FOR IMMEDIATE RELEASE

Franchot: Crackdown on Tax Scheme Yields $3.5 million for the State

Settlement reached in another ‘Captive REIT’ audit

Annapolis, MD (December 17, 2008) - Comptroller Peter Franchot announced today that a major corporation has paid over $3.5 million to the state as the result of his agency’s aggressive enforcement of Maryland’s tax laws. This is the second check resulting from a change – initiated by Franchot – in the way so-called “captive” Real Estate Investment Trusts (REIT) are treated for taxation purposes.

“I am committed to ensuring that everyone pays their fair share, especially in these tough economic times,” said Comptroller Peter Franchot. “The vast majority of Maryland businesses play by the rules, but we will not allow a few large corporations to gain an unfair advantage by flouting our tax laws.”

Last year, Franchot announced that his office would begin auditing corporations trying to avoid paying taxes by using “captive” REIT, whereby companies place their holdings in real estate trusts and take unauthorized deductions. The Comptroller’s administrative action was complimented by legislation enacted by the Maryland General Assembly in the spring of 2007. In October, Maryland received a $10.8 million dollar payment from another corporation marking the first case in which an audit had been completed and a tax liability settled in a “captive” REIT case. The agency has a pending $5.7m assessment in another REIT case and several audits underway involving this type of tax-avoidance scheme. Due to tax confidentiality laws, the name of the taxpayer cannot be revealed.

“My agency took the lead in closing this tax loophole and has been tireless in their pursuit of the money that is owed the State of Maryland by companies exploiting it, Franchot continued. “As hardworking families struggle to make ends meet, we’re going to make sure that everyone is paying their fair share

Contact: Joe Shapiro, 410-260-7305