The Statute of Limitations for State Income Taxes in the State of Maryland

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Tax-based statutes of limitations in Maryland protect both the state and the resident from facing legal action after a specified period of time has passed. Residents are protected from having to pay taxes after a number of years have passed when records may not be available anymore and memories have faded. The state, however, has a longer statute of limitations for tax actions than residents have to claim refunds of taxes.

What is a Statute of Limitations

  • A statute of limitations is a legal time limit within which legal actions must be taken or the entity or person who could bring the action waives that right. States provide for various statutes of limitations based on the type of action. Tax actions are often similar to the federal tax statute of limitations.

Limit to Claim a Refund

  • If you are owed a tax refund from the state of Maryland, you must claim that refund within three years of the date that the tax was paid. Claims for estate tax or generation-skipping transfer taxes must be made within three years form the date of the event that caused such refund. If you operate a business and you are owed a claim for refund for various state taxes, such as franchise taxes or alcoholic beverage taxes, the statute of limitations varies by the specific type of tax.

Limit for Collections

  • Maryland also has a time limit within which it must collect taxes that it is owed. The state must collect taxes within a seven-year period from the date that the tax was due. Maryland may obtain a two-year extension if a receiver or trustee is appointed within the initial seven-year period for collections. This two-year extension commences on the date of the trustee or receiver's appointment. Despite these limits, if the state has received a judgment against you for taxes owed, the judgment is enforceable after seven years.

Special MD Tax Statutes of Limitations

  • Maryland must bring actions to recover certain taxes, such as admissions and amusement taxes, boxing and wrestling taxes, motor fuel taxes or sales and use taxes, within four years from the date upon which the tax was due. However, in the event of fraud or gross negligence, there is no statute of limitations to recover these special taxes.

References

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