Weiner: “BP Should Not Be in Charge of Anything in this Operation”...

Calls on BP to be Removed from the Claims Process & Media Access

Today, during the House Energy and Environment subcommittee hearing, Rep. Anthony Weiner (D – Queens & Brooklyn) questioned the Chairman and President of BP America, Lamar McKay.

Watch Rep. Weiner’s Testimony:

“It seems we are all saying the same thing; that BP should not be in charge of anything in this operation anymore,” said Weiner. “BP has done nothing to establish any level of credibility.”

“If we know BP is conflicted about being truthful with information, they should have no control in determining what access the American people have to learn what’s going on. BP should have no control over the access of the media nor should they have control over any access of experts in the field.

"Why should there be any decision-making ability on your part at all here? That's one thing my Republican friends, who want to criticise the administration for not doing enough, maybe we agree on. Maybe we need to have BP involved a heck of a lot less, with anything to do with our environment, anything to do with our citizens."

“If we know BP is conflicted about wanting to understate costs - that the basic element of a corporation, they want to take in as much as they can and give out as little as they can- why is there any role for them to play in claims? Why should there be any decision making ability on the part of BP at all here. While they sit here saying over and over again that they are going to pay all legitimate claims, my question is: Who determines what legitimate, and I believe it should be the American people, not BP.

Rep Ed Towns’ Statement on the Passage of The American Clean Energy and Security Act

U.S. Rep. Edolphus “Ed” Towns (NY-10)issued the following statement today, following the passage of H.R. 2454, The American Clean Energy and Security Act (ACES), which passed the U.S. House of Representatives by a vote of 219-212.

“I joined my colleagues today in passing sweeping reforms of America’s energy policy. The American Clean Energy and Security Act addresses serious environmental issues while encouraging responsible stewardship and management of our environmental resources. This legislation creates innovative industries and millions of new ‘green’ jobs, which are vital to improving New York City’s struggling economy. Above all, this legislation ensures that future generations will benefit from a cleaner, greener, and healthier environment.

Through the pioneering measures included in this bill, we create opportunities for clean energy technologies and energy efficiency standards that lessen our dependence on foreign oil and reposition America as a global innovation leader.

In the quest to adopt an energy plan for the 21st century, we cannot leave our most vulnerable communities behind. Minorities and low-income communities have carried the lions’ share of the burden during this economic crisis, and many of them are now suffering a 20% unemployment rate. That’s why I strongly supported adding a provision to this bill that will guarantee access to the green jobs market for local, low-income workers. This broadminded measure also provides underrepresented construction workers with access to employment opportunities on some of the varied construction projects that are planned in their communities.

With this legislation, we move all of America in a new, green direction, and make worthwhile investments in America’s energy future.”

Crowley & Weiner Call on IRS to Help Ponzi Scheme Victims Recoup Payments Made on “Phantom Income”

As Thousands of Taxpayers in Queens, NYC and Nationwide Lose Money from Ponzi Schemes, Crowley-Weiner Send Letter to IRS Commissioner Asking for Clarification on Laws Intended to Help Fraud Victims

As more Ponzi schemes are unearthed and thousands of victims discovered across Queens, New York City and the United States, Congressmen Joseph Crowley (D-Queens, the Bronx) and Anthony Weiner (D-Brooklyn, Queens) called on the Internal Revenue Service (IRS) to clarify regulations on payments made on “phantom income” in order to help victims recover their assets.

“Victims of Ponzi schemes are not only limited to Madoff-level investors. Just last month, the FBI raided a Queens-based Ponzi operator who had bilked local investors of more than an estimated $380 million,” said Congressman Crowley.

“With little regard for their victims, Ponzi scheme operators like Bernie Madoff prey on clients’ retirement funds, investments and life savings. The Federal government is not only responsible for finding and prosecuting these scam artists, it must also let victims know their rights and how they can recoup the taxes they paid on phantom income. Congressman Weiner and I believe the time has come for the IRS to clarify its laws and help the victims of these crimes more easily recover their assets.”

Rep. Weiner said, “For many victims, the injury of the fraud has been compounded by the insult of having to pay taxes on the phantom gains.”

