Maryland’s scofflaws have the next two months to pay off back taxes without penalties and with interest rates cut in half, as the cash-strapped state tries to generate more income.
Gov. Martin O’Malley said Monday that Maryland residents who owe income taxes, corporate income taxes, withholding taxes, sales and use taxes, and admissions and amusement taxes would get a break from Sept. 1 through Oct. 31. The Maryland General Assembly approved the program during its last legislative session.
» The District’s chief financial officer has the authority to hold a tax amnesty program during the next fiscal year, but has not announced any plans to do so.
» Virginia is planning a tax amnesty this fiscal year, the details of which haven’t been announced.
» Maryland has 177,000 delinquent individual income tax accounts and 18,000 delinquent business tax accounts.
But the path to financial redemption may be dangerous to those who owe similar types of back taxes to the Internal Revenue Service, which isn’t offering a tax amnesty. The state may share newly filed tax information with the IRS, giving prosecutors the tools to go after those who are delinquent in paying Uncle Sam, said Jeffrey Katz, a Bethesda tax lawyer.
“If it’s an income tax issue, if you’re going to have a state liability you’re likely to have a federal liability as well,” Katz said. “There may be some traps for the unwary.”
He added that those rushing to file state tax returns to take advantage of the tax amnesty need to file with the IRS as well to avoid any problems.
The Maryland Comptroller’s Office won’t “automatically” share tax informationobtain through the amnesty program with the federal government, but the state does “in general” have a number of information-sharing agreements with the IRS, said Joseph Shapiro, director of the comptroller’s communications office.
Comptroller Peter Franchot told WBAL News in Baltimore that the amnesty was a “get out of jail free card for all of the tax cheats in Maryland that have been ducking their responsibility.”
Shapiro said the amnesty program was coming too soon on the heels of the last amnesty program in 2001.
That year the state raised $39.5 million through; this year officials predict the state would generate between $10 million to $20 million. Taxpayers who took advantage of the 2001 amnesty are ineligible for this year’s program.
Lawmakers on Monday praised the amnesty as a way to help “individuals, families and small businesses who may have fallen behind.”
“It gives families and businesses that have fallen behind as a result of the global recession a one-time opportunity to avoid penalties, and the state and opportunity to collect sorely-needed revenue,” said Senate President Thomas V. Mike Miller Jr., D-Calvert.
