9 Ways Maryland Can Force You To Pay Your Tax Debt
What can the State of Maryland do to me if I owe back taxes?
9 Ways Maryland Can Force You to Pay Your Tax Debt
If you owe the State of MD back taxes and you try to ignore them, they have many ways of forcing you to pay. They have more information about you than most other creditors and more methods to collect from you.
Unlike most other creditors, the State of Mary always knows where you work. So if they decide to garnish your paycheck, they can always find you. They can take roughly 25% of your gross income for the garnishments. If you have other garnishments or voluntary deductions, you could be left with very little to live on.
The State of Maryland has become very aggressive in filing tax liens for even small amounts of taxes due. These are recorded in the county where you live and are liens on any real property you own in that county. If you try to sell or re-finance your property, you will need to pay the lien in full or negotiate a settlement.
Until 2018, they were reported on your credit report. However, because many people have similar names and the data was often inaccurate, all 3 major credit reports (Experian, Equifax and TransUnion) have stopped collecting and reporting tax liens.
Business and Professional License Hold
If you hold any kind of state issued license for a business or profession, the State of MD can prevent you from renewing it. Almost all state agencies are required to check with the comptroller’s office to verify that you do not owe back taxes. If you do, they cannot renew you license until you have either paid or make arrangements to pay the taxes due.
Bank Account Garnishment
The State of MD can seize any bank accounts
Publish Your Name
The State of MD has started publishing a list of the 20 people who owe the most state income taxes. Some of these people are well known and this publication could be embarrassing. The comptroller sends a letter before the list is published, so you do have an opportunity to make payment arrangements to avoid being on the list.
Send you to A Collection Agency
The State of MD has contracted with 2 third party debt collections companies to try to collect money. If you receive a letter from Penn Credit or Harris and Harris, they may be collecting on behalf of the state of MD. They also may be adding additional fees and costs to your debt.
Stop you from Renewing Your Driver’s License or Car Registration
The MD Comptroller can notify the MVA that you owe back taxes and place a hold on your driver’s license. If this happens, you should get a letter from the State of MD letting you know. You will not be able to renew your license or registration until you either pay the taxes or set up a payment plan with the State of MD.
Grab Your Tax Refund
If you owe the State of MD taxes, they can take both your state and federal tax refund. In 1995, MD set up the Tax Refund Intercept Program (TRIP). Any state agency that is owed money can report the amount to the Comptroller. The comptroller can then deduct the amount owed from your state refund. The state of MD can also send the debt to the federal government through the Treasury Offset Program (TOP). There it is matched by name and SSN to any tax refund you may be entitled to. If you are getting a refund, the IRS will deduct the amount you owe.
Grab other federal payments
If you run a business and get payments from the federal government, this can also be taken by the Treasury Offset Program (TOP). Many day care and senior care facilities rely on these payments to help run their business. If the payments are reduced, it can force them out of business. If you receive a federal or military pension, it can also be offset for MD tax debts
How can I deal with Maryland Tax Debt?
Aa general rule, MD wants 10% of the amount owed as a down payment and the balance over 24 months. In some cases, MD will give you up to 99 months to pay if your income is limited.
You will be paying 11.5% interest on the remaining balance plus any penalties. Once you have set up the payment plan, you will be able to renew your license and registration.
File Chapter 7
Filing Chapter 7 will give you immediate relief from many MD tax debt problems without paying any of the MD tax debt upfront.
It will allow you to renew you driver’s license or car registration.
It will stop a wage or bank garnishment.
It will allow you to renew you business or professional license.
Depending on the age of the tax debt, the Chapter 7 may wipe some or all of the tax debt. It might also eliminate a tax lien on your property.
The Chapter 7 will last about 4 months. After the Chapter 7 is over, you will still need to deal with any remaining MD tax debt.
File Chapter 13
Filing Chapter 13 will give you the same immediate relief as filing Chapter 7, but it will also allow you to set up a payment plan. This plan can pay the MD tax debt over 60 months along with any other debts you may have. When the Chapter 13 is over, you may not have any debts at all!