Bill Positions

Bill Number: SB 745

Bill Title: Interest Rate on Tax Deficiencies and Refunds

Bill Sponsor(s): Senator Kasemeyer

Subject: Budget & Tax

Committee: B&T

Bill Summary: This bill would have altered the calculation of interest that the Comptroller sets for delinquent state taxes and refunds of taxes. Under current law the minimum annual rate is 13%. This bill would have reduced the annual interest rate over a period of years, starting in 2011. The interest rate would have been 2 percentage points above the Internal Revenue Code underpayment rate.

History: The Chamber has supported similar bills in recent years to lower the minimum interest rate on delinquent taxes to be below 13%. In 2007, the Budget & Taxation took no action on SB 867. In 2008, the Committee took no action on SB 227. In 2009 SB 745 again died without a vote in the Budget & Taxation Committee.

Chamber Position: Support

Position Summary: Interest on delinquent taxes and refunds of taxes should be market-based, and reflect the time value of money. The current interest rate of 13% was set 20 years ago when market rates were much higher. In today's economy, an interest rate of 13% is actually an additional penalty that gouges taxpayers. It is appropriate to transition to a market-based rate that rises and falls over time.

Position Statement: Click here (pdf)

Chamber Staff: Ronald Wineholt

General Assembly: Click here to view the bill on the Maryland General Assembly's website.