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Why the Comptroller's Office calls a new tax law a 'game-changer'

In our post last week, we discussed how the principal duty of the Comptroller of Maryland's office is the collection of taxes and how it has a host of tools at its disposal to assist with the fulfillment of this duty. Indeed, the agency collects an astounding $16 billion per year armed with a budget of only $110 million.

Interestingly enough, Governor Larry Hogan recently signed a new bill into law earlier this month, which will further enhance the agency's tax enforcement powers. Indeed, Comptroller Peter Franchot has referred to it as both "a missing piece of the puzzle" and, more significantly, a "game-changer."

What was the legislation by the governor?

The legislation signed by Governor Hogan was the Taxpayer Protection Act, a measure designed to provide the Comptroller's Office with greater enforcement powers over both identity thieves and deceitful tax preparers.

What exactly are these greater enforcement powers?

The Taxpayer Protection Act vests the Comptroller's Office with the same authority to investigate and enforce income tax fraud cases as they currently have in those cases relating to motor fuel and tobacco. In other words, they can now seek both search and arrest warrants in these cases, as well as injunctions against deceitful tax preparers.

Under the previous system, the Comptroller's Office had to rely on the Maryland Attorney General's Office to handle these cases.

Does this mean the Comptroller's Office can now come after individual taxpayers?

The Comptroller's Office has made it clear that the powers provided under the Taxpayer Protection Act will not be used to go after individual taxpayers who are less than forthcoming on their returns. Rather, the primary target is identity thieves and deceitful tax preparers.

Was the Taxpayer Protection Act necessary?

According to Comptroller Franchot, tax-related fraud has hit crisis levels, with his office blocking $174 million in suspicious returns over the last ten years, but nevertheless hamstrung by the inability to pursue the types of cases that create a deterrent effect.

"This is our opportunity to prepare some cases against the people sitting in a hotel and sending dozens of fraudulent tax returns electronically to our office," he said.

It will be interesting to see what impact this legislation has going forward …

If you are under investigation or have been charged with some manner of tax fraud or evasion by state or federal officials, consider speaking with a skilled legal professional who can protect your rights and your future as soon as possible.

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Friday, November 18, 2016

Chaya Kundra will be a panelist at the New England IRS Representation Conference on Preparer Penalties.

Preparer Penalties: Everything You Need to Know! Over time the IRS has increased its focus from individual taxpayers to tax preparers. When the IRS identifies a pattern of false or fraudulent returns, it does not hesitate to impose penalties on the return preparers. This panel will walk you through the various penalties and what preparers need to know to protect themselves.

Moderator: Amanda Evans, Green & Sklarz LLC, New Haven, CT

Panelists: Chaya Kundra, Kundra & Associates, Rockville, MD, Barbara Kaplan, Greenburg Traurig, New York, NY

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