Recent proposals by members of Congress seek to provide tax relief to victims of far-reaching investment frauds like the one committed by Bernard L. Madoff, who pled guilty this week to carrying out a multi-billion dollar Ponzi scheme, the largest in U.S. history.
Victims of Madoff's Ponzi scheme would be able to receive refunds for taxes that they paid on "phantom" investment profits -- money they reported as earned but in fact never existed because of Madoff's deceit -- going back 13 years, under a new law proposed by Congressman Gary Ackerman (D-NY). Similar legislation, introduced last month by Congressman Kendrick B. Meek (D-FL), would allow any taxpayer bilked in a Ponzi scheme to recoup taxes they paid on "phantom" income. Finally, Bloomberg.com reports: "The Senate Finance Committee, led by Montana Democrat Max Baucus, plans a March 17 hearing on how to deal with victims of Madoff’s scheme."
After a federal investigation and subsequent indictment in which Madoff was accused of bilking thousands of investors out of billions of dollars, the former financier pled guilty in federal court on Thursday -- to 11 charges including investment adviser fraud, mail fraud, perjury, and submitting false filings to the SEC. Madoff faces life in prison, and has seen his bail revoked as he awaits sentencing in federal incarceration.