MACPA State Tax Committee meets with Maryland Office of Unemployment, State Department of Assessments and Taxation

By Cindie S. Rosenzweig, CPA, MS
Hertzbach & Company, P.A.
Member, MACPA State Tax Committee

On Aug. 8, 2001, the MACPA State Tax Committee met with the Maryland Office of Unemployment and the State Department of Assessments and Taxation.

The meeting opened with Thomas Crowley, deputy director of Maryland Unemployment Contributions Division. Mr. Crowley informed the committee that the unemployment trust fund currently has $914,000,000 in it. As a result, there will be no surcharge in 2002, for the sixth year in a row. The minimum rate continues to be three-tenths of 1 percent. The maximum rate is 7.5 percent for employers with high benefit charges relative to their reported wages. The current new account rate is 2 percent but may change one- or two-tenths of a percentage point for 2002. The current rate for new foreign contractors is 3.4 percent. The maximum unemployment benefit is $280 a week. There was an increase in benefits paid in 2001 but there is no anticipated effect on rates.

The unemployment report can be done via the Internet at www.dllr.state.md.us. The password and URL can be found on the taxpayer's paper return. If the paper return is not available, practitioners can call the employer assistance unit to obtain passwords for their clients. At this point, there is still no way to pay online. Therefore, a check still needs to be sent in. It is anticipated that for the third quarter a pop-up window for credit card payments and ACH credit options should be available. Maryland Unemployment wants practitioners to call (410) 767-2412 or (800) 492-5524 to obtain an employer rate.

Next, the State Department of Assessments and Taxation (SDAT) — represented by Edward Muth, program manager personal property; Michael Griffin, assessments supervisor personal property; and Phyllis Levi, supervisor unincorporated personal property — made their presentation. There has been no major new legislation in the current year. An attempt was made to get an automatic personal property exemption for 501(c)(3) entities, but that initiative never got out of committee.

SDAT did have a few reminders for us. Extensions now can be obtained on the SDAT's Web site. A confirmation will be given and can be printed out. Ms. Levi reminded us that once a home-based exemption is granted, there is no need to file a return unless the exemption no longer applies. There currently is an initiative to discover forfeited accounts that are still operating in Maryland. If the SDAT discovers an entity operating that has a forfeited account, that taxpayer will face stringent penalties. Remember, there is a voluntary disclosure program available to non-filers who have not been contacted by SDAT.

There has been a major change in the interpretation of the law dealing with exemptions. Requests for refunds as a result of a missed exemption will be limited to one year from the date the assessment becomes final. In other words, from this point forward corrections on amended returns for missed exemptions can be for only one year. For example, if it is discovered that an exempt item has been improperly classified as taxable for several years, a request for refund on an amended return can only be done for one year. For other types of corrections such as incorrectly placing an item in a category A rather than category D, amended returns can be filed for three years.

Manufacturing exemption applications must be filed by Sept. 1 for the exemption to apply for the current year. For example, an application received on or before Sept. 1, 2001 and subsequently approved will apply to the 2001 filing. An application received after Sept. 1, 2001 and subsequently approved will apply to subsequent years. For example, an application received Sept. 2, 2001 will apply to the 2002 filing. Taxpayers will no longer be able to go back three years and amend those returns for refunds.

Note that this is not a change in the law. This change comes about as a request from the SDAT to the Attorney General for an interpretation of the current law. This change takes effect immediately. SDAT will not require any repayment from taxpayers that have already received refunds as a result of filing amended returns due to approved applications. However, all pending applications will fall under the new interpretation.

We are reminded that when a taxpayer transfers the assets of his or her business or goes out of business, the SDAT must be informed. Form AT 3-45 is available to assist taxpayers in meeting their responsibility to inform the SDAT. A letter will be accepted by the SDAT provided that all applicable information is contained in the letter.

If an entity's charter has been forfeited, articles of revival must be completed and the taxpayer must obtain a tax clearance certificate to reinstate the company. The SDAT reminds us that a lot of valuable information is available on its Web site, including the status of an entity's charter. The SDAT encourages all taxpayers and practitioners to visit its Web site.

The MACPA State Tax Committee thanks the representatives from Maryland Unemployment and SDAT for their time in preparing for the meeting and for the informative presentations. A special thanks goes to Michael Griffin of the SDAT and Thomas Crowley of Maryland Unemployment for their assistance with this article.

These meetings allow committee members to meet personally with the representatives of the departments and provide an informal forum to discuss issues that concern all practitioners. As always, the MACPA State Tax Committee appreciates our continued working relationship with these departments.