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2009 Maryland Tax Amnesty Summary

The Maryland Tax Amnesty for 2009 officially ended on October 30, 2009, but if you missed the deadline you may still be able to negotiate payments and reduce your penalties for past due taxes.   For instance, you may be able to use a Voluntary Disclosure Agreement. Please contact my office for more information.

Updated 5/19/2009, Following publication, the Maryland Comptroller’s Office announced early filings and payments will not be eligible for amnesty. The Comptroller’s Office is drafting an official amnesty application. Payments “under protest” for contested liabilities are eligible for amnesty if otherwise meeting the amnesty requirements. To receive notice when the Comptroller issues the amnesty application or further updates, please feel free to e-mail me.

The 2009 Maryland Tax Amnesty bill was signed into law on May 7, 2009, but the Maryland Comptroller’s Office will need to consider certain policy issues regarding its implementation. One obvious question Maryland tax attorneys and tax accountants are asking is, “What if you file prior to the Maryland Tax Amnesty period?”

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Maryland Senate Proposes Tax Amnesty

Updated: I now provide a new article summarizing the final Maryland tax amnesty bill being sent to the governor and some policy issues the Maryland Comptroller will likely consider given the bill’s delayed implementation date. 

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Maryland Pressing to Tax Internet Sales

The Maryland Senate jumped on the Amazon tax bandwagon despite disappointing revenues and damaging results for a prior enactor. The bill targets Amazon and select others who states portray as state tax scofflaws.

Because companies such as Amazon lack direct physical presence in Maryland, the U.S. Supreme Court’s 1992 Quill ruling does not permit Maryland to require these Internet-based companies to collect Maryland sales tax. Despite having no physical presence, states can confer physical presence if a state can establish a formal relationship between the company and an in-state agent, representative, or salesperson. Maryland seeks to require Amazon and similar companies to collect Maryland sales tax based upon its relationship to its Maryland “affiliates”.

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California to Slash and Burn Amazon As Well

Taking its cue from New York, California introduced legislation to require online retailers with no physical presence to collect sales tax for sales into the state. The California bill, Assembly Bill 178, resembles a similar New York statute that, thus far, has passed constitutional muster at least with the local judiciary.

States have been seeking to get their claws into Amazon and similar retailers for a decade. States argue that the increased prevalence of Internet merchants and their cannibalization of sales by brick-and-mortar local merchants has reduced sales tax revenues.

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Additional States Require Pass-Through Entity Withholding

The states of Massachusetts and Illinois recently enacted withholding requirements for flow-through entities. These states joined a score of states that enacted similar measures to prevent nonresident partners, members and shareholders from avoiding their personal filing requirements.

The current list of states with similar withholding requirements include: California, Colorado, Georgia, Indiana, Kansas, Kentucky, Michigan, Minnesota, Missouri, Nebraska, New Jersey, New Mexico, New York, North Carolina, North Dakota, Oklahoma, Oregon, Pennsylvania, South Carolina, Virginia, and Wisconsin.

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States Increasingly Audit for Unclaimed Property

Because of the political hurdles typically constraining states from raising taxes, many have turned to raising revenues via laws already on the books. While audit fears generally cause companies to comply with other tax laws, many are unaware of their business’s obligations regarding unclaimed property, also referred to as “abandoned property”.

Because of the political hurdles typically constraining states from raising taxes, many have turned to raising revenues via laws already on the books. While audit fears generally cause companies to comply with other tax laws, many are unaware of their business’s obligations regarding unclaimed property, also referred to as “abandoned property”.

Many states in the past selectively enforced such laws, concentrating on financial institutions where abandoned accounts, safety deposit boxes, and uncashed dividend checks produced significant bangs for their audit bucks. Increasingly; however, states have turned to other sources, such as hospitals, and have increased enforcement against companies with large or transient payrolls that may fail to report uncashed payroll checks.

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