIN in time to file a return during the upcoming tax season. Failure to do so will result in refund delays and possible loss of eligibility for some tax benefits.

The IRS said that an ITIN renewal application filed now before the end of the year will be processed before one submitted in January or February at the height of tax season.
Currently, a complete and accurate renewal application can be processed in as little as seven weeks. But this timeframe is expected to lengthen to 11 weeks during tax season.

The IRS reports several common errors being seen in recent weeks that are currently slowing down and holding up some ITIN renewal applications. The mistakes generally center on missing information, and/or insufficient supporting documentation. The tax agency stressed that ITIN renewal applicants should be sure to use the latest version of Form W-7, revised September 2016. This is the version of the form, along with its instructions, currently posted on IRS.gov.

To ensure prompt processing of the form, ITIN renewal applicants should also complete the following steps:

• At the top of the form, be sure to check the box that says, “Renew an existing ITIN.”

• Under, “Reason you’re submitting Form W-7,” every applicant must check one of the eight boxes. If more than one applies, be sure to check the option that best describes the tax purpose for filing the application. Do not write, “ITIN renewal,” in this section of the form, as it is not a valid reason.

• On Line 3, an applicant living outside the United States should enter their foreign address, if different from the mailing address on Line 2. If now living in the U.S., be sure to enter the foreign country of last residence. See the Form W-7 instructions for details.

• Include original supporting and required identification documentation, or certified copies from the issuing agency to prove foreign status and identity.

ITIN renewal applicants also are reminded that only a passport with a U.S. entry date is now acceptable as a stand-alone identification document for dependents. This is a change from past policy. This means that dependent ITIN applicants who use a passport without a date of entry must provide additional documentation, along with the passport, to prove U.S. residency. Acceptable documents include:

• If under age 6, a U.S. medical record.

• If under age 18, a U.S. school record.

• If at least age 18, a U.S. school record for anyone who is a student. Otherwise, anyone 18 and over can provide a rental or bank statement or a utility bill listing the applicant’s name and U.S. address.

Dependents from Canada, Mexico, or dependents of U.S. military personnel stationed overseas are exempt from these additional requirements.

 

Statement of Comptroller Peter Franchot Regarding Updated Revenue Estimates

 

ANNAPOLIS, MD (December 8, 2016) – The following is a statement from Maryland Comptroller Peter Franchot released today during a meeting of the Board of Revenue Estimates in the Treasury Building in Annapolis.

CAPTION: From left are: Maryland Secretary of Budget and Management David Brinkley; Deputy Treasurer Bernadette Benik, who attended the meeting on behalf of Treasurer Nancy Kopp; Maryland Comptroller Peter Franchot, who is chairman of the Bureau of Revenue Estimates (BRE); and BRE Director Andrew Schaufele.

“I’d like to thank my fellow members of the Board of Revenue Estimates – Treasurer Nancy Kopp and Maryland Secretary of Budget and Management David Brinkley – as well as Bureau of Revenue Estimates Director Andrew Schaufele, his staff, and the Revenue Monitoring Committee for their hard work.

“Today, Maryland’s Board of Revenue Estimates voted to reduce the revenue projections for the State of Maryland for Fiscal Years 2017 and 2018 by a total of $38.3 million, which is $13.8 million for Fiscal Year 2017 and $24.5 million for Fiscal Year 2018. These reductions underscore the reality that our economic recovery remains weak. Wages and incomes continue to grow at a subdued rate and many Marylanders and small business owners are still struggling.

“Our projections indicate that there will be three percent growth in our sales and use tax revenue for the current and the next fiscal years, which serves as a positive indicator that Marylanders are spending more. That’s not a return to normal, but it is a step in the right direction.

“Whether it’s a temporary indicator or a prolonged trend is uncertain. State policymakers can help by not doing harm to consumer confidence. We can’t assume we’re around the corner from returning to the way things have been in Maryland.

“We have to be more forward-looking about how we borrow money as a state because we can’t sustain our current patterns of debt accumulation without provoking actions that could harm an already fragile economy. But if we maintain a cautious mindset, Maryland’s economy is strong enough to withstand this slow recovery and return us to prosperity.”

MEDIA CONTACTS: Peter Hamm, 410-260-7060 (office) or 443-414-3083 (cell)
Alan Brody, 410-260-6346 (office) 443-924-1473 (cell)