Comptroller of Maryland Issues Letter Acknowledging Delays Processing PTE Payments and the Issuance of Erroneous Notices.
On September 19th, the Maryland Comptroller (MC) published a conciliatory letter to the state’s Tax Professionals community, addressing the difficulties the state has faced processing refundable tax credits from pass-through entities (PTE). The letter was signed by Robert Sheerer, the Director of the Revenue Administration Division, and Andrew Schaufele, the Chief Deputy Comptroller. It is a welcome acknowledgement of the challenges faced by both tax professionals and business owners, who have tried to file Maryland personal income tax returns, unsuccessfully claiming credits for PTE tax payments that were made.
Over the last couple of years numerous notices have been issued by the MC to business owners who were attempting to claim credits for PTE payments made by their flow through entities. The tax payments were received by the state, but in many cases, credits for the payments were not passed through correctly to the partners/members who relied on those payments to cover their own individual Maryland income tax liabilities. Thus came the notices.
To address these issues, the MC is taking the following actions to correct this situation:
The state has confirmed that they are currently upgrading their tax processing system, but that project is two years from completion. In the meantime, the measures outlined herein should help to alleviate the current processing backlogs and notice errors.
Contact the tax professionals at Saggar and Rosenberg for more insights.