Maryland Tax Amnesty Program Signed Into Law

On April 14, 2015, Maryland Governor Larry Hogan signed legislation enacting a tax amnesty for certain civil and criminal penalties and interest relating to state and local income, withholding, sales and use, and admissions and amusement taxes.

Who is eligible?

The new legislation benefits those taxpayers who wish to come into compliance with their Maryland tax obligations. The amnesty program does not apply to any taxpayer that was:

1. granted amnesty under a Maryland tax amnesty program held between calendar years 1999 and 2014 or
2. eligible for the July 1, 2004 through November 1, 2004 settlement period for tax periods prior to tax year 2003.

When is the amnesty period?

The amnesty period for certain delinquent taxpayers is from September 1, 2015 through October 30, 2015.

What are the benefits of participating in the amnesty program?

Waiver of civil penalties and interest

The Comptroller shall waive all civil penalties (except previously assessed fraud penalties) and one-half the interest imposed against the taxpayer attributable to the nonpayment, nonreporting, or underreporting of income taxes, withholding taxes, sales and use taxes, or admissions and amusement taxes that are paid during the amnesty period.

Waiver of criminal penalties

A taxpayer may not be charged with a criminal tax offense arising out of any return filed and tax paid during the amnesty period. Note that amnesty from criminal tax offenses arising out of any return filed and tax paid during the amnesty period or in accordance with an agreement does not apply to any criminal charges pending in the Maryland state courts or under investigation by an office with the constitutional authority to prosecute a person for violation of criminal laws (e.g., the Office of the Attorney General of Maryland, the Office of the State Prosecutor, and the Office of the State’s Attorney for any of the political subdivisions of the state, but not the Office of the Comptroller).

The Takeaway

It is critical that taxpayers affected by this new legislation take advantage of this window of opportunity to come into compliance with their Maryland tax obligations and to take advantage of the waiver.