COVID-19 Maryland Tax Updates

Although these are unpredictable times, taxpayers’ obligations remain a constant. The COVID-19 pandemic has hit Maryland’s economy hard, and the state’s legislators continue to negotiate ways to reconcile the increased strain on the state’s budget. Recent updates to Maryland’s tax landscape could carry implications for the state’s taxpayers. This article will pin point what Maryland residents and business entities should know as they plan their financial futures for the coming year and beyond. If you’d like advice on how to best structure your business and personal finances to adjust to these changing conditions, contact the experienced attorneys at JDKatz, P.C. today.

Qualifying Business-Related Tax Filing Deadlines Extended to July 15th

On April 14, 2020, Maryland Comptroller Peter Franchot announced that businesses whose tax filing deadlines would typically fall during the months of February, March, April, and May of 2020 may now file taxes associated with those deadlines by July 15, 2020. Affected entities include businesses filing a broad range of taxes, including sales taxes, admissions and amusement taxes, excise taxes on alcohol, tobacco, and motor fuel, tire recycling fees, bay restoration fee returns. The Comptroller’s announcement marks the second time the state has extended this filing deadlines since the COVID-19 pandemic began.

Montgomery County Property Taxes Remain Mostly Flat for FY 2021

In Montgomery County, property taxes will remain roughly the same for the coming fiscal year, with a weighted average tax rate of 97.85 cents per $100 of assessed value (compared to last year’s rate of 97.86 cents per $100). County Executive Marc Elrich has proposed an alternative interpretation of the county’s charter that would permit the Council to increase property taxes in the future. However, Elrich’s proposal remains in limbo and has faced heavy criticism related to transparency concerns. For now, the county’s tax regime (including the income tax offset credit of $692) largely mirrors that of the prior fiscal year.

State Provides Further Guidance to Employers on Withholdings for Teleworking Employees

On May 4, 2020, the Maryland Comptroller clarified Governor Larry Hogan’s mandatory “stay at home” orders in an announcement stating the orders would not affect withholding requirements for Maryland employers. The Comptroller’s guidance emphasized the multi-state compact that exempts residents of D.C., Pennsylvania, Virginia, and West Virginia from Maryland income tax for services performed in Maryland as remaining in place, and that employers’ withholding requirements under that agreement have not changed. However, employers should bear in mind the multi-state agreement does not apply to Delaware residents. Under normal circumstances, Maryland employers may have to withhold Maryland income taxes for their employees who are Delaware residents and working from home. The Comptroller addressed this issue and stated that in light of the COVID-19 pandemic, it would not impose additional withholding requirements on employers who have shifted to a teleworking model for their employees. For Maryland employers with employees who are Delaware residents and are now teleworking, this means that those employers do not need not begin to withhold Maryland state income tax from those Delaware employees’ paychecks.

Governor Vetoes a Variety of Increased and New Taxes

On May 7, 2020, Governor Hogan vetoed several measures passed by state legislators that would have levied new or increased taxes on a number of sectors. The vetoed bills would have increased tobacco and nicotine taxes and a imposed a first-of-its-kind tax on digital advertising. Governor Hogan said in a letter attached to his vetos that “it would be unconscionable to raise taxes and fees now” given the state’s economic downturn caused by the COVID-19 pandemic. The bills originally passed the Maryland legislature with a veto-proof majority, so their dispensation there remains to be determined (particularly as economic conditions continue to change).

Contact JDKatz For Questions Related To COVID-19