Our Human Resources Blog

On March 10^th, House Bill 632 is slated for a hearing before the House Ways & Means Committee.  The bill requires Maryland employers to provide written or electronic notification to employees who may be eligible for the state earned income tax credit. It would apply to even the smallest Maryland companies.

The employer’s notification to employees would be required to state the following: 

• the employee may be eligible for the federal and State earned income credits
• the employee must file an income tax return to receive the credit even if taxes are not owed
• a portion of the earned income tax credit may be refundable 

Employers would be required to inform eligible employers by January 1 of each year. 

The bill was originally introduced to help spread the word that the tax credit exists and is available to assist struggling families. (The earned income tax credit is designed to supplement the income of low wage workers.) According to supporters-- this bill is needed, as despite the efforts of government agencies and non profit groups, thousands of workers each year fail to claim credit on their tax return.  About 20% of eligible low income taxpayers don’t apply for the credit.

Those that oppose the bill, believe it’s the responsibility of the state not employers to identify potentially eligible employees. In order for employers to distribute the notice to “an employee who may be eligible,” an employer would need to know information such as the adjusted gross income for the family, the employee’s income tax filing status, and the number of the employee’s “qualified” children. Which wouldn't be in an employee's files.

Requiring employers to notify employees could potentially cost businesses not only additional time and money but could cause privacy issues as well.  The good news is the bill has failed to pass in 2 previous legislative sessions. I’m sure that there are many Maryland employers that are crossing their fingers that it will fail again.