Important developments in Maryland property taxes

By Cindie S. Rosenzweig, CPA, MS;
Brian McCurdy, CPA;
and Karen Syrylo, CPA

Recently developments in Maryland property taxes topped the agenda as the MACPA's State Tax Committee met recently with the state Department of Assessments and Taxation (SDAT).

The SDAT was represented at the meeting by Personal Property Program Manager Edward Muth and Personal Property Assessments Supervisor Michael Griffin.

Mr. Muth opened the discussion by reporting that the number of paper extensions filed has decreased from 34,000 in 2004 to 167 in 2005. A major time-saving feature is the increase from 10 to 50 extensions allowed per request. SDAT officials are pleased with the result.

According to Mr. Muth, the system for electronically filing the extensions has worked very well. (Extensions are now being filed electronically, likely due to the new charge for filing paper extensions, as passed into law by the Legislature last year.)

The SDAT representatives also discussed a few items of interest that are continuing to cause troubles for both taxpayers and the SDAT. These included:

duplicate filings,
non-stock companies paying the filing fee,
filings for merged entities, and
companies paying an estimated personal property tax amount (generated by the tax return software) instead of paying from the actual invoice.

The SDAT would like CPAs to remind their clients not to pay the tax with the return; only the filing fee is paid with the return.

Tangible personal property returns and payments will be mailed to a new address in 2006. The new address will appear on the return. Also, domestic entities no longer receive reminder or advance notices of forfeiture; only the final notice is sent.

SDAT officials reiterate that the proper method of discontinuing a business is to file articles of dissolution. A potential domestic forfeiture list is available on the Web at sdatcert3.resiusa.org/forfeiture/domForType.Asp. To further reduce delays in processing, it is recommended that filing back years' returns should be on that year's color paper instead of white.

Mr. Griffin reminds CPS that if exempt manufacturing property is transferred to a person who uses the property for manufacturing, the property will be considered exempt from the date of transfer if the transferee files an application within six months from the date the property is first assessed to the new owner. The previous company must also have an exemption on file.

Two counties made noteworthy changes to their personal property tax. Caroline County passed a tax credit that began this year and will be fully phased in for the 2007-08 tax year. The General Assembly passed House Bill 585 authorizing Dorchester County a phaseout, but the local (county) bill has not yet been passed. Dorchester County will be exempt after 10 years at a reduction of 10 percent per year.

The MACPA State Tax Committee thanks the SDAT representatives for their time in preparing for the meeting and for the informative presentation. The meeting allowed committee members to meet personally with the representatives of the department and provided an informal forum to discuss issues that concern all practitioners and businesses.

The State Tax Committee also thanks Michael Griffin for his assistance with this article. As always, the MACPA State Tax Committee appreciates the continued favorable working relationship we have with the SDAT.

Cindie S. Rosenzweig, CPA, works for Northrup Grumman. Brian McCurdy, CPA, works for Smart & Associates, LLP. Karen Syrylo, CPA, is a sole practitioner. They are all members of the MACPA's State Tax Committee.

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