The State of Maryland is flexible, like the IRS, by offering tax solutions if you need an extension to file, you need to pay your taxes over time, or you are having serious financial issues that you do not think you can pay off all your taxes. If you have a serious IRS or state tax problem, always consult a tax professional such as a CPA, tax attorney, Enrolled Agent, or former IRS agent.
If you owe the State of Maryland taxes and cannot pay, one option is set up a tax payment plan. A payment agreement is very much like an IRS Installment Agreement where you will pay your taxes off over time. When you file your tax return, be sure to pay as much as you can in order to reduce penalties and interest. The state will normally send you a notice of any remaining taxes you owe with options to set up a payment plan (continue to make payments as you wait by putting your Social Security number and the tax year the payment is for). Alternatively, you can set up this payment agreement online after you get your first notice. If you still can’t comply with the payment options provided to you, call the Collection Section at 410-974-2432 for help or speak to a tax professional such as a CPA or Tax Attorney. If you fail to pay, the state can charge you 13% interest per year with up to 25% in penalties for late payments so it is better to address the situation as soon as possible.
An Offer In Compromise is a way you can negate a part of your tax liabilities with the State of Maryland. Unfortunately, obtaining this form of tax settlement comes only after other means to resolve the balance have been exhausted and you are reasonably unable to pay your tax liabilities whether it be the Income Tax, Sales Tax, Use Tax, or Amusement and Admissions tax. To apply for an OIC you would submit form MD 656. Typically, just with the IRS, you will need to MD656 and a Collection Information Statement 433-A individuals or 433-b for businesses. A Collection Information Statement describes your assets, liabilities, and income so your financial situation can be assessed. With the IRS, they require you to pay your “reasonable collection potential,” or make an offer that both you and the State agree on can be collected without causing severe financial hardship. OICs are rarely accepted, as you have no right to pay less than you owe because it is up to the State, but it is a possibility.
If you complete your return and you find you are unable to pay the taxes, still file a tax return! If you do not owe any taxes by April 15th, you can request an extension to file a 502, 503, 505 or 515 for up to six months of the April 15th deadline on the web, or by calling the Maryland Revenue Administration Division at 1-800-260-3664. If you are unsure if you owe, use form 502E to figure out whether you owe or not (if you don’t owe, don’t send in form 502E). In some cases, if you are abroad, you can request an extension of up to a year. If you received an IRS filing extension and you do not owe the State of MD, you automatically will get a 6-month extension to file your Maryland State tax return (MD will compare records with the IRS). However, if you do owe MD state taxes, you will need to pay those taxes (postmarked by 4/15) and include form 502E. If you are doing it online, you can pay with a credit card or debit card. Remember, an extension to file is not an extension to pay.
Our partner’s tax attorney team may be able to help you resolve Maryland State and Federal tax issues. Sometimes having a professional on your side who works as a liaison with the State can bring you a better outcome then if you tried to handle the situation yourself. It is also better to tackle the situation as early as possible in order to prevent penalties, interest, levies, and liens. If you have a tax lien placed on your property by the State, or you are facing wage garnishment or a bank levy, connect with our partner team comprised of tax attorneys and CPAs who can help you resolve and settle your tax problems once and for all. Get a free, no-obligation, consultation today by calling or using the form.
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