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Good tax policy says that the broadest expanse of our citizenry should pay their fair share of taxes.  Bad tax policy enforces the idea of a shared burden in a heavy-handed manner.

A wide variety of professionals – including architects, barbers, electricians, engineers, lawyers, even accountants – have found themselves unable to work when the State refuses to renew their professional license, because they owe State unpaid back taxes. 

Delinquent taxpayers run face first into the tough provisions of the Business and Occupations Article (Sec. 1-204), which requires the offices issuing licenses to verify through the Comptroller that the applicant has paid his taxes or provided payment “in a manner satisfactory to the unit responsible for collection.” (MD Code Bus. Occ. & Prof. § 1-204).

Many of these people cannot pay their taxes because of unemployment, a failed business, divorce, illness, or death.  They make mistakes along the way and need a fresh start, something the State is reluctant to help with.

The Collection Division of the Comptroller, the unit responsible for determining what constitutes a “satisfactory” manner, typically demands 25 percent down and the rest of the liability paid off in 12 months to reinstate a professional license.  For many people, this demand is insurmountable. Some exceptions have been made, but for the most part, the Collection Division utters “no” more than it says “yes”.

Whether due to the State’s fiscal shortfall or outrage over the idea that some people are not paying their fair share, the Comptroller has convinced the legislature to broaden the reach of this law.  As of June 1, 2011, the Department of Motor Vehicles will not renew a driver’s license or a vehicle registration if a taxpayer has unpaid liabilities or is not in an approved payment plan.  (MD Code Transp. § 13-406).

One client, who just found a job as a truck driver after a long period of unemployment, has a new baby, and no savings.  He threw up his hands when the Collection division demanded 10 percent of what he owed, more than $2,000, and an installment agreement stretching over 99 months to renew his driver’s license.  Without allowing reasonable terms, the Comptroller will force this taxpayer, and others like him, to violate our State’s driving laws just to get to work or go food shopping. 

The Collection Division should follow the lead of the IRS and its good tax policy, which fosters the idea of a “fresh start” by enforcing collection action only when taxpayers have more money available than what would be needed for a reasonable standard of living.   People like the client mentioned above who deal with the IRS would not have to come up with $2,000 down to enter into a payment arrangement.   The IRS might even declare them uncollectible, giving strapped taxpayers the hope of returning to tax compliance without the heavy hand of the IRS weighing them down.  

Driving people to violate State laws by taking away their driver’s license cannot be considered good tax policy.
 


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Murray Singerman, JD, LLM

Author

Self-dubbed "Tax Knight," Murray Singerman writes in defense of the "humble citizen," often beaten down by the IRS and state taxing authorities.  Enjoy his short ruminations about the ever-changing area of tax controversy law.  Written with accountants in mind, Murray offers useful info and a chuckle to make your day a bit more enjoyable.

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