New Law Makes Significant and Helpful Changes to Maryland Tax Procedures


A new procedure that Maryland tax practitioners have been seeking for years has been signed into law by Governor Larry Hogan.

Through sponsorship of Maryland Senate Bill 477 Sens. Katie Fry Hester and Jim Rosapepe – and Del’s Bill 366 cross-sponsorship. Brooke Lierman – The Comptroller’s Office will soon have a “private decision letter” process to provide “and detailed advice” to taxpayers.

Why is this important?

The new law requires the Comptroller, as tax collector, to provide binding written answers to tax questions from taxpayers and tax practitioners on behalf of their clients – answers that cannot be changed later by auditors as long as the facts have not changed. The Comptroller’s Office currently offers non-binding responses by phone or mail and a rarely used declaratory judgment settlement.

The new law clarifies that the private letter ruling is “a written decision issued by the Comptroller on the application of tax laws and regulations under this section (Maryland tax code) to a specific set of facts that is intended to apply only to that specific set of facts.”

The new adjudication process will also benefit Maryland taxpayers. Although the Comptroller’s decision letter is binding only on the taxpayer who requested it and for the specific facts that have been described, by law the Comptroller’s Office must publish redacted versions of the letters it issues that may be of interest to the general public.

Other taxpayers who may have similar situations will be able to see the Comptroller’s response to the requesting taxpayer and may choose to use that response as a guide for their own tax calculations.

The decision-by-letter process is in place in dozens of other states. He is pro-taxpayer, pro-business and pro-tax advisor.

The new procedure will benefit both Maryland taxpayers and the state: taxpayers will have certainty of the Comptroller’s interpretation of Maryland’s tax laws so that current tax returns can be prepared accordingly. The state benefits because most taxpayers will implement the answer in the ruling letter, and therefore the Treasury will receive the correct tax now rather than years from now after both parties have spent the time and effort. expense of an audit and even litigation.

Maryland tax professionals, including CPAs, have been asking for a law for binding decisions for many years. Partial success was achieved in January 2016 when the Maryland Economic Development and Business Climate Commission released a report on tax matters that recommended that Maryland institute a private letter decision process for tax matters.

As a result of this report, the Legislature passed a bill during the 2016 General Assembly session, Senate Bill 843, requiring the Comptroller to implement the process. However, several years of annual budget requests for the Comptroller’s Office to hire additional staff for the process have never been approved.

The comptroller’s staff attempted to improve their internal referral processes, but resource constraints prevented full implementation of the private letter decisions envisioned by the newly enacted law.

Maryland has now taken an important step in the fair and transparent administration of state tax laws. The CPA Association of Maryland anticipates that sufficient funding will be included in next year’s budget to support the operations outlined in Senate Bill 477. In addition, regulations containing details on how to request a decision by private letter are now to be published.

MACPA is deeply grateful to Fry Hester, Rosapepe and Lierman for sponsoring the Bills and getting them across the finish line.

Maryland CPAs look forward to continuing to work with the staff of the Office of the Comptroller and thank the office for its support of the new law.

Rebekah Brown, CPA, is the CEO of the Maryland CPA Association.

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