Dealing With Tax Problems In Maryland: A Primer For Taxpayers
If you live or work in Maryland and pay taxes there, it is likely to be nerve-wracking if you receive a letter from the comptroller of Maryland. A letter in your mailbox from the state of Maryland’s taxing authority could be confusing and worrisome for anyone.
You could be concerned that that the state will take your assets or revoke your driver’s license if you have failed to pay your tax debt. And, if you have also received a letter about past-due taxes from the IRS, you could be wondering which letter to respond to first.
While you might be anxious about your tax problems, the positive thing is that there is help.
A skilled tax lawyer like Attorney Sammy Kim has the knowledge and experience to help you solve not only your Maryland state tax problems, but also your IRS problems.
In resolving tax debt, tax audits, and other tax issues, it is both about what you know and who you know.
Attorney Sammy Kim knows the tax return reviewers who work at the Comptroller of Maryland. She can represent you in any tax matter — and could even help reduce the amount of taxes you have due.
Respond To All Tax-Related Letters In A Timely Manner
Whether you received a tax letter from the state of Maryland, from the IRS or both, the first thing to know is that you must respond to the letter(s) by the requested deadline.
Read any letter carefully and figure out what information is requested. Look to see if there are any rules to follow in replying to your specific letter and be sure to do exactly what it says.
Also, taxpayers often think that they should focus on the IRS matter and not worry about the state taxing authority.
However, tax problems in the state of Maryland and other states can be at least as urgent as IRS tax problems, so you need to make sure you respond to both.
A skilled Maryland tax attorney can help you handle all sorts of Maryland tax problems.
Here are some examples of tax problems and possible resolutions you might encounter:
Driver’s License Suspension
In Maryland, it is a common collection action for the state taxing authority to suspend your driver’s license and/or vehicle registration if you fail to pay your taxes.
If your Maryland driver’s license was suspended due to failure to pay your tax debt, the state will request a lump sum payment in order for you to get your license back.
The good news is that you don’t have to pay back the entire amount of taxes you owe in full to get your license back. What you need to do is work with the Comptroller of Maryland to pay a lump sum and begin the process of resolving your tax debt. A Maryland tax attorney can help you navigate the process.
Business License Suspension
The Maryland Business License agency in charge of issuing your specific license will check to see if you and your business have paid all taxes that are due when business licenses are being renewed periodically. Agencies will not renew a license if you have an unpaid tax liability with the Comptroller of Maryland and Motor Vehicle Administration, Department of Labor, Licensing, and Regulation, etc.
You need a valid license to operate and transact business in Maryland. No tax benefits may be extended to your business. Transacting business without a valid license will affect your contractors, employees, clients, and most importantly your reputation and your business.
Paying your tax bill in full is the quickest way to get your license back. But a good news is you don’t have to pay your tax debt in full all at once. You can still get your business license back if you enrolled in an official payment plan. The Comptroller’s Office will then notify the agency responsible for your license, so that it can be renewed.
If a tax liability itself is an issue, be sure to contact an experienced Maryland tax attorney to contest your tax debt.
Wage Levy Or Garnishment
Another action the state can take against you is called a wage levy or garnishment. That means that the Maryland Comptroller’s Office takes money out of your paycheck to pay your tax debt.
This action is awkward because your boss or HR director from work will know about it, as the state takes the action by contacting your workplace.
But, if you get help from a Maryland tax attorney, it is possible that you could get you wage garnishment modified, which means it could be reduced.
Business Bank Levy
If you own a business and fail to pay your taxes, the Comptroller of Maryland can add penalties and interest to start. If do not pay your taxes, they can issue a business bank levy.
A business bank levy means that the state can take money from your business bank account to pay back your unpaid back taxes.
A bank levy also freezes your account, making it impossible for you to pay your employee or vendors as you normally would.
A tax attorney with experience working with Maryland tax problems can help you make a proposal for payment plan so you can get your business up and running again.
Tax Lien
A tax lien is a legal claim the state or federal government can make on your property.
Similar to the IRS, the state of Maryland can issue a tax lien on your home, car or other property to satisfy the taxes you have due. What’s more, Maryland won’t release a lien on your property until your tax debt is paid in full. The longer it takes to release the lien, the harder it can be to keep interested buyers waiting to purchase.
If you work with a Maryland tax attorney, they can help you deal with the state of Maryland and the IRS to try to have the lien released so you can sell your property.
Full Payment Plan
When you can’t afford to pay the full amount of your Virginia taxes due at one time, a tax attorney can help you negotiate a payment plan so you can pay it over time. One positive thing is that the Comptroller of Maryland is often open to extending the repayment period when a taxpayer cannot afford a bigger monthly payment.
At the Law Offices of Sammy Kim, we have seen payment plans extended for as long as 99 months.
Partial Pay Payment Plan
Under a partial payment plan in Maryland, you pay a lower amount back to the state on a monthly basis. A tax attorney can help you gather all the detailed financial information you need to arrange a partial pay payment plan.
That involves filling out a form called MD Form 433-A, which tracks the IRS form of the same name and includes the taxpayer’s assets, income and monthly expenses are obtained to calculate an ability to pay.
Based on your financial information, the state will assess your ability to pay and decide how much you need to pay per month. Penalties and interest will continue to accrue on the unpaid balance while you continue to make your monthly payments.
At the end of the agreement term, the remainder due will either need to be paid as a balloon payment or could be abated, depending on your circumstances.
Offer In Compromise
An Offer in Compromise (OIC) is an arrangement with the state of Maryland that allows you to pay less tax than the amount you owe.
In Maryland, the Office of the Comptroller will not consider an OIC if your tax liability is relatively new. You must begin by making other payment arrangements.
If you receive a tax assessment from the state of Maryland, you must wait two years before applying for an OIC. Otherwise, your application won’t even be reviewed at all.
Work with a state tax attorney to gather the required information and argue your case for an OIC.
Maryland Tax Audits
Attorney Sammy Kim has represented many people in Maryland tax audits. These audits include payroll tax audits, income tax audits and Sales & Use tax audits.
Successfully resolving a tax audit requires a tax attorney who is familiar with the Code of Maryland Regulations (COMAR) and Tax Rulings of the Maryland Tax Court, Tax Bulletins, Attorney General Opinions and Legislative Summaries, and can use all of that to support your case.
A tax lawyer can represent you, build your case and help you pay less to the state. For complicated cases or when there are accusations of tax fraud against you, it is especially critical to hire a tax attorney.
Sales and Use Tax Return And Economic Nexus for Businesses
Under Maryland law, out-of-state vendors with more than $100,000 in sales or at least 200 separate transactions with Maryland residents are required to register and collect sales tax. (COMAR 03.06.01.33(B)(5))
For a business located anywhere that establishes an economic nexus with the state of Maryland, you must register to pay sales and use tax.
A tax attorney can help ensure you are in compliance with all business tax rules.Talk to a Maryland tax lawyer to get help with your tax problems now
Sammy Kim
IRS and State Tax Lawyer
Sammy helps clients handle tax issues with the federal or state tax authorities, including negotiating offers in compromise and installment agreements, reducing or eliminating tax debt, releasing wage levies, business bank levies, and tax liens, and relieving tax penalties for failure to pay. She knows how to navigate the administrative channels and when to escalate the matter when the IRS does not agree with your position.
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