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Payroll Tax Overview for Maryland

Maryland WelcomeThe mechanics of payroll tax law vary widely by state, so knowing how to file and pay payroll taxes in a timely manner can be challenging. The following payroll tax overview should help give companies a better sense of the specific requirements in Maryland, assist them in filing taxes accurately, and help payroll tax managers mitigate the penalties associated with not filing taxes in a timely and accurate manner.

How to file and pay withholding taxes

The Comptroller of Maryland is responsible for collecting withholding taxes on behalf of the state.[1] All employers must register with the Revenue Administration Division by filing a Combined Registration Application Form (CRA) online at www.marylandtaxes.com, mail, or fax. The employer will be assigned a Central Registration Number (CRN) that will be used for employer income tax withholding.[2] To help determine the amount of tax due, employers may take advantage of the Comptroller’s withholding tax calculator.

The Comptroller assigns employers with one of five different filing schedules: accelerated, quarterly, monthly, seasonal and annual.[3] Generally, all new accounts are placed on a quarterly filing frequency, but may be changed following a yearly assessment.[4] Maryland encourages employers to file and pay withholding tax via eFile, an online service intended to reduce paper waste and make the filing process faster, easier and more accurate.[5] Employers with less than 25 W-2 forms to report may file by mail.[6]

Employers who do not owe tax must still register and file a return. Employers can file a zero report using Maryland’s telefile service.[7]

Payments can be made via direct debit (using Maryland’s bFile service), credit card, electronic payment (EFT), check, or money order.[8]

Penalties and interest for withholding taxes

Any employer who fails to file returns or pay tax as required is subject to a penalty not to exceed 25% of the unpaid tax.[9] If an employer pays tax, interest or penalty by check, and the check bounces, the employer will be charged $30 per check.[10]

Credits and refunds for withholding taxes

If an employer overpays, the overpayment may be refunded or be credited to future periods, as requested.[11] If a credit is requested, employers should wait to be notified of approval prior to using the credit.[12]

How to file and pay unemployment taxes

Unemployment insurance is collected by the Maryland Department of Labor, Licensing, and Regulation, Division of Unemployment Insurance (DLLR). Because Maryland has a combined registration process, employers can use the CRA to apply for many of the business tax accounts needed. This CRA covers obligations to seven agencies including the Comptroller and the DLLR.

The DLLR states that an employer is liable for unemployment insurance if there is a total payroll of $1,000 or more during any calendar quarter of the current or preceding calendar year.[13]

Maryland employers are required to file and pay their unemployment insurance taxes on a quarterly basis.[14] The Maryland Code of Regulations requires employers with 100 or more employees to submit quarterly wage information on magnetic tape and encourages smaller employers to report via diskette.[15] All other employers may report via e-Wage, which transmits wage information via email.[16]

Employers may pay unemployment insurance via ACH Debit (EFT), credit card, check or e-check.[17]

Penalties for unemployment taxes

Late payments incur an interest penalty of 1.5 percent per month for late payments, and late reports assess a penalty of $35 for each report.[18]

 

Credits and refunds for unemployment taxes

If an employer overpays, the overpayment may be refunded or be credited to future periods, as requested.[19] If a credit is requested, employers should wait to be notified of approval prior to using the credit.[20]

 

Learn More about ADP Employment Tax

 

Other resources

For additional resources, check out The Bridge Sponsored by ADP®, a new secure social networking community sponsored by ADP® that provides a unique peer-to-peer online forum for employers to interact, collaborate, communicate and share experiences and knowledge about a wide range of human capital management topics. Here you can find the Maryland tax forum and additional details about the state’s tax employment documents and requirements.

The information provided in this blog post is for informational purposes only and not for the purpose of providing accounting, legal, or tax advice. The information and services ADP provides should not be deemed a substitute for the advice of any such professional.  Such information is by nature subject to revision and may not be the most current information available.

[1]http://forms.marylandtaxes.com/current_forms/Withholding_Guide.pdf, pg. 4

[2]http://forms.marylandtaxes.com/current_forms/Withholding_Guide.pdf, pg. 4

[3]http://forms.marylandtaxes.com/current_forms/Withholding_Guide.pdf, pg. 6

[4]http://taxes.marylandtaxes.com/Business_Taxes/Business_Tax_Types/Income_Tax/Employer_Withholding/Filing_Withholding_Reports/Filing_Categories.shtml

[5]http://forms.marylandtaxes.com/current_forms/Withholding_Guide.pdf, pg. 7

[6]http://forms.marylandtaxes.com/current_forms/Withholding_Guide.pdf, pg. 8

[7]http://taxes.marylandtaxes.com/Business_Taxes/Business_Tax_Types/Income_Tax/Employer_Withholding/Filing_Withholding_Reports/

[8]http://taxes.marylandtaxes.com/Business_Taxes/Business_Tax_Types/Income_Tax/Employer_Withholding/Withholding_Payments/

[9]http://forms.marylandtaxes.com/current_forms/Withholding_Guide.pdf, pg. 4

[10]http://forms.marylandtaxes.com/current_forms/Withholding_Guide.pdf, pg. 4

[11]http://forms.marylandtaxes.com/current_forms/Withholding_Guide.pdf, pg. 7

[12]http://forms.marylandtaxes.com/current_forms/Withholding_Guide.pdf, pg. 7

[13]http://www.dllr.state.md.us/employment/empfaq.shtml#domestic

[14]http://www.dllr.state.md.us/employment/empfaq.shtml#file

[15]http://www.dllr.state.md.us/employment/empfaq.shtml#mag

[16]http://www.dllr.state.md.us/employment/empfaq.shtml#mag

[17]http://www.dllr.state.md.us/employment/empfaq.shtml#file

[18]http://www.dllr.state.md.us/employment/empfaq.shtml#file

[19]https://thebridge.adp.com/docs/DOC-1324, Credits/Refunds

[20]https://thebridge.adp.com/docs/DOC-1324, Credits/Refunds



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