January 21, 2010

Tax amnesty bringing in much more than expected

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By Andy Rosen
Andy@MarylandReporter.com

Maryland’s two-month tax amnesty program that ran last year has been nearly three times as effective as was previously expected, tax officials told lawmakers Wednesday.

Deputy Comptroller Linda Tanton said during a briefing for the House Ways and Means Committee that the amnesty has raised about $26 million, and is still bringing in money as taxpayers continue to pay off their old debts. She estimated that the state would haul in another $5 million.

Early reports after the amnesty program ended in October indicated that it would bring in somewhere around $10 million. That was the highest projection in a two-year estimate that legislative analysts made before the bill authorizing it passed last year.

The program allowed people to pay back taxes without penalty, so long as they hadn’t participated in a previous amnesty period for the same tax in 2001. That year, the state collected nearly $40 million in back taxes.

Comptroller Peter Franchot had been critical of the plan, concerned that it would send the wrong message to delinquent taxpayers. He also predicted it wouldn’t bring in as much money as expected.

Tanton said Franchot has changed his mind to a degree. Much of the late-arriving money has come in through payment plans set up by tardy taxpayers.

“He wasn’t really a fan of the amnesty program,” she said, “but now he’s changed his mind a little bit because we did bring in significantly more money than estimated.”

Shaun Adamec, a spokesman for Gov. Martin O’Malley, said any extra money that comes in this year or next would likely be used as extra cash to pad the state’s year-end reserve. He doubted it would be enough to support state spending.

“I can’t imagine it would be so much that it would necessitate a supplemental budget,” Adamec said. “I don’t think we’re in those waters at this point.”