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Tax judgment liens never expire, Md. court says

State had waited more than 12 years to enforce lien

In a victory for the state tax collector, a Maryland appeals court has held that a tax judgment lien never expires.

The Court of Special Appeals rendered its decision in overturning a circuit court ruling that the state comptroller’s office went too long — more than 12 years — without enforcing a lien against Montgomery County resident Kenneth R. Shipe for unpaid income taxes from the late 20th century.

The intermediate court said the state’s dozen-year statute of limitations for private judgment liens does not apply to taxes owed to Maryland.

In its 3-0 decision, the court cited the constitutional provision giving the Maryland government immunity from statutes of limitation unless the applicable law, in this case the Tax-General Article, states otherwise.

Section 13-806 of the law “does not waive the state’s immunity and clearly indicates that a tax lien ‘continues to the date on which the lien is: (1) satisfied; or (2) released by the tax collector….,’” Judge Michele D. Hotten wrote for the Court of Special Appeals.

The law also “makes it clear that the General Assembly did not intend for there to be a specific statutory period … and that it was in the tax collector, or, in this case, the state’s discretion to release the lien ‘by reason of lapse of time’ or [as] ‘uncollectable,’” Hotten added.

Comptroller Peter V.R. Franchot said, through a spokesman, that he is “pleased with the ruling and the successful outcome of the Shipe case.”

Shipe’s lead attorney, Glenn M. Anderson, said Friday that he and his client have not yet decided whether to seek review by Maryland’s top court, the Court of Appeals.

In any event, Anderson said he continues to believe Maryland’s comptroller has limited time to enforce a lien, much as the U.S. Internal Revenue Service has 10 years to collect a federal tax. This belief is based on the state legislature’s effort to model its tax code after the federal government’s, he added.

“It’s apparent that the General Assembly intended to impose time limitations on the comptroller,” said Anderson, of Miller, Miller & Canby Chtd. in Rockville. “The Court of Special Appeals came up with a contrary conclusion.”

The Montgomery County Circuit Court ruled in December 2013 that Shipe did not owe $2,111.70 in unpaid taxes (plus interest and penalties) for 1997 and 1998. The trial court noted that just over 12 years had passed between the comptroller’s recording of the tax judgment lien in May 2001 and Shipe’s motion to release the lien in June 2013.

Franchot then sought review by the Court of Special Appeals, which heard arguments in the case on Jan. 8 and rendered its decision Tuesday. The court’s decision placed Shipe’s tax debt at $3,543.17 based on the $2,111.70 principal, $793.54 in interest and $637.93 in penalties.

Hotten was joined in the opinion by judges Patrick L. Woodward and Raymond G. Thieme Jr., a retired jurist sitting by special assignment.

The case is State of Maryland, Comptroller of Maryland v. Kenneth R. Shipe, No. 9 September Term 2014.