Innovative Initiatives Capture Millions of Dollars Owed the State
Annapolis, MD (October 5, 2010) – Emphasizing his commitment to enforce Maryland’s tax laws as effectively as possible, Comptroller Peter Franchot announced today that more than $162 million has been returned to Maryland’s coffers as a result of innovative partnerships with federal government agencies. The first-in-the-nation Federal Vendor Offset Program and the Federal Income Tax Refund Intercept Program are partnerships between Maryland and the federal government to collect back taxes and other monies owed the state from tax scofflaws.
“It has been one of my top priorities to ensure that my office is using every tool at our disposal and creating new innovative partnerships to collect monies that are owed the state,” said Comptroller Franchot. “I was very proud that Maryland was the first state in the country to join the Federal Vendor Offset program and that we have aggressively pursued the Income Tax Refund Intercept Program. During tough economic times, programs such as these that generate income for the state are vital. They also reward taxpayers who do the right thing by not allowing those who would cheat the state to get away with it. These are not new taxes, but taxes rightfully owed the state. We are also proving to tax scofflaws that they can run but can’t hide.”
The Federal Vendor Offset Program allows Maryland to intercept federal vendor payments to satisfy tax and other financial liabilities of the state. In 2007, Maryland became the first state in the nation to participate in the pilot reciprocal program with the U.S. Department of the Treasury’s Financial Management Service. Since its inception, Department of Labor, Licensing and Regulation (DLLR) and the Central Collections Unit (CCU) were added to the program and debts owed to those agencies are intercepted as well.
In total, $51,820,302.87 has been collected through this program over the past three years. Most of the collected debt has fulfilled tax liabilities totaling $26,008,450.88, while $8,193,231.19 has gone to DLLR and $17,618,620.80 to CCU to satisfy other financial liabilities.
In addition to this rewarding program with the U.S. Department of the Treasury, the Comptroller’s Office participates in the Federal Income Tax Refund Intercept Program.
Through this initiative, federal income tax refunds are intercepted by the agency to satisfy individual state income tax liabilities. In turn, the Internal Revenue Service (IRS) intercepts Maryland income tax refunds of delinquent tax payers to satisfy individual federal income tax liabilities. Since 2008, the program has returned $111,444,972.09 in back taxes to Maryland.
“The refund offset program is one of the most successful in the nation,” said Comptroller Franchot. “It continues to grow because of our ability to quickly certify more accounts to intercept.”
While not federal partnerships, Maryland also has state reciprocal agreements with Connecticut, Delaware, New Jersey and New York.
In recognition of his work on behalf of Maryland taxpayers, Comptroller Franchot has been honored several times by his peers and national groups. In particular, for the innovative partnerships he has entered and the historic investment to upgrade the state’s tax compliance technology, the Association of Government Accountants awarded Comptroller Franchot their highest honor, the William R. Snodgrass Distinguished Leadership award in 2008.