United States

Maryland enacts tax amnesty program

Program opens Sept. 1, 2015

TAX ALERT  | 

On April 14, 2014, Maryland enacted SB 763, creating a tax amnesty program applicable to state and local corporate and individual income, withholding, sales and use, and admissions and amusement taxes that will run from Sept. 1, 2015, to Oct. 30, 2015.

Pursuant to the amnesty legislation, the Maryland Comptroller is required to waive all civil penalties other than previously assessed fraud penalties and 50 percent of the interest imposed against a taxpayer who failed to file a required return or pay the appropriate amount of tax due on or before Dec. 31, 2014. This mandatory waiver applies to a taxpayer only if, during the amnesty period, the taxpayer:

  • Files a delinquent return and pays the full amount of the tax due, including 50 percent of any interest calculated,
  • Pays the full amount of tax due and unpaid with a previously filed return, plus 50 percent of any interest calculated, or
  • At the comptroller's discretion, enters into an agreement with the comptroller to pay the tax due, including 50 percent of any interest calculated, on or before Dec. 31, 2016, and in strict accordance with the terms and schedule established in the agreement, with the exception that any additional interest accruing on amounts outstanding for periods after Oct. 30, 2015, will not be eligible for the 50 percent waiver.

Additionally, a taxpayer that meets any of these requirements will not be charged with a criminal tax offense. However, the amnesty provisions for criminal tax offenses will not apply to any criminal charges pending in the Maryland state courts or under investigation by an office with the constitutional authority to prosecute a person for violation of criminal laws, including the Office of the Attorney General of Maryland, the Office of the State Prosecutor, and the Office of the State's Attorney for any of the political subdivisions of the state, but not including the Office of the Comptroller.

This amnesty program does not apply to any taxpayer who was either granted amnesty under a Maryland tax amnesty program held between calendar year 1999 and calendar year 2014; or was eligible for the July 1, 2004, through Nov. 1, 2004, settlement period for tax periods prior to tax year 2003.

Nonfilers and taxpayers that underreported or underpaid covered Maryland state and local tax liabilities should review the terms of this amnesty, and should consider taking advantage of its provisions. However, in determining whether to participate in this amnesty program, it is important to compare amnesty benefits to the benefits that can be obtained by entering into a voluntary disclosure agreement (VDA) with the state. For example, the amnesty does not provide a limited look-back period, while a three- or four-year look-back period can be obtained through the VDA process. This difference could substantially reduce the benefit of amnesty participation for taxpayers with more than three or four years of exposure.

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