Congressmen Crowley and Weiner sent a letter on February 27, 2009 to IRS Commissioner Douglas Shulman requesting clarification of the Federal tax laws governing taxes paid on phantom income as well as losses incurred by the victims of various Ponzi schemes. The full text of the Crowley-Weiner letter is included below.

Congressman Crowley is a member of the exclusive House Committee Ways and Means with jurisdiction over the IRS; Congressman Weiner is a member of the House Energy and Commerce Committee, with jurisdiction over interstate commerce.

February 27, 2009

The Honorable Douglas Shulman

Commissioner of Internal Revenue

Internal Revenue Service

1111 Constitution Avenue, NW

Washington DC 20224

Dear Commissioner Shulman:

The news of the Madoff Ponzi scheme, which reportedly totaled $50 billion, as well as the Bayou scheme and another major Ponzi scheme in Queens, New York, has brought a few tax-related issues to the forefront.

Considering the likelihood of additional fraud cases being uncovered due to the increased attention and regulation of the financial sector and the increasing redemptions occurring on Wall Street, we respectfully request clarification of the Federal tax laws governing taxes paid on phantom income as well as losses incurred by the victims of various Ponzi schemes.

Theft Loss Rule – Clarification of the Designation

As we understand, section 165 of the Code provides for deductions of losses, including losses from theft. Taxpayers affected by the growing number of Ponzi schemes have expressed some uncertainty regarding whether their losses should be recorded under section 165(c)(2) pertaining to losses incurred in a transaction for profit or section 165(c)(3) pertaining to losses from theft.

This is an important determination because if the losses are treated as having been incurred from transactions entered into for profit, there would be no casualty loss limitations imposed under section 165(h).

While we understand the IRS will not – nor should it – comment on issues specific to individual taxpayers or cases, we do seek overall guidance from your agency on the criteria used in determining how to classify these losses from Ponzi schemes. Clarification of this question by the IRS is important as the victims of these schemes are looking for relief.

Additionally, we seek guidance from the IRS on the criteria used in determining the classification of taxpayer losses in the Bayou Group Ponzi scheme, which until recently was the largest such fraud of this nature in American history.

Finally, we ask that you clarify that such losses be determined by an investor’s basis in the investment, including both invested principal and reported income not previously withdrawn, and if a taxpayer may carry back these losses three years and may carry forward the losses 20 years. This would allow the victims some ability to recover taxes on erroneously reported income, as well as some portion of their lost principal.

Theft Loss Rule -- Timeline for Claiming

Under Treasury regulations, a taxpayer may only claim a theft loss deduction after there is no reasonable chance of recovery of the funds.

This appears to mean that taxpayers who may be interested in claiming the theft loss deduction must first apply for any reimbursement or insurance, such as a claim from the Securities Investor Protection Corporation (SIPC), before being able to claim this deduction.

Is it possible for taxpayers (i) to reduce the amount of loss by any potential claim and take the remaining loss currently, or (ii) to waive any claim for reimbursement in order to get closure and to ensure they can utilize losses against income?

Additionally, as the process of unwinding the finances or filing of bankruptcy protections by the perpetrators of these frauds could add months – and likely even years – to any resolution of the question of reasonable chance of recovery, but the law only permits a three year carry back for losses from theft, it raises the question of whether the IRS stops the clock with respect to the three carry back upon determination of the theft.

There is concern that it will take many years, especially in the most complex cases, before any official determination can be made as to whether there is any chance of recoupment of funds for those victims of theft. This multi-year delay could rob these taxpayers of their ability to claim their rightful deduction under theft loss rules.

Taxes Paid on Capital Gains and Other Phantom Income

The law allows a taxpayer to file an amended Federal tax return dating back three years to take into account any taxes paid on any phantom gains, including capital gains or other income that never really existed.

We have been asked about the fairness of this three year limitation as there are many defrauded investors who had investments dating back more than three years, and who paid taxes on income that never existed. So we request that you provide explanation of the rationale behind limiting this carry back to three years, and if there is precedence in law or regulation for a taxpayer to seek redress for taxes incurred on phantom income dating back more than three years. For example, would the claim of right doctrine provide possible relief?

We appreciate your attention to this matter and look forward to working with you on this matter. Thank you.

Sincerely,

Joseph Crowley, Member of Congress

Anthony D. Weiner, Member of Congress