With 19 days to go, tax amnesty is way short

Md. collects less than 10 percent but expects rush at end

October 12, 2001|By Gus G. Sentementes | Gus G. Sentementes,SUN STAFF

With 19 days to go, the state has received less than 10 percent of what it expects in its drive to collect back taxes - without penalties or interest - from individuals and businesses, the state comptroller's office said yesterday.

The $4.7 million collected falls far short of the $50 million that the General Assembly expected to be able to disburse. Legislative analysts had estimated $70 million could be collected.

But Stephen M. Cordi, the deputy comptroller, said that this year's tax amnesty program is outpacing the state's last program in 1987, and that collections will greatly increase in the days before the Oct. 31 deadline. "We're going to get 90 percent of the money in the last 10 days," he said.

FOR THE RECORD - An article in yesterday's Business section mischaracterized the state's tax amnesty program. The state comptroller's office is collecting taxes and interest - only penalties are being waived during the two-month period ending Oct. 31. The Sun regrets the error.

The Sept. 11 terrorist attacks hampered publicity of the amnesty program, and uncertain economic times may mean that people will hold onto their cash, rather than pay their past tax bills, Cordi said.

For roughly the same period in 1987, the state had collected $2.8 million, Cordi said, and ended up with $36.6 million at the end of the two-month period.

Most of the collections have come from individual taxpayers, with $2.49 million from 2,591 applications. The vast majority of amnesty applications comes from "known" delinquents, Cordi said.

The state mailed 180,000 statements to notify these delinquents of their tax liability starting in late August.

But in terms of dollars, the amount collected from previously unknown tax delinquents - what Cordi called "out-of-the-blue money" - constitutes about 20 percent of the total collected so far.

That percentage is sure to rise if results from the 1987 amnesty program are any indication. Collections from previously unknown tax delinquents made up 56.8 percent of total taxes paid during the 1987 amnesty program, Cordi said.

"Amnesty typically brings in a substantial amount of money," said Karen J. Boucher, a principal in Arthur Andersen LLP's Milwaukee office who specializes in state and local taxes. "You get a bump from nonfilers and you get them on your books ... so you know next year that your computer system should generate a question" if they don't file.

Advertising is a big part of the campaign to publicize the tax amnesty program - the General Assembly allotted $1 million for advertising expenses. But the Sept. 11 terrorist attacks, and the subsequent blanket media coverage, meant that a big part of its television advertising was canceled by news coverage.

"We lost about a week's worth of advertising on television because of the events of Sept. 11," said Michael D. Golden, the comptroller's deputy director of communications. "Actually, I believe our saturation is a little higher now because the week that we lost has been pumped into the rest of the campaign."

With more people turning to cable television for news, Golden said the state altered its strategy and bought advertising time on cable systems, such as CNN and MSNBC, in the Baltimore-Washington region. The state initially planned to advertise only on the broadcast networks.

The additional advertising on cable means that advertisement costs will run "a little bit" more than $1 million, and be covered through another $1 million allotted by the General Assembly for administrative expenses related to the program, Golden said.

After the tax amnesty period ends Oct. 31, state officials said that they will pursue aggressive civil and criminal enforcement measures. Criminal fines will increase from $5,000 to $10,000 for each violation, and jail time of up to five years is possible.

Tax amnesty receipts

As of Oct. 10, the state comptroller's office reports collecting the following amounts in taxes and interest. The last day of tax amnesty is Oct. 31.

Tax Type Total Tax + Interest Paid

Admissions & Amusement Tax ............ $4,949.52

Corporation Income Tax .............. $227,443.56

Employer Withholding ............. $1,136,272.91

Fiduciary Income Tax ............. $31,264.91

Individual Income Tax ............... $2,491,226.66

Pass-through Entity Income Tax ............. $64,290.28

Sales & Use Tax ............... $815,394.99

Total: ......................................... $4,770,842.83

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