Tax issues that may arise at the state level may include but are not limited to:
- Income Tax
- Sales & Use Tax
- Employer Witholding Tax
- Unemployment Tax
- Property Tax
- Resident v. Non-Resident
Each state has a different system for administering and collecting tax. State taxing authorities frequently are difficult to deal with and may be more aggressive than the IRS in tax collections. Often times, this is attributable to a less formal system. I frequently deal with many State taxing authorities including: The Comptroller of Maryland, Virginia Department of Taxation, and the D.C. Office of Tax and Revenue.
State taxing agencies are in direct competition with the IRS for tax dollars. Often times, states assess income tax before the IRS or file a tax lien before the IRS. This often gives the state priority over the IRS and other creditors when taking collection action against a taxpayer. Because their procedures are not as formal, often times protecting taxpayers who have outstanding tax liabilities is challenging.
Additionally, some States, like Maryland, have instituted laws not allowing for the renewal of professional licenses, business licenses, vehicle registrations, or drivers licenses. Maryland’s Motor Vehicle Administration (MVA) has begun holding drivers licenses until after arrangements have been made to pay outstanding state tax obligations. A creative approach, with a well thought out strategy is necessary to protect the rights of a taxpayer. Most states offer similar versions of the IRS’s Offer in Compromise program, and will offer payment plans and amnesty from penalties and interest.
I frequently deal with the following divisions at the Comptroller of Maryland and State of Maryland:
- Collection Division or Compliance Division
- Office of Hearings and Appeals
- Maryland Tax Court
- Sales Tax Audit
- Income Tax Audit
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