Maryland Comptroller’s New Policy for Reviewing Tax Returns

irsThe Maryland legislative auditors have noted the Comptroller does not adequately review the documents required to be attached to tax returns. As a result, the Comptroller has started new procedures for reviewing supporting documentation attached to tax returns. The prime target is individuals who take Maryland tax credits for taxes paid to other states. In the past, the Comptroller would review the attached documents on a sample basis. However, the process has now changed to reviewing the taxpayer’s supporting documents for 100% of the returns with this credit. And the rule for the review is “when in doubt, throw it out.” This new review procedure has resulted in an increase in the notices our clients are receiving. Many times it appears the correct documentation is attached but the Comptroller’s rookie reviewers don’t understand the other state filings. Additionally, we have seen incidents of the Comptroller disallowing trust deductions for income allocated to non-resident beneficiaries.

If you receive one of these notices and have any questions, please contact the KatzAbosch SALT (State and Local Tax) Group or Andy Bareham, CPA, MST at abareham@cpas4you.com or 410.307.6442.

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