You can set up a Maryland tax payment plan through the Comptroller of Maryland, which lets you pay an overdue individual income tax balance in monthly installments instead of all at once. The fastest route is the Individual Online Service Center at interactive.marylandtaxes.gov, but you can also arrange a plan by phone or by mail. Interest keeps running on your unpaid balance the whole time, so the shorter the plan, the less you ultimately pay.
How to Request the Plan
Log in to the Individual Online Service Center and choose the option to set up a new payment agreement. You will need the notice number from a recent tax bill to get through the online form. If you don’t have the notice handy, the Collection Section can look it up at 410-974-2432 or 1-888-674-0016.1Comptroller of Maryland. Individual Payment Agreement
If the online system won’t approve your plan automatically, you have two fallbacks. You can complete a payment plan request through the Comptroller’s service portal, linked from the same payment agreement page.1Comptroller of Maryland. Individual Payment Agreement Or you can call the Collection Section and work through the setup with a representative. The Collection Section also accepts email at cdcollectionind@marylandtaxes.gov; include only the last four digits of your Social Security number in anything you send.2Maryland Comptroller of Maryland. Tax Guidance – Setting Up a Payment Plan
If you received a paper bill, you can also complete and return the bottom portion of that bill to set up a plan by mail.2Maryland Comptroller of Maryland. Tax Guidance – Setting Up a Payment Plan
What You Need Before You Apply
You must have filed every required tax return for prior years. The Comptroller will not negotiate a payment schedule while you have unfiled returns outstanding. Have your Social Security number ready, along with the notice number from your bill.
Think carefully about the monthly amount you propose. Subtract your necessary monthly expenses from your take-home pay and offer something you can actually sustain for the full life of the plan. The Comptroller generally wants the balance resolved within a reasonable timeframe, so very small payments against a large debt are less likely to be accepted.2Maryland Comptroller of Maryland. Tax Guidance – Setting Up a Payment Plan
Interest and Penalties Keep Running
A payment plan does not freeze your balance. Interest accrues on every dollar you still owe until the debt is paid in full, and it started on the original due date of the tax, not the date you set up the plan.3Maryland General Assembly. Maryland Code Tax-General 13-601 – Unpaid Tax The rate is set annually by the Comptroller and is the greater of 9% or 3 percentage points above the average prime rate charged by commercial banks during the prior fiscal year.4Maryland General Assembly. Maryland Code Tax-General 13-604 – Interest Rates
Late-payment penalties can reach up to 25% of the tax owed.5Comptroller of Maryland. Tax Guidance – Penalty and Interest Charges Those penalties are usually assessed before the plan is set up, so they are already baked into your starting balance. Every month you stay on the plan, interest nudges the remaining balance up, which is why paying more than the minimum whenever you can saves real money.
Keeping the Plan in Good Standing
Once your plan is approved, consistency is what protects it. Missing even one payment can trigger a default. You also need to stay current on any new tax obligations while the plan is active; if you file a return for a later year and owe money, that new liability can jeopardize the existing agreement.
The Comptroller offers a recurring direct debit that pulls your payment from your bank account on schedule, which takes the risk of a missed due date off the table.2Maryland Comptroller of Maryland. Tax Guidance – Setting Up a Payment Plan You enroll in autopay through the same Individual Online Service Center where you created the agreement, using your payment agreement number.1Comptroller of Maryland. Individual Payment Agreement
What Happens If You Default
Defaulting opens the Comptroller’s full collection toolkit. The state can file a tax lien with the circuit court in the county where your property is located, which attaches to your real estate and makes it difficult to sell or refinance.6New York Codes, Rules and Regulations. Maryland Code Tax-General 13-807 – Filing, Indexing, and Recording Tax Lien
The Comptroller can also send a notice directly to your bank, ordering it to seize funds in your accounts up to the amount of the lien. The bank must comply immediately and has 30 days to report back to the Comptroller with the amount frozen.7Maryland General Assembly. Maryland Code Tax-General 13-812 The state can intercept your Maryland tax refunds and apply them to the balance as well, and these actions can happen at the same time.
Even while you are making payments, Maryland can refer a delinquent balance to the federal Treasury Offset Program, which matches state debts against federal payments including your federal tax refund. If there is a match, the federal government withholds part or all of your refund and sends it to Maryland.8Bureau of the Fiscal Service. Treasury Offset Program If you were counting on that refund, plan accordingly.
When a Payment Plan Isn’t Enough
If a monthly plan still isn’t feasible, Maryland has a separate program that lets you settle for less than the full amount. The Comptroller’s Offer in Compromise Program looks at your available resources and circumstances to decide whether reducing the balance is appropriate.9Comptroller of Maryland. Offer in Compromise Program FAQs
You have to meet several conditions to qualify:
- Your tax liability must have resulted in a formal assessment, and at least two years must have passed since you became liable.
- You must have filed the current year’s return by its due date (including extensions) and all income tax returns for the prior six years.
- You cannot have the same tax issue under appeal, and you cannot be in an active bankruptcy proceeding.
You apply by sending Form MD 656 and Form MD 433-A to oic@marylandtaxes.gov. An offer can be structured as a lump sum, as a payment plan of up to 24 months for less than the full balance, or even as zero dollars if you truly cannot pay anything.9Comptroller of Maryland. Offer in Compromise Program FAQs
If your offer is accepted, you must file and pay all tax obligations on time for the next three years. Miss a filing or a payment during that window and the Comptroller can default the compromise, reinstating your original debt minus what you’ve already paid, plus accrued interest and penalties.9Comptroller of Maryland. Offer in Compromise Program FAQs