Tax fraud hurts the poor

Music stores, laundromats, used-car dealerships, shoe stores, and tarot card readers: What do these have in common? They are examples of businesses in Maryland that also offer tax preparation each year. If that tax preparer is licensed and competent, this service co-location could be helpful. Unfortunately, consumers served in this manner more often receive fraudulent tax returns that steal their hard-earned money and rob our state and federal coffers of general funds. (“Let Franchot do his job,” Feb.16).

Fraudulent returns are not to be confused with simple errors like mistyped numbers or an omitted form. The fraudulent returns have fake dependents to claim tax credits or inflated or fabricated self-employment income and itemized expenses, like donations to charities and unreimbursed business expenses. These preparers often target low-income filers and those who may speak English as a second language.

A tax return is one of the most crucial documents in a person’s life. It is needed to apply for a mortgage or financial aid, and for low-to moderate-income taxpayers, a tax return could lead to more reliable transportation or could mean the difference between stable or unstable housing.

The Maryland General Assembly has shown leadership to crack down on paid tax preparers by passing legislation in 2008 to register them. The General Assembly now has a chance to expand the Comptroller Peter Franchot’s authority to go after these problem preparers. After all, who knows better who the bad actors are? SB304/ HB424 give the comptroller’s office the tools they need to shut down fraudsters large and small. This bill provides for more accountability in tax preparation services across the state and prevents fraudulent and predatory practices in tax preparation. Yes, let Mr. Franchot do his job.