Maryland Creates 20-Year SOL for Tax Liens

On April 30, 2019, Maryland Governor Larry Hogan signed a law providing that certain tax liens on certain real or personal property terminates 20 years from the date of assessment. Previously, a tax judgment lien in Maryland never expired. Indeed, in 2015, the Court of Special Appeals clarified in Comptroller of Maryland v. Shipe,1 that "[t]he language in Tax-Gen. §13-806 does not waive the State's immunity and clearly indicates that a tax lien 'continues to the date on which the lien is: (1) satisfied; or (2) released by the tax collector. . ..'" The new law changes this long-standing rule and creates a 20-year statute of limitations for Maryland tax judgment liens (unless another date is specified by law or the lien is for unpaid inheritance tax). Significantly, this means that even income tax liens will terminate 20 years from the date of assessment.

Specifically, the new law amends Tax-Gen. §13-806, such that a lien arises on the date of notice that tax is due and continues until the earlier of: (1) the date on which the lien is satisfied, or released by the tax collector, or (2) 20 years after the date of assessment.

This amendment is especially encouraging for taxpayers who want to settle their Maryland income tax liability via an offer in compromise. Prior to this law, the Comptroller had very little incentive to accept a taxpayer's offer to settle their income tax liability for less than the full amount owed. A solid offer in compromise typically offers the most amount of money that the taxing authority can expect to collect within the statute of limitations. Without such time-limit-it is much more difficult to persuade the taxing authority to settle. Now, with a clock running against the Comptroller, an individual attempting to settle their tax debt via an offer and compromise may find that the Comptroller is much more receptive and willing to consider their offer in compromise.

The law is effective July 1, 2019. The law does not include an express provision indicating whether the provisions would apply retroactively.

If you have questions or concerns about Maryland tax judgment liens or offers in compromise, please contact Frost & Associates, LLC at 410-497-5947.

1 Md. Ct. Spec. App., No. 0009, 02/03/15.

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