Madoff Help News & Assistance

Senator Schumer Continues Leadership on Tax Benefits for Madoff and other direct and indirect ponzi victims.
Tremendous thanks go to Andrew Lerman, CPA who worked tirelessly with Senator Schumer’s office, Ron Stein of Madoff-Help.Com and the Network for Investor Action & Protection and attorney Helen Davis Chaitman representing her clients and the Madoff Coalition for Investor Protection. Many others, including the Ponzi Victims Coalition of Indirects have played an important part in this outstanding achievement as well. Theft loss deductions for IRAs and pension plans, extended carrybacks, and a waiver of IRA early withdrawal penalties for fraud victims, are just a few of the proposed tax remedies included in the bill. Equally significant is that the bill will now put indirect investors on an equal tax footing with direct investors. This is a giant step forward and a huge accomplishment! Stay tuned for more information and details as to how we can help see them to fruition. Congratulations to EVERYONE! Senator Schumer’s release follows– From: Marsha, Ilene, Andy, Helen, Ron….

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FOR IMMEDIATE RELEASE CONTACT: Josh Vlasto
December 7, 2009 202-380-5990

WITH THE ONE YEAR ANNIVERSARY OF THE BERNIE MADOFF BUST THIS WEEK

SCHUMER UNVEILS COMPREHENSIVE MADOFF INVESTORS TAX BILL OF RIGHTS – AIMS TO PROVIDE EXPANDED TAX AND RETIREMENT RELIEF TO SMALL INVESTORS WHO INVESTED ALL AND HAVE NOTHING LEFT BECAUSE OF THE CONVICTED SCAM ARTIST

Thousands of Smaller-Money Victims – Including Many Who Lost Everything, and Didn’t Even Know they Were Investing With Madoff Have Received No Relief So Far

Schumer Proposal Would Allow for Expanded Income Tax Relief, Penalty-Free Deductions from Retirement Savings, and Accelerated Tax-Free Contributions to Retirement Accounts to Make Up for Losses

Joined by middle class New York City residents who lost everything they had at the hands of convicted scam artist Bernie Madoff, U.S. Senator Charles E. Schumer today unveiled his new Madoff Investor Tax Bill of Rights that would dramatically expand federal tax benefits aimed at helping devastated investors recoup some of their losses. Many of Madoff’s victims were older and retired and don’t have a monthly income to rely on day to day. The largest Ponzi scheme, run by disgraced financier Bernie Madoff, cost thousands of investors more than $60 billion. Schumer’s new legislation would expand theft-loss benefits already available to investors who lose money due to scams, allow for accelerated and increased contributions to tax-free retirement accounts to make up for losses, and allow for penalty-free early withdrawals from retirement accounts for investors in dire need of cash to get by.

“The fact that Bernie Madoff swindled so many investors is outrageous, but the fact that so many of the smaller investors, who may not have even known they were investing with Madoff, are not receiving the same assistance as direct investors from is simply unfair,” Schumer said. “This proposal would finally give those smaller investors, many of whom lost everything, the tax relief they need and deserve.”

Schumer said that while many famous names lost hundreds of millions and even billions in the Madoff ponzi scheme, thousands of smaller investors were also left with nothing. These indirect investors typically invested through feeder funds or other brokers and tended to have lower net worth. Typically, these investors gave money to an investment advisor and many didn’t even know that their money was with Madoff.

The IRS originally issued rules this past April under which a direct investor could take a theft loss deduction for their Madoff losses, by saying that theft losses could be treated as net operating losses (NOLs), as if the individual investors were small businesses. Direct investors were allowed to “carry back” their losses for 5 years instead of 3, and carry forward any remaining losses for up to 20 years. A longer carryback is important because it puts cash in your pocket by providing refunds for taxes paid in past year.

But investors in a “small business” with more than $15 million in assets could not qualify for this relief. As a result, the IRS guidance was of help only to the direct investors, because the “feeder funds” that had the money of thousands of smaller investors were worth more than $15 million. By statute, the small business test is done at the level of the business, not the level of the individual partners. Under the law, the smaller, indirect investors are also not eligible for the $500,000 of relief from the Securities Investor Protection Corporation (SIPC), so they were shut out of both government insurance and the expanded carryback on the theft losses.

In the Senate’s unemployment bill, Schumer’s provision ensured that relief under the tax code would not be limited only to corporations and would include these smaller indirect investors; prevents having a “haircut” apply to all losses in all years and ensures that at a very minimum, the indirect investors would be eligible for a 4-year carryback at 100 percent and a fifth year at 50 percent, so they would get what amounts to an additional year and a half of loss carryback compared to current law.

In order to expand relief available to Madoff’s smaller investors, Schumer today announced he is introducing new legislation that would increase the amount an victimized investor can carryback on their income taxes, raise the limit on tax-free contributions to retirement accounts so an investor can replenish losses quicker, and waive penalties for withdrawing from retirement accounts to increase daily cash flow. Many of Madoff’s victims were older and retired and don’t have a monthly income to rely on day to day.

Specifically, Schumer’s Madoff Investor Tax Bill of Rights includes the following provisions: