Twice “Berned”

Those who were fleeced by Bernie Madoff want some money back…from the state of NJ.
Bert Ross, a lawyer, real estate investor and the former Englewood Mayor lost 5 million dollars in the alleged Ponzi scheme and paid 75 thousand dollars to the state in taxes on “phantom” income over the past three years. But reclaiming the money won’t be easy in New Jersey!
On February 20th the NJ Division of Taxation posted a “Ponzi Scheme and Amended Returns” notice on its website. It says the state is “…not accepting amended returns with regard to Bernie Madoff or other alleged Ponzi schemes.” It advises taxpayers to claim a loss of investment that can be taken against capital gains in the year of the loss. Since Ross (like many others) has no capital gains in 2008, he would get nothing.
Sixty-six year old Bert Ross feels cheated – twice. Governor Corzine’s staffer told me that they saw the piece on NJN, and Ross is hopeful that the state will reverse its policy. The notice is actually no longer on the website. But the budget is taking precedence and no official action has been taken.
Madoff victims are also awaiting, so far in vain, pre-April 15th instructions from the IRS. Will they be able to amend returns this year? Will the state of New Jersey change its stated policy and give “Berned” investors a break?