Staten Island Rep: Protecting Taxpayers From Preparers Committing Fraud In Their Name Without Their Knowledge

Malliotakis Bill to Protect Taxpayers from Ghost Preparers Passes House Unanimously

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Editor’s note: Rep. Malliotakis recently pushed for an increase in the Capital Gains exception currently in place, greatly affecting the willingness of elderly Americans to sell their homes and move to a smaller house once their kids have left, due in large part to the very small allowance previously provided. She also pushed for an increase in the SALT deduction (for state taxes paid on homes where the total deduction was increased), particularly since taxes are so high in New York City, and when the SALT deduction was first reduced, it caused some upheavals in the market at the time. However, her constituents have raised concerns that rural hospitals in New York and other states may have to close as Medicaid requirements, including the necessity to work, are tightened and millions will lose their health insurance. There is a double edged sword in medicine – especially when profit is the motive but laws exist to protect those who cannot afford to purchase healthcare, such as New York.  These hospitals must serve every patient, even if it will turn out that they cannot pay for those services.  These new rules mean that this outlay of funds for indigent (or low income) patients will no longer be reimbursed by Medicaid  where it was in the past. Adding to this the new SNAP costs passed on to the states (which we will be covering in more detail in the coming weeks) – many of which can’t afford it – and it’s a recipe for suffering.  Places like Alabama, where rural health clinics are already struggling and now, with Medicaid reimbirsement being withheld from any provider whose reproductive care has the chance of including abortion care, whether for medically necessary reasons or not, even more have closed and are closing.  It is possible that smaller clinics, such as the one that has been offering nutrition and lifestyle changes along with herbal medicine preparations, will survive this downturn.   This includes Planned Parenthood centers, who provide voluntary abortion care as a portion of about 20% of their total patient care routine.  The rest of their care is STD screenings, breast cancer screenings, PAP smears, routine gynecological exams, contraception implants and prescriptions, and other types of routine medical care.  Readers will learn more about this important topic during an unofficial Senate hearing on reproductive healthcare and the devastating impact on the health of women everywhere of the Supreme Court’s Dobbs decision.   We also spoke with a tax expert about the different types of businesses and the liability and income protections each type offers to the entrepreneur and small business owner.  

(WASHINGTON, DC) — Congresswoman Nicole Malliotakis applauded the unanimous House passage of her legislation, H.R. 9499, the Protecting Taxpayers from Ghost Preparers Act. This legislation takes an important step to ensure that taxpayers who are victims of preparer fraud are not unfairly punished for actions they did not commit.

Under current law, when a dishonest tax preparer commits fraud without the taxpayer’s knowledge, the taxpayer may be subject to an indefinite statute of limitations, even if they had no intent to evade their tax obligations. The bill addresses this gap in the law by clarifying that the unlimited statute of limitations for fraudulent tax returns applies only when the taxpayer intended to commit fraud—not when a dishonest tax preparer acted alone without the taxpayer’s knowledge.

Several recent New York cases underscore how dishonest tax preparers can exploit taxpayers and defraud the system. An individual on Long Island pleaded guilty to a nearly $12 million tax fraud scheme. They prepared fraudulent tax returns, charged clients more than $1 million in fees—including a percentage of their refunds—and put those taxpayers at risk while enriching themselves. An individual in the Bronx was sentenced to four years in prison for orchestrating a decade-long, $145 million tax fraud scheme. He oversaw the filing of tens of thousands of false tax returns, generating approximately $12 million in fraudulent proceeds.

“Far too many taxpayers have been forced to spend months trying to fix IRS problems they did not create, and my office has seen that frustration firsthand through more than 1,400 IRS-related constituent cases,” said Congresswoman Nicole Malliotakis. “With the unanimous passage of my legislation in the House, we are one step closer to ensuring innocent taxpayers are not penalized for fraud or misconduct committed by a tax preparer. This bill puts the responsibility where it belongs—on those who break the law—and gives taxpayers greater protection when they have acted in good faith. I hope the Senate will now take up this bipartisan, commonsense measure and send it to the President’s desk.”

“Shady businesses that file tax returns on behalf of taxpayers but deceive the IRS by making it appear that the taxpayer prepared the return are not just committing fraud – they are committing a crime that could leave an innocent taxpayer facing consequences and potential IRS penalties for something they did not do,” said Ways and Means Committee Chairman Jason Smith (MO-08). “With the Protecting Taxpayers from Ghost Preparers Act, we can ensure taxpayers do not face an indefinite future of IRS assessments or penalties due to the misdeeds of others. Having seen the impact of tax fraud on victims in the communities she serves, Representative Malliotakis is protecting the rights of taxpayers by keeping the IRS focused on going after the criminals responsible.”

Banner Image: Rep. Malliotakis delivers speech on the House floor regarding this legislation. Image Credit – Rep. Malliotakis