United States: State & Local Tax Alert - April 21, 2015

Maryland Enacts Tax Amnesty Program to Begin September 1, 2015

Maryland has enacted legislation requiring the Maryland Comptroller to establish a tax amnesty program to be held from September 1 to October 30, 2015.1 The tax amnesty program applies to state and local income tax, withholding taxes, sales and use taxes, and admissions and amusement taxes.2 If the taxpayer complies with the amnesty program requirements, the Comptroller will waive all civil penalties (except previously assessed fraud penalties) and one-half of the interest imposed against the taxpayer.3

Operation of Program

The Comptroller's waiver of penalties and one-half of the interest applies to the nonreporting, underreporting and nonpayment of tax liability.4 Taxpayers are eligible to participate in the amnesty program if they failed to file a return or pay the tax by December 31, 2014.5

To receive the benefits of the program, the taxpayer must do the following during the amnesty period: (i) file a delinquent return and pay the tax, including one-half of any interest, due under the return; or (ii) pay the tax, plus one-half of the interest, due on a previously filed return.6 With respect to delinquent tax due under a return filed during the amnesty period or under a previously filed return, a taxpayer may receive amnesty if it pays the tax and one-half of the interest pursuant to a payment agreement (see below). In general, a taxpayer may not be charged with a criminal tax offense arising out of any return filed and tax paid during the amnesty period or pursuant to a payment agreement if the taxpayer satisfies the amnesty program requirements.7

Payment Agreements

The Comptroller is authorized to enter into an agreement with a taxpayer to grant amnesty for taxes that are not paid in full during the amnesty period but the taxpayer agrees to pay according to the established terms and schedule.8 While the Comptroller is free to set most of the terms and schedule of this agreement, full payment of the delinquent tax plus one-half of the interest must be made by December 31, 2016.9 The waiver of civil penalties and interest is void if the taxpayer fails to make the payments strictly in accordance with the terms and schedule established in the agreement.10 The waiver of one-half of the interest does not apply to interest accruing on unpaid taxes for periods after October 30, 2015.11

Limitations

The amnesty program does not apply to (i) any taxpayer that was granted amnesty under previous Maryland tax amnesty programs held between calendar years 1999 through 2014; and (ii) any taxpayer eligible for the July 1, 2004 through November 1, 2004 intangible holding company settlement period (relating to issues determined in Crown Cork & Seal)12 for tax periods prior to tax year 2003.13 Also, the amnesty from criminal charges does not apply to (i) any criminal charges pending in Maryland courts; or (ii) any criminal charges under investigation by an office with the constitutional authority to prosecute a person for violating criminal laws.14 Except as provided above, the Comptroller is not authorized to waive any interest charges or previously assessed fraud penalties.15

Commentary

Taxpayers who believe they owe any Maryland taxes should consider participating in this amnesty program as a means to avoid the imposition of civil penalties and one-half of the interest at a later date. While the legislation contains the general provisions of the amnesty program, the Comptroller is expected to release more detailed guidelines before the program begins in September.

This Maryland tax compliance initiative is the latest of a series of tax compliance programs, including general tax amnesty programs in 1987, 2001 and 2009.16 The 2015 amnesty program will be available to corporations as well as individuals for a wide variety of taxes. Unlike the amnesty programs administered in most states, Maryland allows taxpayers to use a payment plan. Note that taxpayers that have participated in Maryland amnesty programs since 1999 are ineligible to participate in the program. Also, any taxpayers that were eligible for the intangible holding company settlement period in 2004 cannot receive amnesty. Apparently, this limitation applies whether or not the taxpayer actually participated in that amnesty program, and is in line with the stance taken by the Comptroller in Crown Cork & Seal, as well as a series of more recent high-profile tax controversies with companies that utilized intangible holding companies in Maryland in the 1990s and early-2000s.

Footnotes

1 Ch. 50 (S.B. 763), Laws 2015, effective June 1, 2015.

2 S.B. 763, § 1(b).

3 S.B. 763, § 2(a)(1).

4 S.B. 763, § 1(c).

5 S.B. 763, § 2(a)(1).

6 Id.

7 S.B. 763, § 2(b)(1).

8 S.B. 763, § 2(a)(2)(i).

9 S.B. 763, § 2(a)(2)(iii).

10 S.B. 763, § 2(a)(2)(iv).

11 Id.

12 Under Ch. 557 (S.B. 187), Laws 2004, a settlement period applied to the Maryland corporate income tax based on issues that were decided by the Maryland Court of Appeals in Comptroller of the Treasury v. SYL, Inc. and Comptroller of the Treasury v. Crown Cork & Seal Co. (Delaware), Inc., 825 A.2d 399 (Md. 2003). In these combined cases, corporate subsidiaries licensed trademarks to parent companies that did business in Maryland. The Court held that the subsidiaries had nexus with Maryland even though they did not do business in the state or own property in the state. During the settlement period, a taxpayer was able to elect whether to have additional income tax calculated as though otherwise deductible payments were added back to the paying taxpayer's federal taxable income, or as though the receiving taxpayer were subject to the Maryland corporate income tax.

13 S.B. 763, § 2(a)(3).

14 S.B. 763, § 2(b)(2). An office with constitutional authority to prosecute a person for violating criminal laws includes the Office of the Attorney General of Maryland, the Office of the State Prosecutor, and the Office of the State's Attorney for any Maryland political subdivision. However, the term does not include the Office of Comptroller. S.B. 763, § 2(b)(3).

15 S.B. 763, § 2(c).

16 Fiscal and Policy Note for S.B. 763, Maryland Department of Legislative Services, revised March 25, 2015. According to the Fiscal and Policy Note, these initiatives include: (i) tax clearance requirements for vehicle registration and driver's license renewals; (ii) an income tax refund intercept program including reciprocal agreements with the IRS and other states; (iii) tax clearance requirements for virtually all business licenses; (iv) a federal vendor offset program; (v) direct salary attachment for all taxes; (vi) new or enhanced withholding from direct payments including gambling winnings, lump-sum distributions, and nonresident realty sales; and (vii) limiting withholding exemptions under certain circumstances.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions