Starting September 1, 2015, the Comptroller of Maryland (Comptroller) will offer qualifying taxpayers that failed to file or pay certain taxes an opportunity to remit tax under very attractive penalty and interest terms. The 2015 Tax Amnesty Program (Program) is the first offered in Maryland since 2009, when the state raised nearly $30 million, not including approximately $20 million collected the following year under approved payment plans. The amnesty program offered before that (in 2001) brought in $39.4 million. Consistent with the Maryland amnesty programs offered in the past, the Program will apply to the state and local individual income tax, corporate income tax, withholding taxes, sales and use taxes, and admissions and amusement taxes.
The Program was made law by Governor Larry Hogan when he signed Senate Bill 763, available here, after two months of deliberation in the legislature. While the Program is scheduled to run through October 30, 2015, the Comptroller has a history of informally extending these programs beyond their codified period. For companies that are nervous about potential assessments following the Gore and ConAgra decisions, the amnesty offers an opportunity that should be evaluated.
The Program’s main benefits include:
- Waiver of 50 percent of the interest;
- Waiver of all civil penalties (except previously assessed fraud penalties); and
- A bar on all criminal prosecutions arising from filing the delinquent return unless the charge is already pending or under investigation by a state prosecutor.
The Program is open to almost all businesses, even if under audit or in litigation. The statute provides for only two classifications of taxpayers that do not qualify:
- Taxpayers granted amnesty under a Maryland Amnesty Program held between 1999-2014; and
- Taxpayers eligible for the 2004 post-SYL settlement period relating to Delaware Holding Companies.
Because the Program’s enacting statute does not prohibit participants from being under audit, or even those engaged in litigation with the Comptroller, even taxpayers with known issues and controversy may find the amnesty an attractive vehicle to reach resolution of a controversy with the state.
Because the range of taxpayers eligible for the Program is so broad, we encourage all businesses to evaluate whether participation will benefit them. Given that past Maryland amnesty programs excluded taxpayers over a certain size (based on employee count), large companies who were not able to resolve uncertain exposure in the state should evaluate this new offering. If your business is currently under audit (or concerned about any tax obligations from previous years), please contact the authors to evaluate whether the Program is right for you.