Congressman Pascrell Introduces Ponzi Scheme Victims Tax Relief Act Of 2010

Press Release

In an effort to help those defrauded by deceptive investment brokers, U.S. Rep. Bill Pascrell, Jr. (D-NJ-8) today introduced the bipartisan Ponzi Scheme Victim's Tax Relief Act of 2010.

"No one wants to fall victim to a Ponzi scheme. Bernie Madoff's deception, as well as the deception of others schemers across the county, was deplorably shocking. In addition to countless small investors and retirees, nonprofit humanitarian organizations, foundations and banks also fell victim to Madoff. The potential effect of those losses on our society can never be calculated," said Pascrell, a member of the House Ways and Means Committee, which oversees the development of our nation's tax policy. "But to help the small investors who lost so much, we can at provide some relief, and a path to recoup tax dollars paid on earnings which never existed."

The Ponzi Scheme Victim's Tax Relief Act of 2010, introduced on April 15, will expand the net operating loss carryback period for investors in a Ponzi-type scheme from five to 10 years. That means that victims who lost money in a Ponzi scheme can recoup some of their losses by declaring them as net operating losses during previous tax years and collecting refunds from those tax years.

The Safe Harbor rulings provided by the IRS in early 2009 provided some relief to fraud victims. However, large numbers of victims were excluded or limited in their benefits from these rulings. Most of these victims paid taxes on these investments. Others were dependent on their IRAs and retirement savings to cover their living needs. And virtually every state has uncovered and prosecuted Madoff, Allen Stanford, and Tom Petters or other similar Ponzi schemes.

Similar bipartisan legislation (S.3166) has been introduced in the Senate by Senators Charles E. Schumer (D-NY) and Jon Kyl (R-AZ).

Source