Maryland State Enforcement: Understanding Tax
Collection Actions
Introduction
State enforcement occurs when Maryland’s Comptroller’s Office takes formal action to collect unpaid state taxes through legal means. This process begins after initial billing, notices, and collection efforts receive no response or payment from the taxpayer. Understanding state enforcement helps you navigate this serious situation and respond appropriately to protect your financial interests and legal rights.
Enforcement represents a significant escalation in the state’s efforts to collect outstanding tax liability. Ignoring enforcement actions typically results in wage garnishment, bank account levies, and property liens. These actions directly affect your ability to access funds, obtain credit, and sell real estate without restriction.
What State Enforcement Means
State enforcement in Maryland refers to formal collection actions taken by the Comptroller’s
Office when a taxpayer owes unpaid tax liability. These collection mechanisms include wage garnishment through a writ of garnishment, bank levies, property liens, or asset seizure through a writ of execution. Enforcement begins after routine billing and debt collection attempts prove unsuccessful and the taxpayer fails to respond.
How Maryland Enforcement Differs from Federal Actions
Maryland state tax agencies operate under a different authority than the federal government when collecting tax debts. While the Internal Revenue Service issues a Final Notice of Intent to
Levy before an IRS Bank Levy, Maryland follows state procedures governed by Maryland Code,
Courts and Judicial Proceedings. The Consumer Credit Protection Act and federal law limit wage garnishment to 25 percent of disposable income or the amount exceeding 30 times the federal minimum wage.
Step-by-Step Checklist: What to Do After Receiving an
Enforcement Notice
Step 1: Review the Notice Carefully
Locate and read the entire enforcement notice to identify the specific action type, tax years involved, amount due, and issuance date. Note any deadlines for response or objection mentioned in the notice to avoid missing critical timeframes for filing appeals.
Step 2: Verify the Debt Accuracy
Confirm the name, Social Security number or tax identification number, and tax years match your records accurately. Check your tax returns to verify whether you filed returns for the years listed on the enforcement notice.
Step 3: Gather Supporting Documentation
Collect documentation of any previous payments, payment arrangements, or correspondence with the Comptroller’s Office regarding this state tax liability. Organize these documents chronologically to present a complete picture of your payment history and prior collection efforts.
Step 4: Contact the Comptroller’s Collections Division
Contact the Maryland Comptroller’s Collections Division immediately using the contact information available at marylandtaxes.gov. Request to speak with a representative about the specific enforcement action and document the representative’s name and contact information for future reference.
Step 5: Request Debt Clarification
Ask for written documentation showing the tax year, original amount owed, penalties and interest added, and the current total due. Request clarification through a Notice and a Demand for Payment on your options for response, objection, hearing rights, or Installment Plan
Agreement options.
Step 6: Understand Your Response Deadlines
Confirm any deadlines for response or objection to the enforcement action with the Collections
Division representative. If you dispute the assessment, you must file an appeal within 30 days of the mailing date of the notice, per Maryland Code procedures.
Step 7: Document All Communications
Document the name, title, and direct contact information of every representative you speak with during the debt collection process. Note the date, time, and summary of each conversation to maintain a clear record of your efforts to resolve matters.
Step 8: Follow Up in Writing
Send an email or letter summarizing what was discussed, what you are requesting, and the date of contact. Written follow-up creates a paper trail and ensures your request is formally documented in the Comptroller’s records under Maryland Rule 2-621.
Step 9: Notify Your Employer or Bank
If you received a writ of garnishment, provide a copy to your employer’s payroll department immediately to ensure proper processing. If you received a Notice of Levy, contact your depository institution to understand the levy process, automatic exemptions, and potential procedures for a frozen bank account.
- Wage garnishment limits: Maryland allows garnishment of up to 25 percent of your
- Bank levy protections: Maryland provides an automatic $5,000 exemption from all
- Tax lien duration: Maryland tax liens on real estate or personal property terminate
- Interest accrual: Interest continues to accrue on unpaid Maryland tax liability during
- Appeal deadlines: You must file an appeal within 30 days of the notice mailing date if
- Ignoring the enforcement notice: assuming the problem will resolve itself or disappear
- Missing appeal deadlines: Failing to file an appeal within 30 days of the notice mailing
- Providing incomplete information: Submitting unclear or incomplete responses to the
- Assuming no payment options exist: Believing that Installment Plan Agreements are
- Confusing federal and state procedures: Misunderstanding differences between
- State tax notice review and response
- Penalty and interest reduction options
- Payroll and trust fund tax assistance
- Payment plan and relief eligibility review
- Representation with state tax agencies
Step 10: Maintain Organized Records
Keep all notices, correspondence, and records of communication with the Comptroller’s Office in a dedicated file for easy reference. Organized records help you track deadlines, responses, and the status of your case throughout the judgment enforcement process.
