Tax amnesty program returns after six-year hiatus

Starting Sept. 1, Marylanders who owe taxes to the state may be eligible to pay that money without penalties and pay only half of any interest associated with those unpaid bills.

The state is expected to bring in an estimated $11.4 million in fiscal year 2016 from the tax amnesty program, an estimate likely on the low-end based on past programs, said Michelle Byrnie-Parker, interim communications director for the state Office of Comptroller.

The state last offered a tax amnesty program in 2009, which brought in $38.9 million. The 2001 program brought in $39.4 million, and the first program, in 1987, brought in $34.6 million.

Tax amnesty programs are set by the General Assembly. This year’s bill took effect on June 1.

While amnesty programs can help the state fill budget gaps, Comptroller Peter Franchot said he was worried that the increased frequency of tax amnesty programs reward “bad behavior.”

Delinquent taxpayers, both businesses and individual households, owe the state some $800 million in back taxes, according to the comptroller’s office.

“Used sparingly, a tax amnesty makes sense, but anything less than 10 years should be avoided,” Franchot said in an interview Monday. “The trend is going in the wrong direction.”

The state has tracked down $4 billion in unpaid taxes the past eight years through various programs, including not allowing people to renew drivers’ licenses or obtain business licenses unless their taxes are paid.

Baltimore tax attorney Stanley H. Block has been spreading the word about the tax amnesty period, which ends on Oct. 30. Block said Monday that he has thousands of clients who may benefit from the state program.

“I think it’s of great importance that we notify as many Maryland people as we can,” said Block.

While the state did not have an estimate of how many people may benefit from the amnesty program, Block estimated that “hundreds of thousands” of people across the state may be eligible.

“Sometimes people let it go for a while and they don’t understand that the interest rate is 13 percent on unpaid taxes,” he said.

If someone owes five or six years’-worth of taxes, the penalties and interest may exceed the amount owed in taxes, said Block.

For this year’s program, tax liabilities for returns due on or before Dec. 31, 2014, are covered. Anyone who used the 2001 or 2009 amnesty program is not eligible to participate this year. Taxpayers under criminal investigation by the state and those who have pending criminal charges are not eligible for amnesty for the given tax period.

Taxpayers can find out how much money they owe by going to www.marylandtaxes.com, clicking on the Amnesty page and then BillPay. There’s also an interest table on the Comptroller’s website.