Income tax issue from 2019
So I filed my taxes this year and my state tax returned was intercepted. I had no idea why. It took a good while to track down what happened. Turned out the District of Columbia took my return for a payment I owed them.
So in 2019 I lived in DC but I accidentally filed my taxes in the state of MD where I worked. I filed as a non-resident in MD and did not remove my income so I paid them ~$7.7K in state taxes in 2019.
DC says if you lived here you need to file a D-40. So I went to a tax expert paid to get it done. I get a bill in the mail saying I owe DC ~$7.8k for taxes that year and $8.3K in interest and $2K in a penalty. I reached out to MD and they said you can't amend a return over 3 years. So I can't get my $7.7k back from them. So I now spoke to DC and they said basically they might be able to get the penalty removed but not the interest.
Now I had 0 idea i did anything wrong for 7 years. I am not liable for 7 years of interest even though DC failed to alert me of this issue. They mailed a letter to my DC address over and over. I lived there for a year and a half. I never received anything in the mail EVER. No text, not phone call, no mail, no email...nothing. I only found out because my state tax return in 2026 was taken. In which time I attempted to fix this issue. Had DC alerted me in a timely manner i could have done all of this and got the money back from MD and sent to DC and had a net zero impact. Now i need to pay in total ~$18k to DC. I am beyond angry about all this but it doesn't seem like I have a solution.
Do i have any grounds to stand on to get out of this? I am almost resigned to paying the $7.7K and taking that loss. But having it be over double when i didn't even know it existed seems wild to me. I have asked to be forgiven for the Penalty and told that is possible. But no one I spoke to thinks i can get out of $8.3K in interest for a period i had no clue i did anything wrong. I feel like the punishment is for some one who knowingly dodged taxes. But I paid taxes in 2019....i just did it wrong (my fault). Common sense says pay us the money you owe and since MD won't give you anything back we understand you have paid double the taxes because we (DC) didn't alert you. Not...pay us an egregious amount of interest and penalty too.