Statute of Limitations Does Not Apply to Maryland Tax Judgment Liens

February 23, 2015

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On February 3, 2015, the Court of Special Appeals found in the case of State of Maryland, Comptroller of Maryland v. Kenneth R. Shipe that tax judgment liens never expire in the state of Maryland.  The ruling was decided by Judge Michele D. Hotten, who was joined by Judges Patrick L. Woodward and specially assigned Raymond G. Thieme Jr., a retired jurist.

The case began with a Montgomery County man, Kenneth R. Shipe, who was issued a “Notice of Lien of Judgment for Unpaid Tax” in April 2001 by the state of Maryland for his failure to pay $2,111.70 in income taxes from January 1997 to December 1998.  More than twelve years went by without the lien being enforced upon Shipe, which then led him to file for a “Motion to Release Judgment/Tax Lien” with the Montgomery County Circuit Court in June 2013.  Shipe’s argument was that the State’s judgment/tax lien was subject to Maryland’s twelve-year statute of limitations, therefore making the lien “unenforceable by reason of lapse of time on May 8, 2013.”  The State responded by arguing that the twelve-year statute of limitations “[did] not apply to a specialty taken for the use of the State.”  After a hearing was held in August 2013, the Montgomery County Circuit Court released the tax lien originally issued to Shipe, stating that a “plain reading of the statutes and cases cited clearly demonstrates the intent of the General Assembly to impose time limits on the Comptroller to enforce a tax lien once filed.”

The State was denied a motion for reconsideration by the Circuit Court, leading the Comptroller of Maryland, Peter Franchot, to appeal the case to the Court of Special Appeals of Maryland.  On February 3, 2015, the Court of Special Appeals reversed the Circuit Court ruling, instead finding that judgment liens for taxes owed to Maryland are immune to the twelve-year statute of limitations.  According to the judge, Section 13-806 of the Tax-General Article “does not waive the State’s immunity and clearly indicates that a tax lien ‘continues to the date on which the lien is:  (1) satisfied; or (2) released by the tax collector…’”  Contrary to the statement made by the Circuit Court, the judge found there was clearly no intent by the General Assembly to impose a specific statutory time limit on the State’s enforcement of a tax lien, and that it was in the tax collector’s judgment to release the lien.  After final decision, the Court ruled Shipe’s total costs owed to be $3,543.17 after a $637.93 penalty and $793.54 in accumulated interest, in addition to the original $2,111.70 in principal.  

 

Sources:

http://caselaw.findlaw.com/md-court-of-special-appeals/1691166.html

Lash, Steve.  “Tax liens are forever, Md. Court declares.” The Daily Record  9 February 2015: 1A, 10A.  Print.