CPA helps employers get tax waiver


Pasadena accountant Elmer Dunn can relax today after completing a pile of clients' tax returns as late as Monday. But thanks to one extra task Mr. Dunn took on earlier this month, business people all over Maryland can rest a little easier about another tax deadline that was supposed to be in two weeks.

State officials credit Mr. Dunn with spotting a problem in the state's new unemployment insurance tax laws that threatened to put small businesses like Mr. Dunn's clients in a bind: The General Assembly deadlocked for a month over how much to cut unemployment insurance payroll taxes. That meant the forms went out this month instead of last month, as officials waited to see what the new law would be.

So there were Mr. Dunn and his son, Elmer Jr., looking at about 200 clients who would all need to make their quarterly unemployment insurance payments by April 30. So instead of meekly accepting late-payment penalties, they waded into government in search of common sense. And they won, in the form of a waiver that gives employers an extra two weeks to file their first-quarter unemployment insurance tax returns.

"The problem is, we had 15 days to do what we normally do in a month," Mr. Dunn said. "They were just putting too much work on small accounting firms."

Mr. Dunn first contacted his local legislator, Del. John R. Leopold, an Anne Arundel County Republican. Mr. Leopold said he considered a special bill to delay the April payment a couple of weeks, but decided it was too late in the legislative session to get the bill passed. So he turned to the office of Gov. Parris N. Glendening.

"They agreed it was a serious problem," Mr. Leopold said. "They say the devil is in the details. You have to be careful when you plan long-term improvements that you take care of short-term details, because they can be just as oppressive."

Charles O. Middlebrooks, assistant secretary for employment and training at the state Department of Economic and Employment Development, said department Secretary James Brady granted a waiver from late payment penalties for quarterly returns filed by May 15. He and Mr. Leopold emphasized that the grace period is a one-time exemption that applies only to this quarter.

"We got an inquiry as to whether it was possible, and of course we said yes," Mr. Middlebrooks said. "Most people will know about it and will send it on time" without taking advantage of the delay.

The reason for the confusion was a disagreement between the state Senate and House of Delegates over how much to cut the surcharge to unemployment insurance premiums that employers pay. The tax cut bill, which also raises the maximum weekly amount an unemployed worker can claim to $250 from $223, spent nearly a month in a House-Senate conference committee before a compromise was struck.

The new law cuts the surtax all employers pay to 1.1 percent of payroll from 1.7 percent. That rate is applied on top of insurance premiums tailored to how often an employer has laid off workers who made claims under the program.

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