Tax changes mean double trouble for state collectors Filing errors are up twofold over 1992

February 10, 1993|By David Michael Ettlin | David Michael Ettlin,Staff Writer

Income tax season -- a nightmare for many taxpayers -- is proving irksome this year even for the state tax collector.

Changes enacted last year in the piggyback income tax rate by five Maryland counties are being blamed by the state comptroller's office for more than doubling the normal error rate in the first wave of tax returns that has been filed.

Errors in piggyback tax calculations are turning up not only in tax returns prepared by individuals, but those done by commercial tax preparers and accountants, said Marvin Bond, spokesman for the comptroller.

The piggyback tax rate -- the percentage of the state income tax that is used to calculate the local income tax for the 23 counties and Baltimore -- was a nearly uniform 50 percent throughout Maryland until the legislature last year granted local jurisdictions the option of raising it.

Nearly everyone in Maryland could simply multiply the state income tax obligation by 50 percent to figure the local tax -- except for residents of Worcester County, where the piggyback rate was a mere 20 percent.

Your state tax was $1,000? Easy. The local tax most places would have been $500.

In Worcester, still not so tough -- the local tax would have been $200.

The General Assembly's action allowed local jurisdictions to raise their piggyback tax rate as high as

60 percent. (They could lower it, too -- but you know how likely that would be.)

Taking advantage of the option to raise rates were Prince George's and Talbot counties, which raised their piggyback rates to the maximum 60 percent; and Allegany, Montgomery and Baltimore counties, which opted for 55 percent. (Worcester's rate rises to 30 percent for income earned in 1993.)

Almost predictably, Mr. Bond said, returns from residents in the biggest jurisdictions with changes -- Montgomery, Prince George's and Baltimore counties -- showed the highest rate of error.

In some cases, the local tax was calculated on the basis of place of employment rather than residence -- or even figured by commercial preparers on the basis of the rate where the company office was located, or by using computer software that had not been updated to reflect the changes.

Do you live in Anne Arundel, where the rate is 50 percent? Work in Prince George's, where the rate is 60 percent? Have your return prepared by an accountant in Montgomery, where the rate is 55 percent?


Mr. Bond emphasized yesterday the only factor that matters is where the taxpayer lives -- and the rate for that jurisdiction is the one that should be used in calculating the local income tax.

The state tax packet includes separate work sheets grouping the various jurisdictions by tax rate, and errors can be avoided by using the appropriate work sheet for the taxpayer's jurisdiction of residence, Mr. Bond said.

In a normal year, Mr. Bond said, the error rate may be 1 percent to 1 1/4 percent, but samplings of the about 200,000 returns already filed are showing an error rate of about 2 1/2 percent.

Income tax officials hope sending out word of the problem will reduce the error rate as the bulk of an expected 2.2 million Maryland tax returns arrive.

Mr. Bond said anyone who realizes that a mistake was made on a return already filed need do nothing -- the error will be caught and corrected by the state Income Tax Division, and notification sent of any adjustment on tax liability or refund.

But errors could slow down the processing of refund checks, and add to the workload of the more than 500 state employees dealing with tax returns, Mr. Bond said.

He said state income tax offices will be open Saturday from 9 a.m. to 1 p.m., and on the holidays -- Lincoln's Birthday on Friday, and President's Day on Monday -- from 8 a.m. to 5 p.m.

Addresses and telephone numbers appear in local telephone directories, and on the back of the state income tax packet.

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