Tax Overview: Maryland
Maryland tax debts are handled by the Comptroller of Maryland and can trigger liens, levies, wage garnishments, and license holds. The state offers OIC and installment plans up to 99 months with financials. Maryland has no collection statute of limitations — debts persist indefinitely. The state is unique in collecting both state and county income taxes simultaneously, and uses multiple collection agencies with different terms. Penalty abatement is strictly one-time-only and requires full principal payment first.
Key Tax Facts
- OIC available via Forms MD-433a & MD-656 — will NOT stop collections
- Liabilities not eligible for OIC until 2 years after date of assessment
- SFRs (Substitute for Returns) are OK for OIC applications
- Installment agreements up to 36 months without financials
- Up to 99 months with financials — 20% down payment required
- Business installment agreements require 25% down payment
- Down payment can be paid in installments UNLESS there's a license hold (then full DP needed before license lift)
- Wage garnishment can be reduced but CANNOT be switched into a payment plan
- Penalty abatement: must pay PRINCIPAL on ALL years first — strictly one-time-only
- If penalty abatement requested on some years but not others, unpaid years lose future waiver eligibility
- Collection agencies: Penn Credit (full payment in 30 days) and Harris & Harris (12-18 month IAs, balance over $5K requires DP)
- NO collection statute — debts persist indefinitely
- Unique: dual state + county income tax collection system
Common Tax Issues
No collection statute means Maryland debts never expire
The 2-year waiting period for OIC eligibility after assessment delays settlement options
Penalty abatement is truly one-time — if you don't request it for all years simultaneously, you lose eligibility on the remaining years
Wage garnishment cannot be converted to a payment plan — only reduced
Penn Credit (collection agency) demands full payment in 30 days with no flexibility
The dual state/county tax system creates additional complexity for resolution
Resolution Options in Maryland
Payment Plans (Installment Agreements)
Without financials: Up to 36 months
With financials: Up to 99 months
99 months requires 20% DP. Business: 25% DP. DP can be paid in installments unless license hold exists. For reduced DP, full MD433B required.
Offer in Compromise (OIC)
Available: Yes
Does NOT stop collections while pending
Form: Forms MD-433a & MD-656
Will NOT stop collections. Liabilities not eligible until 2 years after assessment. SFRs OK.
Wage Garnishment
Rate: Varies
Can lift with payment plan: No
Can reduce amount: Yes
Can be reduced but CANNOT be switched into a payment plan.
Penalty Abatement
Available: Yes
Must pay PRINCIPAL on ALL years first. Strictly one-time-only. If requested on some years but not others, unpaid years lose future eligibility.
Bank Levy
Can release: No
Official Resources
How Tax Advocate Group Helps Maryland Taxpayers
Whether you're dealing with the IRS, the Comptroller of Maryland, or both — we provide comprehensive tax resolution services to Maryland residents and businesses.