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Maryland Tax Law Blog

A closer look at the enforcement options Maryland uses to collect tax debt - II

Earlier this month, our blog spent some time discussing how those individuals who find themselves in the unenviable position of not having made payment arrangements with the Comptroller of Maryland's office or being unable to comply with these arrangements should know that the agency will not hesitate to pursue one -- or several -- enforcement actions.

We'll continue examining these enforcement actions in today's post. However, it's important to reiterate at the outset that the primary purpose in this exercise isn't to cause unnecessary alarm, but rather to provide valuable insight and reinforce just how important it is to seek the necessary assistance.

Understanding the Foreign Account Tax Compliance Act (FATCA)

As someone who has foreign accounts in counties other than the United States, it's important that you understand the Foreign Account Tax Compliance Act (FATCA). This is an important act that was created to help eliminate tax evasion by those holding accounts outside the United States.

The FATCA does require some people to report their assets held outside the county on an IRS Form 8938. This form is a Statement of Specified Foreign Financial Assets and is required by law if you hold assets over the $50,000 threshold.

Why the Comptroller's Office calls a new tax law a 'game-changer'

In our post last week, we discussed how the principal duty of the Comptroller of Maryland's office is the collection of taxes and how it has a host of tools at its disposal to assist with the fulfillment of this duty. Indeed, the agency collects an astounding $16 billion per year armed with a budget of only $110 million.

Interestingly enough, Governor Larry Hogan recently signed a new bill into law earlier this month, which will further enhance the agency's tax enforcement powers. Indeed, Comptroller Peter Franchot has referred to it as both "a missing piece of the puzzle" and, more significantly, a "game-changer."

A closer look at the enforcement options Maryland uses to collect tax debt

Given that we are nearly a month removed from Tax Day 2017, most individuals are free to redirect their attention to more pressing -- and likely more exciting -- matters.

However, there are some for whom this is not an option owing to unresolved personal income tax liabilities on the state level, meaning they have yet to make payment arrangements with the Comptroller of Maryland or have simply been unable to comply with these arrangements.

Bill grants major tax breaks to Maryland manufacturers that create new jobs

One tradition of Maryland politics with which people might be unfamiliar is that the governor holds multiple bill-signing ceremonies following the adjournment of General Assembly's 90-day session, including one held the following morning after the final gavel sounds.

This year was no different, of course, as Governor Larry Hogan signed over 110 bills into law back on April 11, including one that will see manufacturers here in the Old Line State secure considerable tax breaks for creating new jobs.   

When audited, follow simple steps to get through it

Audits are not necessarily the end of the world for the person being audited, though you would be justified in feeling so. Audits can be incredibly punishing, and they can also be a massive time-sink for the individual under audit. So how do you survive an audit and what are your options during the process?

The first thing to realize is that most audits are done via mail. You will receive a notice from the IRS and they will inform you of the potential problem in your tax filing, while also asking for more information to substantiate what you have filed. You could then provide that information or try to address the problem by consulting with a professional tax attorney.

Sage advice for those who haven't filed their taxes yet

The end of tax season came quickly and abruptly last week. Indeed, the days leading up to the federal income tax filing deadline may have been very stressful for procrastinators. Those who completed and filed their returns should breathe easy. But for those who did not file, the stress may only be starting. The consternation over owing money, while not having it, can be more than one person can bear. No wonder what tax day is one of the most stressful days of the year.  

If you haven’t filed your return, do not despair. IRS agents are not going to descend on your home or business like a squadron of stormtroopers. After all, you have several options available to you. This post will highlight a few of them. 

6 tax mistakes often made by business owners

Your company had a terrific year, and you're thrilled about your projections moving forward. Of course, along with your increased success and increased income, you must report and file your taxes. Even simple mistakes can lead to audits and penalties, such as monetary fines.

As you work to get your taxes in order, be sure to keep these common mistakes in mind. Double-checking before you officially file could help tremendously moving forward, this year or any other.

You are entitled to an appeal of your tax situation

People and businesses all across the state of Maryland often have to deal with the Internal Revenue Service, and they may have even suffered action at the hands of the IRS. If you are behind on your taxes or if you owe the IRS tax debt, then it is highly unlikely that doing nothing or ignoring the requests will result in anything positive. Addressing your issues in an effective manner is the key to solving the problem and possibly mitigating the penalties and problems associated with your case.

If the IRS takes action, it is important to remember that you have rights as a taxpayer. You are entitled to an appeal and the IRS can't take unilateral action without following protocol.

Tax liens can severely punish businesses

While the following story doesn't come from here in Maryland, the lessons it teaches about businesses and tax liens are applicable no matter where it originates. A start-up company in San Antonio, called Vysk Communications, has been hit with a tax lien by the Internal Revenue Service. Vysk is a company that produces "privacy" cellphone cases, with the intent of the case being that your microphone can be muffled and your phone's camera can be blocked -- thus preventing proprietary parties or third-parties from accessing private data that is knowingly or unknowingly captured.

But the company has fallen on some difficult financial and logistical times, and as such, they have not paid payroll taxes from the latter half of 2014 to the first half of 2016. The IRS has filed a tax lien to recoup the roughly $1.9 million in unpaid payroll taxes.

Firm news & Events

Friday, November 18, 2016

Chaya Kundra will be a panelist at the New England IRS Representation Conference on Preparer Penalties.

Preparer Penalties: Everything You Need to Know! Over time the IRS has increased its focus from individual taxpayers to tax preparers. When the IRS identifies a pattern of false or fraudulent returns, it does not hesitate to impose penalties on the return preparers. This panel will walk you through the various penalties and what preparers need to know to protect themselves.

Moderator: Amanda Evans, Green & Sklarz LLC, New Haven, CT

Panelists: Chaya Kundra, Kundra & Associates, Rockville, MD, Barbara Kaplan, Greenburg Traurig, New York, NY

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