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Madoff victims may recoup US taxes

Bloomberg News / March 12, 2009
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NEW YORK - Investors who paid taxes on "phantom" profits from Bernard Madoff's alleged Ponzi scheme since 1995 would be able to seek refunds from the Internal Revenue Service under congressional legislation proposed yesterday.

The measure, submitted by Representative Gary Ackerman, would extend to 13 years the time for which investors may obtain refunds on taxes tied to the phony profits, the New York Democrat said in a statement. Current rules may limit investor refunds to the past three years, according to the statement.

Madoff, 70, faces 11 charges for bilking investors, including charities and universities. The New York money manager told clients their accounts held $65 billion, though the true amount was a "small fraction" of that, federal prosecutors said Tuesday.

Madoff will plead guilty today, his lawyer Ira Sorkin said. The charges against him include mail fraud, wire fraud, investment adviser fraud, three counts of money laundering, false statements, perjury, false filings with the Securities and Exchange Commission, and theft from an employee-benefit plan. Madoff, free on $10 million bond, may be jailed after his plea.

The Senate Finance Committee plans a hearing Tuesday on how to deal with victims of Madoff's scheme.

Matthew Beck, a spokesman for New York Democrat Charles Rangel, chairman of the tax-writing House Ways and Means Committee, didn't immediately return a message seeking comment on the proposal.

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