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Rep. Ackerman Says IRS Should Provide Relief to Madoff Victims

FEB. 25, 2009

Rep. Ackerman Says IRS Should Provide Relief to Madoff Victims

DATED FEB. 25, 2009
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February 25, 2009

 

 

(Washington, DC) -- U.S. Rep. Gary Ackerman (D-NY), a Senior Member of the House Financial Services Committee, today sent a letter to Internal Revenue Service (IRS) Commissioner Douglas Shulman urging him to provide tax relief to investors swindled by Bernard Madoff's Ponzi scheme. Ackerman specifically called on the commissioner to allow victims to claim theft loss on their 2008 taxes, and amend their tax returns dating back to at least 1995.

By claiming a theft loss, investors would be eligible for a tax credit for money that Madoff stole from them. Amending tax returns back to 1995 would extend the number of years for which victims can obtain refunds for taxes paid on phantom profits. Presently, Madoff investors, like all taxpayers, can only amend tax filings for the past three years.

Ackerman sent the letter in the wake of last week's announcement that no evidence exists to indicate that securities were ever purchased for Madoff's customer accounts for the last 13 years. This announcement came on February 20 from Irving Picard, the court-appointed Trustee for the liquidation of Bernard L. Madoff Investment Securities LLC.

Earlier this month, Ackerman blasted officials from the Securities and Exchange Commission (SEC) as they testified before a House Financial Services Subcommittee. Ackerman criticized the officials for failing to catch Madoff as he defrauded investors. The Congressman also has dozens of constituents in his Queens/Long Island district who have been victims of Madoff's $50 billion Ponzi scheme.

The text of the letter is below.

The Hon. Douglas Shulman

 

Commissioner

 

Internal Revenue Service

 

1111 Constitution Avenue, NW

 

Washington, D.C. 20044

 

 

Dear Commissioner Shulman:

I am writing to you regarding the tax implications of a public statement made on February 20, 2009 by Irving H. Picard, the court-appointed Trustee for the liquidation of Bernard L. Madoff Investment Securities LLC. As you may be aware, Mr. Picard announced that no evidence exists to indicate that securities were ever purchased for Madoff's customer accounts for the last 13 years.

Given this confirmation that Madoff Securities made no investments with its clients' money, I believe it would be appropriate for the Internal Revenue Service to immediately issue guidance and allow Madoff's victims to both claim theft loss on their 2008 tax returns and amend their tax returns dating back to at least 1995. The immediate issuance of guidance will permit victims of Mr. Madoff's fraud enough time to complete their 2008 tax returns.

Additionally, while Internal Revenue Service guidelines currently only permit a three-year carryback under the theft-loss provision, I believe that the magnitude, both financially and in human tragedy, of Mr. Madoff's fraud constitutes an extraordinary circumstance that would permit a full carryback to the beginning of this scam.

Thank you for your consideration of my request. I would welcome the opportunity to further discuss these issues with you.

Sincerely,

 

 

Gary L. Ackerman

 

Member of Congress
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