Comptroller Franchot Announces First in the Nation Vendor Offset Program

ANNAPOLIS, MD - Comptroller Peter Franchot announced today that his agency's new partnership with federal government to collect back taxes from scofflaw vendors is on track to collect more than $2 million in the first year. Once the program is fully implemented, the Comptroller anticipates collections to be much higher annually. Maryland is the first state in the nation to participate in the new reciprocal program with the U.S. Department of the Treasury's Financial Management Service.

"Maryland is leading the way in collecting back taxes," said Comptroller Franchot. "Given the fiscal challenge we face, it's critical we use all available resources to get any money owed the state."

The program, which kicked off on June 11, allows Maryland to intercept federal vendor payments to satisfy state income tax liabilities. In the first week alone, the program brought in $49,870 from 69 vendors for state coffers. The federal government netted more than $42,000 from 38 state vendors.

"Given the program's successful first week, the initiative is on track to bring in more than $2 million in the first year alone," said Comptroller Franchot. "When fully implemented, we will bring in millions of dollars of back taxes owed the state of Maryland."

State officials estimate the total collected to grow as more federal agencies join the program and additional state liabilities are added from the Department of Labor, Licensing and Regulation and Central Collections Unit in the Fall of 2007. More taxes under the purview of the Comptroller's Office will also be phased in as part of the program this Summer.

In addition to the new federal vendor offset program, the Comptroller's Office participates in a federal income tax refund intercept program. Through this initiative, federal income tax refunds are intercepted by the agency to satisfy individual state income tax liabilities and vice versa.

So far in this calendar year, Maryland took back more than $19.7 million in back taxes from nearly 27,000 delinquent taxpayers. This represents almost a $1 million increase compared to the same time last year. The average offset in 2007 proved $727.

"The refund offset program we conduct with the federal government is one of the most successful in the nation," said Comptroller Franchot. "It keeps growing because we're able to quickly certify more accounts to intercept."