Practice Management

IRS must help Madoff victims, says Rep. Ackerman

The Internal Revenue Service should immediately issue guidance that would allow customers defrauded by New York-based Bernard L. Madoff Securities LLC.

The Internal Revenue Service should immediately issue guidance that would allow customers defrauded by New York-based Bernard L. Madoff Securities LLC to claim theft losses going back at least to 1995, Rep. Gary Ackerman, D-N.Y., said today in a letter to IRS commissioner Douglas Shulman.
At a meeting of creditors held Feb. 20 in New York, Madoff trustee Irving Picard, a partner with New York law firm Baker and Hostetler LLP, said there is no evidence that securities were ever purchased for Madoff customers over the past 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,” Mr. Ackerman said in his letter.
Issuing guidance immediately would allow victims of the massive fraud enough time to complete their 2008 tax returns, he wrote.
“While the Internal Revenue Service guidelines currently only permit a three-year carry-back 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 carry-back to the beginning of this scam,” Mr. Ackerman said in the letter.
At the Feb. 20 creditors’ meeting, several Madoff customers complained that few members of Congress or other officials had stepped forward to try to help them.