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)