Key Facts About Maryland Tax Enforcement disposable earnings per pay period under the Consumer Credit Protection Act. The state must leave you with an amount equal to 30 times the federal minimum wage multiplied by the applicable number of weeks, per Maryland Code, Commercial Law, § 15-602. bank account levies without requiring any action from you, per Maryland Code, Courts and Judicial Proceedings, § 11-402. Social Security benefits, Veterans benefits,
Supplemental Security Income, disability benefits, and unemployment compensation are also exempt from seizure of funds when properly identified. automatically 20 years after the date the lien attaches to the property. This expiration period, effective July 1, 2019, under Maryland law, applies to state tax liability liens filed by government agencies. enforcement actions and Installment Plan Agreements until full payment occurs. While on a payment arrangement, the Comptroller cannot waive interest charges on the outstanding balance regardless of financial hardship claims. you dispute a tax assessment. Late appeals are not entitled to a hearing under Maryland
Rule 3-645 and receive only limited document review without formal proceedings.
Protected Income and Exemptions
Certain income sources receive protection from collection mechanisms under federal law and
Maryland statutes. Social Security benefits, Veterans benefits, Supplemental Security Income, disability benefits, and unemployment compensation deposited into a deposit account cannot be levied without specific court judgment authorization. The automatic $500 exemption applies to all bank accounts subject to garnishment, regardless of income source or financial hardship status.
Child support payments and support payments ordered by a court order receive different treatment under Maryland Rule 3-646. Federal Student Loans and student loans backed by the federal government may allow wage garnishment up to 15 percent of disposable income without requiring a money judgment. Retirement plan funds may receive protection depending on the plan type and applicable Maryland Code provisions.
Bankruptcy and Enforcement Actions
Filing for bankruptcy protection under Chapter 7 or Chapter 13 triggers an automatic stay under
11 U.S.C. § 362 that halts most collection efforts immediately. The Bankruptcy Code provides the judgment debtor with temporary relief from wage garnishment, bank levies, and other judgment enforcement actions while the bankruptcy case proceeds. However, state taxes are generally not discharged in bankruptcy under 11 U.S.C. § 523, meaning the tax liability remains enforceable after bankruptcy proceedings conclude.
The automatic stay prevents the government agency from pursuing collection measures during the bankruptcy process, but interest may continue to accrue on the debt. Consult with a tax lawyer regarding how Chapter 7 or Chapter 13 bankruptcy affects your specific state tax liability and enforcement situation.
Alternative Resolution Options
Taxpayers facing enforcement may qualify for alternative resolution methods beyond standard
Installment Plan Agreements. An Offer in Compromise allows qualifying taxpayers to settle their tax liability for less than the full amount owed, based on financial hardship and their ability to pay. The Comptroller evaluates factors including income, expenses, asset equity, and future earning potential when reviewing compromise proposals.
Discovery in aid of enforcement allows the government agency to investigate the debtor's assets through formal proceedings under Maryland Rules 2-633 and 2-642. This process helps the Comptroller identify property, bank accounts, and income sources available to satisfy the money judgment through appropriate collection mechanisms.
Common Mistakes to Avoid without response can lead to continued enforcement and the seizure of funds from your frozen bank account. Enforcement actions do not automatically expire or disappear without taxpayer response or full payment of the tax liability owed to state tax agencies. date eliminates your right to a hearing under Maryland Rule 3-649. Missing this deadline significantly limits your options for challenging the court judgment or negotiating favorable terms with the debt collection agency.
Comptroller’s Office delays resolution and may result in continued judgment enforcement activity. Complete and accurate information helps the government agency process your request efficiently and reach a resolution faster through proper Maryland Office procedures. impossible prevents you from exploring payment arrangements or hardship relief programs available through the Maryland Office. The Comptroller’s Office offers online payment agreement setup and may work with taxpayers who respond promptly to collection efforts. federal payments enforcement by the federal government and state tax liability collection by Maryland state tax agencies creates confusion. Maryland follows Maryland Code procedures and Maryland Rule requirements rather than federal law governing IRS Bank
Levy or Final Notice of Intent to Levy processes.
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