On August 4, 2015, the Maryland Comptroller’s office hosted an informal gathering for tax practitioners to ask questions of the Comptroller’s staff regarding the upcoming Maryland tax amnesty program, as well as the processing of refund claims related to the Wynne decision.
The tax amnesty program, which will take place from September 1, 2015 to October 30, 2015, gives Maryland taxpayers the opportunity to come clean on any outstanding tax liabilities. The program allows for the waiver of civil penalties and one-half of any outstanding interest due to the nonreporting, underreporting, and/or nonpayment of Maryland state and local income tax, withholding taxes, sales and use taxes, and admissions and amusement taxes.
In the August 4th meeting, the Comptroller’s staff clarified that the amnesty program does not apply to tax year 2014, as amnesty is only being offered for tax liabilities arising from returns due on or before December 31, 2014. It was further stated that the Comptroller’s expectation is that taxpayers participating in the program will disclose their tax liabilities for all back tax years. Thus, taxpayers with unfiled returns for more than three prior years should consider participating in the Comptroller’s voluntary disclosure program, which typically limits a taxpayer’s disclosure and payment of outstanding tax liabilities to the most recent three-year period while foreclosing the Comptroller’s ability to assess the taxpayer for any year prior to such period. The Comptroller anticipates that the applications for participation in the amnesty program will be available on its website by August 28, 2015. Taxpayers that have significant outstanding Maryland tax liabilities can benefit from entering into the amnesty program, but they should consider whether the voluntary disclosure program is a better option.
The Comptroller’s staff also updated practitioners on its processing of Wynne-related refund claims. For readers not familiar with the decision issued by the U.S. Supreme Court in Wynne, please see Aronson’s blog on the Court’s ruling. The Comptroller has set a goal of processing all of the approximately 10,000 protective refund claims by the end of 2015. It is unclear, however, how long it will take the Comptroller to process all of the refund claims currently being filed by taxpayers that, rather than filing protective claims for 2012 and 2013, waited until the decision in Wynne was issued in May of 2015. The Comptroller is receiving these types of refund claims on a daily basis.
The Comptroller estimates that approximately 55,000 Maryland residents are due a refund. Even assuming that a significant portion of those taxpayers will not file refund claims because their refunds are of an insignificant amount, the additional claims could easily number in the tens of thousands. The Comptroller is processing the refund claims in the order in which they were received, so taxpayers that filed separate protective claims (based on the applicable year’s statute of limitations) will be receiving separate refund checks for each year at different times. The Comptroller fully expects the processing of the more recently filed refund claims to overlap with the 2015 filing season, which is expected to delay the completion of processing all of the Wynne refund claims.