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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.

While it's understandable that circumstances can arise making individual tax compliance difficult, those who find themselves in this situation should know that the Comptroller's Office's is less than forgiving and will not hesitate to pursue one -- or several -- enforcement actions.

Driver's license and car registration renewal

State law dictates that any individual with unpaid and undisputed state tax liabilities cannot renew a Maryland driver's license or vehicle registration until these debts are fully or partially satisfied.

Those who learn of an inability to renew a driver's license or registration may contact the Comptroller's Office to either remit the full payment or enter an approved payment plan. Once this is done, it takes roughly two days for the renewal hold to be released.

It's important for those individuals who are actively paying off tax debts via an approved payment plan to know they are allowed to renew a driver's license and/or vehicle registration.

Interest and penalty charges

Those with unpaid tax debt will be mailed a first notice notifying them of the amount owed and methods of resolution. Failure to respond to this initial notice will result in the mailing of an assessment notice restating the debt, and outlining both interest and penalties being levied.

As for the amount of each, state law dictates that the Comptroller's Office must charge interest at a 12 percent annual rate starting from the date the debt was originally owed, while penalties can reach as high as 25 percent of the tax debt  owed.

Upon receiving the assessment notice, the individual has 30 days to formally dispute the amount of the tax debt and collection procedures will commence if this deadline passes without action.

The purpose in sharing the foregoing information was not to cause unnecessary alarm, but rather to impress the importance of considering a consultation with a skilled legal professional upon those who find themselves in this unenviable position.

We'll continue this discussion in future posts ...

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