A Tax Holiday In Maryland

Maryland Comptroller Peter Franchot

Maryland Comptroller Peter Franchot Declares 90-Day Tax Payment Holiday For Consumers And Suggests Residents ‘Take Action’ With Creditors Amid Covid-19 Crisis

By Raoul Dennis

As the Coronavirus continues to spread through Maryland communities forcing state officials to enforce stay at home measures, Comptroller Peter Franchot has established what he calls a Tax Payment Holiday (90 days) for state residents.

“I think that the health emergency is creating tremendous economic damage to the state. I think in addition to [addressing] the health crisis we can begin to work on something that will help with the burden of all the fiscal anxiety that’s out there,” Franchot said in an interview with Prince George’s Suite Magazine & Media March 27. “We have announced a 90-day tax holiday where no Marylander needs to send us any money whatsoever. You don’t need to file any tax returns, you are in no danger of being fined or penalized at all. We do not expect to see your April 15 return until July 15. That’s when we expect you to file and to pay those taxes if you owe.”

With the first of the month coming this week, the comptroller and many Maryland leaders recognize the anxiety that residents have as many are currently missing nearly two pay periods.

Maryland Governor Larry J. Hogan and the comptroller are in agreement on the need to address the current crisis aggressively. The governor has directed $75 million of the state’s rainy day fund toward the effort to stop Covid-19. Maryland has been so proactive against the virus it has been recently recognized as one of the top three states in the nation in aggressively combating Covid-19.

Franchot sees his office’s role as one that will help alleviate financial stress on families but says Maryland heads of households should take fiscal matters a step further.

He calls on consumers to reach out to their creditors and ask for a similar 90-day holiday from monthly bills. Franchot calls on them to talk personally with creditors before sending those checks.

“I would also like to suggest that the two million Maryland families and millions of Maryland citizens take advantage of what I call a 90 day payment holiday. That means all of the checks that you write to your creditors – like the bank loans, auto loan repayments, utility bills and all of the various expenses that we normally write checks out to – [such as] our landlords, etc.  - do not send those checks until you talk personally with your creditor and ask them for a 90 day payment holiday similar to the tax holiday that I am announcing.”

Franchot says “The big economic issue for the state is how do we emerge from the health crisis with enough working capital for small businesses to reopen and for individual families to weather the fiscal stress.”

He explains, for example, that Marylanders pay $6 billion a month in mortgage payments and auto payments alone.

“That needs to be put on hold for three months,” Franchot says.

Once the three months have passed and people are back to work and the economy is moving again, then people can get in touch with their creditors and discuss “a phased-in repayment of fees over the 90 days they granted.”

Franchot believes residents will be pleasantly surprised to learn how many of those creditors will be willing to accept the request.

“It’s voluntary but I’m told that all the private sector are primed to have very positive responses and I encourage everybody to call their creditors before you send checks on April 1.”

The banking industry is preparing to adjust to the anticipated rift in the state’s economic landscape. The Maryland Banking Association is a longstanding advocacy and resource coalition comprised of 123 banks -- all FDIC insured and federally regulated. MBA members manage some $120 billion in deposits collectively. The association is working to provide some financial relief to bank customers.

Kathleen Murphy, president and CEO of the Maryland Bankers Association

“We’re in this together. The success of the bank is tied to the success of their customers and their community,” says Kathleen Murphy, president and CEO of the Maryland Bankers Association. “Our members have been incredibly proactive [on this issue].”

“Anyone who is experiencing a hardship as a result of the Coronavirus needs to contact their bank because the solutions vary depending on their individual circumstances. That’s the most important thing that people need to do: Banks are not going to know unless you contact them.”

Murphy says that banks are prepared to defer payments – primarily by tacking payments onto the tail end of the loan in an effort to aid customers and small businesses in getting through the next three to four months.

Although each bank operates differently, Murphy stresses the fact that all member banks are available to work with their customers on the issue. Click here to locate your bank and get more details.

The banking industry leader also applauded the passage of the $2 trillion Coronavirus Aid, Relief, and Economic Security Act (CARE) and the programs within it.

“MBA is optimistic about the new Payroll Protection Program and the impact of this program. It is designed to provide rapid, efficient, low-cost financial assistance to help businesses with payroll and operating costs. MBA and banks across Maryland eagerly await the loan program guidelines to be issued by the SBA and Treasury potentially as early as next week so that this program can become operational as soon as possible.”

The time that the CARE Act will take to fully flow into the nation’s economic bloodstream is one of the reasons Franchot is making the administration’s 90-day payment holiday a priority.

“I’m not being critical but it takes time for the federal and state relief programs to be implemented,” Franchot says. “[But] This is something we can do now. I think it’s important for individuals to empower themselves.”

The comptroller, himself a family man, urged residents to hold onto whatever cash they have, harkening back to the idiom ‘a penny saved is a penny earned.’

“People should husband their cash, keep what cash they have for their own family or their own business,” he says. “Cash is going to be king as this emergency unfolds and the economic damage is finally assessed.”

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