Maryland Taxing Information
Attachment of Assets or Wages
Once a lien has been filed the Comptroller of Maryland may request seizure of wages or assets through the issuance of an attachment. Wages, bank accounts, cash, equipment, inventory and other real property may be attached and seized to satisfy your delinquent tax bill.
Enforced Collection Actions
You may be subject to enforced actions if you do not pay your tax bill on time or you fail to arrange a payment agreement with the state of Maryland. Enforced actions may include filing liens, garnishing wages, attaching your bank accounts and assets and holding up the renewal of state-issued licenses.
Caught in the Web
The Comptroller of Maryland takes tax obligations very seriously and publishes an online list of individuals, business and corporate officers who have large unresolved tax debt. Liens and judgments have been recorded against the delinquent taxpayers in one or more circuit courts in Maryland making the information public.
Hearings % Appeals
You have the right to appeal an assessed tax, penalty or interest or a refund denial. You may dispute a notice of assessment from the Comptroller's Office by filing an appeal within 30 days of the mailing of the notice. The first step in the appeal process will be an informal hearing.
Vendors who fail to remit sales and use tax to the comptroller may be issued a summons to a hearing regarding their licenses. If you fail to appear at the hearing or fail to pay the taxes or make payment arrangements, your license will be revoked. Without a license most vendors cannot stay in business. License revocations are enforced through local liquor boards, civil court orders or criminal process.
If you do not make scheduled payments on time, or if you refuse to make arrangements for payment of your tax debt, a lien may be filed against you. A lien is a public notice that secures the state's interest and allows for enforced collections to satisfy the debt. A lien may negatively affect your credit and ability to purchase or sell real estate.
Offer in Compromise
If you are unable to pay your tax liability in full and have been unsuccessful in all other attempts to resolve the liability, you may qualify for an offer in compromise. The Offer in Compromise Program is not an appeal of your liability, but rather a reduction or abatement of the amount due.
The Comptroller's Office will review the offer and determine if there are sufficient grounds for a reduction or abatement of your liability, which will allow you to pay less than the full amount due. If it is determined that there is a basis for adjustment but your offer is not enough, you will be advised as to an acceptable amount. The following circumstances are considered when reviewing an offer:
- Doubt as to liability – you don't believe you owe the amount due.
- Insufficient resources – your assets or income are not enough to pay the full amount..
- Economic or other hardship – when you have sufficient assets, but full payment would cause you an economic hardship or would be unfair and inequitable.
In order to be eligible for the Offer in Compromise program you must meet the following requirements:
- You have incurred a delinquent tax liability that has resulted in an assessment.
- You have attempted all other possibilities of administrative appeal.
- You cannot make an offer in compromise if there is any matter remaining that can be appealed.
- Two years must have passed since you became liable for the tax.
- You must be up to date with all returns filed or required to be filed to the Comptroller's Office.
- You may not be presently involved in an open bankruptcy proceeding.
- Your financial situation makes in unlikely that you will be able to pay the liability in the foreseeable future.
- You do not have sufficient assets or resources to pay the liability and are unable to apply present or future resources to the liability.
If you do not pay your entire income tax bill on time a Personal Income Tax Balance Due Notice will be sent to you. You can request a payment plan for tax debt online or through the Collections Section. A lengthy payment plan will usually require the state to file a lien in the appropriate circuit court.
For businesses that have acquired a tax debt and are unable to pay the balance immediately, a payment plan may be requested. Generally, payment plans need to be short-term (less than 6 months). For short-term arrangements, the Comptroller's Office will usually not require a lien to be filed. During the time that you are under a payment arrangement, disbursements such as refunds that are due to your business will be taken and applied to your outstanding balance.
If you are requesting a payment plan that exceeds 6 months, a supervisor in the Collections Section will be required to review and approve the plan. A lien may be filed as well, to secure the interest of the state.
Late filing or late payment of both individual and business taxes may be subject to additional penalties and interest charges that will be added to your tax bill.
Sales and use tax, admissions and amusement tax or tire recycling fees that are filed late are subject to a 10% penalty and interest of not less than 1% per month. You will also be disqualified for the timely filing discount for vendors.
Late withholding returns are subject to an initial 5% penalty, which increases to 10% after 30 days, plus interest.
If you do not file a return after receiving a notice, additional penalties may be applied and an estimated assessment may be levied. You have 30 days to respond to the assessment notice and request a hearing to dispute the liability. If you do not dispute the liability the assessment becomes final and the collection process may begin.
The Maryland Office of the Comptroller may assess a penalty of up to 25 percent of what you owe and interest of 13 percent per year on delinquent taxes.
The president, vice president, treasurer or any other officer who owns 20 percent of a corporation may be held personally liable for unpaid sales and use taxes or penalties and interest owed by the corporation. Additionally, any officer who is responsible for the direct control of an organization's finances may be held personally liable for withholding and admissions and amusement taxes along with penalties and interest.
Bankruptcy of the business does not avoid the payment of business taxes and if a business is in bankruptcy the owners and specified corporate officers are personally responsible for the taxes.
You may choose to have an authorized person represent you for Maryland tax purposes by filing a completed federal Form 2848 (Power of Attorney and Declaration of Representative) or Form 8821 (Tax Information Authorization).