Aggressive Compliance Efforts Yield More Than $1.4B
Annapolis, Md. (October 19, 2010) – Approaching the two-year anniversary of its approval by the Board of Public Works, the state’s new Modernized Integrated Tax System (MITS) has netted nearly $65 million in back taxes, Comptroller Peter Franchot announced today. Using other innovative and aggressive strategies, the agency has collected more than $1.4 billion in delinquent taxes over the last four years.
The focal point of his efforts to modernize the agency’s resources, MITS is a state-of-the-art data warehousing and tax collection system intended to capture nearly $200 million in revenue owed the state in its initial four-year implementation phase. Following the phase-in period, the tax system is expected to generate $80 to $100 million per year in perpetuity. Employed only two years ago as an $87 million investment to the state, MITS has exceeded expectations and nearly paid for itself already.
“Through the implementation of MITS, my office has made impressive strides to ensure that Maryland is collecting tax revenues to which the state is entitled,” said Comptroller Franchot. “We expected that once fully implemented, MITS would bring in tens of millions annually and it has done just that and more, serving as a cornerstone for returning Maryland to a sound fiscal standing.”
In addition to the MITS collections, over the last four years, The Comptroller’s Office has returned more than $750 million in delinquent and deficient taxes from businesses to Maryland coffers; while, the agency has collected more than $620 million in personal income tax from individuals owing the state.
The Comptroller’s Office has also made a hard-line effort to aggressively crack down on large corporations using tax avoidance strategies such as “captive” Real Estate Investment Trusts and Delaware Holding Company ploys, generating more than $110 million in money owed the state.
“When I took office as Comptroller, I promised that one of my top priorities would be to ensure that we use every tool at our disposal and modernize the current compliance system to collect monies owed the state, especially in these tough economic times” said Franchot. “I am committed to making sure that everyone pays their fair share, whether an individual, small business or large corporation. The majority of Maryland businesses and residents abide by the tax laws and play by the rules. Therefore, we will not allow a few bad apples to gain an unfair advantage by using schemes and other measures to intentionally avoid paying their tax liabilities.”
In recognition of his work on behalf of Maryland taxpayers, Comptroller Franchot has been honored several times by his peers and national groups. In particular, the Maryland General Assembly commended him in 2007 for his significant administrative action in going after corporations utilizing “captive” REIT loopholes to evade taxes. Additionally, the Association of Government Accountants awarded Comptroller Franchot their highest honor, the William R. Snodgrass Distinguished Leadership award in 2008 for his efforts to secure the historic investment to upgrade the state’s tax compliance technology, which has bolstered recent tax collections.
Media Contact: Joseph Shapiro, (410) 260-7305 (office), (443) 871-2244 (cell)