Md. short form coming back

This year's drudgery replaced next year by the doozy of yesteryear

But that's no help tonight

Taxes

April 15, 1999|By Gady A. Epstein | Gady A. Epstein,SUN STAFF

So by now you may have figured out that the new Maryland tax form can be a pain in the neck. The one-page "short" sheet is gone, replaced by a longer, headache-inducing form with different rates and sets of exemptions for state and local taxes.

Well, next year the short form is coming back. Legislators have to file taxes, too, and they have passed a bill getting rid of the extra work sheets and calculations.

It may be too late for this year's tax day, but for next April taxpayers can count on a one-page form. They'll also have a new easy-to-read tax chart, with a completely different look to their local taxes. "Maryland taxpayers will thank us," said Sen. Barbara A. Hoffman, who chairs the Senate Budget and Taxation Committee. "It's bad enough you have to pay taxes to both the state and the county, but at least you only have to do a short form."

The calls for change started coming in during early January, when early-bird tax filers noticed new wrinkles in their state tax forms -- namely, that they had to fill out a longer form, plus work sheets for their local taxes.

Taxpayers picked up the telephone and let local officials, legislators and the comptroller's office know they weren't happy about the new complexities.

"We've received many phone calls, people asking our help to do this computation," said Stephen Cordi, deputy comptroller. "We've received many more people for walk-in assistance at our field offices."

And taxpayers have been making lots more mistakes.

With about a million paper tax returns filed, Cordi said, about 60,000 taxpayers have made mistakes figuring out their local taxes. At least 6,000 more taxpayers than last year have walked into state offices to get help filling out their forms.

The problems resulted from a phased-in, 10 percent cut in state income taxes that began in 1998 but was not extended to local taxes. Maryland's 23 local jurisdictions would have lost hundreds of millions of dollars a year had they gone along with the state tax cut.

So, for last year, the state tax rate was 4.875 percent. But local taxes -- figured as a percentage of state taxes -- are to be calculated using the prior rate of 5 percent and lower amounts for certain exemptions.

About the only people who didn't seem to mind the extra computations were tax preparers, some of whom reported increases in business.

"I've had I-don't-know-how-many people who have come in here and had me do their Marylands by hand because they can't do it," said James Heggins, who runs a branch office of H&R Block tax preparers in Annapolis. "It's certainly caused some problems this year."

Maryland Comptroller William Donald Schaefer called it "irritating," and he and leading legislators vowed to clean up the tax form. The solution was relatively simple. Eliminate the differences in exemptions, and eliminate the link between the local tax rate and the state tax rate.

Now your local tax rate will be a percentage of your taxable income, instead of a percentage of the old 5 percent state tax rate.

For example, Baltimore's tax is 50 percent of the 5 percent state income tax; now, it's going to be a straight 2.5 percent city income tax. Counties with the maximum piggyback rate of 60 percent would instead have a maximum 3 percent local tax on income.

It's the same tax, but without extra calculations.

"You take the new county rate, you multiply it by your personal income, that's it," Cordi said. "So we are hopeful that taxpayers will save some tax-preparation fees as well."

Pub Date: 4/15/99

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