Tax Liability

The state comptroller's office continues to investigate whether to collect an estimated $4,000 in back taxes from the developer of the Blue Ridge Manor community in New Windsor for construction materials the developer purchased tax-free.Bill and Mel Schneider said the finances of their development company, the New Windsor Partnership, were audited by the state in February after New Windsor Mayor Jack A. Gullo Jr. voiced concern about the transactions.Marvin Bond, a spokesman for the comptroller's office, said the state cannot comment specifically on the NWP case because it is still being investigated.

Here is an answer from members of the Maryland Association of Certified Public Accountants to a reader's tax question. The Sun will publish answers through April 15.Q: In 1992, I entered into a property settlement agreement with my husband (since divorced) whereby I paid a lump sum of money in exchange for title to our home. The lump sum was held by him in the form of a second mortgage on the house. I sold the house in the first quarter of 1993 and the settlement included payment of the second mortgage to my ex-husband.

Here are answers from members of the Maryland Association of Certified Public Accountants to readers' tax questions. The Sun will publish answers through April 15.Q: Last year I filed a joint return with my wife. This year I'm separated. I will get a 1099 from the state reporting the refund of state taxes we got last year. Who pays what on this refund? Do I pay 50 percent and she 50 percent or do I have to pay it all?A: Assuming the state refund must be included in income (you can determine this by reviewing the "Tax Benefit Rule" in your Form 1040 tax package)

Beginning in January, wage earners in four Maryland counties will pay higher local income, or "piggyback," taxes to support government services not funded at the state level.Officials in St. Mary's, Somerset and Wicomico counties raised local income taxes from 50 percent of state tax liability to 60 percent. That amounts to a 20 percent increase in the tax rate.In Queen Anne's County, commissioners raised the piggyback tax from 50 percent to 55 percent of state tax liability, amounting to a 10 percent increase.

Computing taxable gain from home saleQ: My lawyer and accountant are giving me conflicting advicon how to compute the taxable gain from my home sale. Can you please resolve the matter? Our original home was purchased for $80,000 years ago, and we recently got $550,000 for it after expenses. We are eligible to use the $125,000 one-time profit exclusion available to homeowners over age 55. Our replacement home cost $300,000. Do we have a taxable gain, and if so, how much is it?A: This oft-asked question stems from continuing confusion over whether taxpayers are able to deduct both the original home's basis (in your case, $80,000)

New York -- To improve its money flow, Congress has passed a tax-collection law that will be unfair to a lot of people. It touches everyone who might withdraw money from an employer-sponsored, tax-deferred retirement plan.Don't get me wrong; I'm all in favor of rules that will capture every dime that taxpayers owe. But this law can entrap you, by creating a tax liability where none had to exist. Even worse, it raises money only from the ill-informed. The well-informed will know how to avoid it.U.

Until the Internal Revenue Service filed a $6 million lien TC against Ellicott City developer Fred Waters Allnutt last month, it looked like Howard County might never collect the personal property taxes he owes.As a result of the lien, Mr. Allnutt filed for bankruptcy protection. The county now hopes to recoup at least 10 cents on the dollar -- no small change in Mr. Allnutt's case.The county estimates that Mr. Allnutt owes between $850,000 and $1.2 million in unpaid personal property taxes and in penalties for non-payment.

The Internal Revenue Service has seized the business of a Howard County contractor who once said that paying taxes with paper money is unconstitutional.The $6 million lien -- based on a reported tax liability from 1981 through 1986 -- has put 60 employees and 20 subcontractors out of work and affected 100 other businesses in the county.Fred Waters Allnutt was convicted in 1983 of evading state taxes.He had refused to file a state tax return or pay property taxes because he believed payment with Federal Reserve notes violated the U.S. Constitution.

WASHINGTON -- The Supreme Court sent revenue-short states a strong hint yesterday that they might gain more power to tax the income of businesses that operate across state lines and globally.In a move that a Maryland official said could aid the state's coffers, the court volunteered to consider overruling two of its own decisions curbing states' taxing authority. It had not been asked directly to do that.Tax lawyers said the court's move widened a controversy that could involve tens of millions of dollars of tax liability.