Comptroller’s request for more police power progressing in legislature

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The Office of the Comptroller may soon have greater investigative and enforcement powers in Maryland thanks to legislation backed by Gov. Larry Hogan to expand the agency’s police powers to fight fraud.

The Taxpayer Protection Act adds tax fraud to the list of enforcement responsibilities assigned to the agency’s Field Enforcement Division and provides legal authority to issue injunctions against preparers who are under investigation for fraud to protect consumers.

The proposed act would also extend the statute of limitations for tax crimes to six years from the current three to allow sufficient time for investigation and adds responsibilities and penalties for tax preparers.

“We continue to see an increase in the number of unscrupulous tax preparers who not only violate our laws but violate the privacy and trust of our clients,” Comptroller Peter Franchot told the Senate Budget and Taxation Committee at a hearing Feb. 15. “As hard as we work to stop them, they’re growing more sophisticated and more brazen.”

Franchot supported a similar law during last year’s session but the bill did not pass. This year, Hogan included the measure in his legislative package, and bills were cross-filed in the General Assembly.

The Senate Budget and Taxation Committee reported Senate Bill 304 favorably with some technical amendments and it passed the full Senate with no opposition. It is before the House Judiciary Committee for a hearing Tuesday.

“We are encouraged by the passage of the Taxpayer Protection Act in the Senate and hopeful that the legislators in the House will also recognize the importance of this bill,” Hogan spokeswoman Hannah Marr said in an emailed statement.

At the Feb. 15 hearing, Franchot said current law does not permit his office to prepare fraud cases for prosecution despite having the expertise to do so. The legislation would give field officers the authority to obtain search and arrest warrants and deliver charging documents.

“We’re heading off a lot of the fraud but we’re not bringing any of these folks to justice because we lack the basic investigatory powers we’re asking for in the bill before you,” he said.

Jeffrey A. Kelly, director of the Field Enforcement Division, said the office currently gets information about fraudulent returns, obtains information from the victims and then turns to the Maryland Office of the Attorney General, which has a police trooper assigned to white-collar crime who must conduct an investigation but is busy with other cases.

Because the Office of the Comptroller does not have investigative powers, the trooper often duplicates their efforts while preparing the case for possible prosecution before turning it over to an attorney, Kelly said.