Loss of Driving Privileges for Unpaid Maryland Taxes
If you don't pay your Maryland state taxes, the Motor Vehicle Administration (MVA) will refuse to renew your driver's license and/or your vehicle registration. Unpaid Maryland taxes or unemployment insurance contributions can prevent you from driving legally or being able to register your vehicle.
To get help now, use TaxCure to find a licensed tax professional who has experience with Maryland state taxes and driver's license problems.
MD Denial of License Renewals and Vehicle Registrations
If you do not pay your MD taxes or make payment arrangements with the Office of the Comptroller, the MVA will not renew your commercial and non-commercial driver's license. Additionally, the MVA will not renew your vehicle registration or provide you with replacement tags, substitute tags, substitute stickers, or transfer tags.
You may face this issue if you don't pay individual income tax, or if your business fails to pay withholding tax, sales and use tax, state unemployment insurance contributions, or any other Maryland business taxes.
What to Do If MD Refuses to Renew Your License or Registration
To get the state to renew your license or registration, you can pay your taxes in full. Unfortunately, you cannot make a payment with the MVA. But you can easily make payments on the Office of the Comptroller's website or mail in your payment.
You may also be able to get the MVA hold released if you set up a payment plan on your MD taxes. However, to ensure the state will remove the hold, you must contact the Office of the Comptroller directly when requesting a payment plan. Individuals can call (855) 213-6669 or email us at [email protected]. Businesses can call 410-649-0633.
Whether sending an email or leaving a voicemail, make sure to note your name, address, the last four numbers of your Social Security Number, your case number or notice number if applicable, and your phone number.
Setting Up Payments to Remove License Holds
Generally, to get a driver's license hold released, you will need to make a downpayment before you start the payment agreement. Typically, that's about 10% of the total owed and then, you must be able to pay off the full bill within 36 months.
Maryland may require a larger downpayment if you have defaulted on an installment agreement in the past. However, if you prove that you're suffering financial hardship, you generally don't have to make any downpayment, and you can qualify for a longer repayment term.
What to Expect if You Lose Your License Due to Unpaid Taxes
The Comptroller's Office will send you several notices if you don't pay your taxes. The notices will demand payment, list the penalties and interest applied to your account, and outline the consequences of unpaid taxes. You may also receive notices saying that the state has issued a tax lien against you or is planning to seize your wages or other assets.
If the state directs the MVA to put a hold on your license or vehicle registrations, you will typically receive a notice in the mail before the renewal deadline. At that point, you can still avoid the hold by paying your taxes or setting up a payment agreement. To protect your right to drive, you should act as quickly as possible so that you can avoid a hold.
Unfortunately, if your license expires and you cannot renew it due to a hold, your driving privileges may lapse. Once your driver's license has been expired for a year or more, you can no longer renew it. Instead, you must take the written and the driving test again. Of course, however, you won't be able to do so until you take care of your outstanding tax liability.
Loss of Business Licenses
The Comptroller's Office may also withhold your business licenses if you have unpaid taxes. This includes professional licenses such as medical licenses, real estate licenses, and legal licenses. It also includes business licenses such as food service licenses.
Why Hire a Tax Pro to Help
Depending on how much you owe and your comfort level with the Maryland state tax code, you may be able to resolve a license hold on your own, but to protect your finances and your driving privileges, you may want to hire a tax pro.
An experienced CPA, tax attorney, or enrolled agent can help with the following:
- Ensuring the tax liability is correct.
- Disputing inaccurate tax assessments.
- Amending or filing tax returns to correct mistakes.
- Applying for payment plans.
- Requesting waivers of the usual required down payments.
- Reviewing your financial situation to see if you should consider an offer in compromise.
- If applicable, guiding you through the offer in compromise application process.
- Applying for penalty waivers from the state.
- Helping you deal with other unwanted collection actions such as liens or levies.
Additional Consequences of Unpaid Taxes in Maryland
In addition to losing your license or vehicle registration(s), you may also face the following consequences of unpaid taxes:
- State tax liens
- Wage garnishments
- Bank levies
- Asset seizures
- Closure of your business
FAQs About License Holds in Maryland
How does the MVA find out that you have unpaid taxes?
The Comptroller of Maryland reports unpaid individual and business taxes to the DOR. The Department of Labor Licensing and Regulation (DLLR) reports businesses that don't pay their unemployment insurance premiums to the state.
Can you lose your Maryland driver's license for unpaid IRS taxes?
No, the IRS does not have the right to restrict your state driving privileges. However, if you have unpaid federal taxes, the IRS can seize your MD state tax refunds, issue a federal tax lien, garnish your wages, and seize your assets. The IRS can also tell the State Department to revoke your passport if you have seriously delinquent federal taxes.
Will Maryland revoke my driving privileges for unpaid taxes?
No, the state does not revoke driving privileges for unpaid taxes. However, the MVA can refuse to renew your license. They can also refuse to renew your vehicle registration.
If you are over 21, you only have to renew your driver's license every eight years. So, theoretically, you may be able to go a few years without paying your taxes before losing your driving privileges. You must register vehicles every two years, however.
Do you have to pay in full to get your license renewed?
No, if the MVA puts a hold on your license due to unpaid tax, you may be able to get it removed by setting up a monthly payment plan. However, you shouldn't just apply online. Instead, contact the Comptroller's Office directly to ensure that the terms of your payment plan require the MVA to lift the hold.
What if you ignore an MVA hold?
If you ignore a hold, you will not be able to renew your license or registration. Without a license or registration, you will not be able to drive legally. Driving illegally subjects you to fines and criminal charges.
Get Help with Maryland State Tax Problems
If you're facing a license hold or dealing with any other MD state tax problems, you should reach out to a professional who has dedicated experience dealing with the Comptroller and extensive knowledge about MD's tax system. To get help now, explore the following links of MD tax pros or use TaxCure to search for a professional today: