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Maryland Senate Proposes Tax Amnesty

April.13.2009

Updated: I now provide a new article summarizing the final Maryland tax amnesty bill being sent to the governor and some policy issues the Maryland Comptroller will likely consider given the bill’s delayed implementation date. 

Updated: The Maryland General Assembly passed the tax amnesty bill with the amendments noted below.  The governor is expected to sign. Taxpayers with tax liabilities should take advantage of this rare opportunity. In particular, out-of-state businesses not currently filing in Maryland should contact an advisor to resolve any possible Maryland tax issues.

Updated: The Maryland Senate seems to be sweetening the tax amnesty deal. Senate Bill 552, now in its third reading, will subject amnesty taxpayers to neither penalties nor interest, rather than half interest. Added to the bill, however, is a clause excluding taxpayers eligible for the 2004 Settlement Period following the SYL and Crown Cork & Seal rulings.

Updated: The Maryland senate gave preliminary approval of the tax amnesty bill on March 24, 2009. Maryland last granted a tax amnesty period in 2001. Favoring the bill’s passage, Maryland certainly needs cash and New Jersey recently approved similar legislation.

Feb 14, 2009 – The Maryland State Senate recently proposed a tax amnesty “applicable to the Maryland State and local income tax, withholding taxes, sales and use taxes, and admissions and amusement.” According to the current draft, the amnesty period would be between September 1, 2009 and October 31, 2009. The measure is largely an attempt to bring immediate revenue that companies may have either delayed reporting or never reported.

This bill, like most amnesties, allows the taxpayer certain benefits. If the bill is passed the taxpayer will be able to file delinquent returns without incurring civil penalties and paying only half of the interest due. In addition to the civil penalties and half-interest benefit, criminal penalties cannot be applied so long the taxpayer complies with their agreement, including their agreement’s required payment schedule.

But Wal-Mart tax department, before you get too excited, the amnesty is limited to companies with fewer than 500 employees in the United States. Companies considered part of a “corporate group”, as defined therein, must count its corporate group’s employees.

The proposal is Senate Bill 552 and can be seen on the Maryland Assembly website.

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