Back Taxes

BLUE BELL, Pa. - Eager to show his understanding of Americans' economic distress, Republican Sen. John McCain of Arizona unveiled new economic prescriptions yesterday that include slashing the tax rate on capital gains in half and helping senior citizens grappling with shrinking retirement accounts. The new proposals come just three weeks before the election and on the eve of the final presidential debate between McCain and his opponent, Democratic Sen. Barack Obama of Illinios at Hofstra University in Hempstead, N.Y. They are part of McCain's effort to right his campaign and regain voters' trust in his handling of the economy, an area in which more voters favor Obama.

Comptroller Peter Franchot announced yesterday Maryland's first successful attempt at closing a real estate-related "tax-avoidance scheme," which yielded $10.8 million in back taxes. The amount represents three years' worth of taxes from a "major corporation" that was not identified because of tax confidentiality laws. Tax collectors have several other related audits under way and have determined that another company owes $5.7 million for using the same practice, officials said. Under the scheme, a company with stores in Maryland establishes a real estate investment trust to which its stores pay rent.

Nearly 105 million down, another 19 million to go. Those are the latest figures from the Treasury Department on the number of economic stimulus tax rebates issued so far. More than $86 billion has been disbursed as of last week and another $24 billion will be issued. So have you gotten yours? And if not, why not? That last question is not easy to answer, although plenty of people are still asking. Maybe it's because you didn't file your tax return early enough or it was incomplete. Maybe your stimulus payment was applied to back taxes or child support.

Baltimore is defending its practice of selling houses that have tax liens for unpaid water bills and other municipal fees, denying accusations by a major national bank that the city is responsible for a recent increase in mortgage foreclosures. The city defended the city's tax-sale practices in federal court filings this week as part of a groundbreaking lawsuit filed by Baltimore against Wells Fargo Bank. The city alleges in U.S. District Court that the bank exploited African-American families in Baltimore by offering them higher-interest loans than they offered white buyers, stripping them of equity through refinancings and charging them excessive points and fees.

A Maryland court has ordered clothing retailer Talbots Inc. to pay $1.1 million in back state income tax, the latest victory in a long-standing campaign by Maryland to crack down on companies that avoid paying taxes by setting up Delaware holding corporations. The Maryland Tax Court ruled that Talbots owed the money for income taxes from 1993 to 2003. Talbots set up a subsidiary in Delaware called Classics Chicago to reduce its corporate income taxes. "The vast majority of Maryland businesses are playing by the rules, and we will not allow a few large corporations to gain an unfair competitive advantage by flouting our tax laws," Comptroller Peter Franchot said yesterday.

Gov. Martin O'Malley and top leaders in the General Assembly are lining up votes for a plan to replace Maryland's new computer services tax with an income tax surcharge on top earners and cuts to transportation and other spending. The plan has the backing of Senate President Thomas V. Mike Miller and Sen. Ulysses Currie, the Prince George's County Democrat who chairs the powerful Budget and Taxation Committee. "I feel fairly certain we'll be able to get it out" of committee, Currie said yesterday.

Gov. Martin O'Malley threw his support behind a growing effort to repeal a $200 million tax on computer services and suggested yesterday that Maryland's wealthiest residents ought to help make up the difference with a surcharge on their personal income taxes. The governor, a Democrat, said it was unfair to expand the sales tax to just one industry and echoed the sentiments of many lawmakers who believe the application of the levy was not thoroughly vetted when it was approved in November.

A national real-estate developer that hopes to build a sprawling office park at Fort Meade would be required to at least pay property taxes, according to an opinion from the state attorney general's office. The 19-page opinion appears to offer the legal underpinning for state legislation that would permit the state and Anne Arundel County to negotiate with Texas-based Trammell Crow Co., which wants to build a $700 million office project on Fort Meade property for up to 10,000 workers arriving as part of a major defense expansion.

The House of Delegates gave preliminary approval last night to a modified version of Gov. Martin O'Malley's tax plan after objections by Montgomery County Democrats nearly derailed his efforts to resolve Maryland's budget shortfall. Under the new plan expected to pass the House early this morning, the sales tax would not be extended to any additional services. Proposals by O'Malley and the state Senate to tax computer services, real estate management and health clubs drew widespread protests, as did an earlier House proposal to tax repair services.

A coalition of several environmental groups and the home builders association are urging Gov. Martin O'Malley and the General Assembly to support a new tax that would raise an estimated $85 million a year to clean up the Chesapeake Bay and its tributaries. "Maryland has been slipping behind in the race to save the bay," said William C. Baker, president of the Chesapeake Bay Foundation. "Little has been done since the `Flush Fee' was passed in 2004," he added, referring to the law that raises about $65 million a year to upgrade sewage treatment plants.