Maryland Sales Tax Enforcement Actions Checklist
Introduction
Maryland sales tax enforcement actions are formal notices issued by the Comptroller of
Maryland when a business fails to file required sales tax returns, underpays sales tax, or is unable to remit collected taxes to the state. The Maryland Office of the Comptroller administers
Maryland sales and use tax enforcement as part of its compliance and collection responsibilities. Receiving an enforcement notice can feel stressful, but understanding what it means and how to respond will help you take the right steps next. Ignoring these notices typically leads to additional penalties, interest charges, and possible collection actions that become harder to resolve.
What This Issue Means
A Maryland sales tax enforcement action is an official communication from the Comptroller of
Maryland indicating that your business has a sales and use tax problem that requires immediate attention. This could mean you have not filed a required sales tax return, you have filed but underpaid the amount owed, or you have failed to remit sales tax collected from customers. The enforcement action serves as a formal notice that the state is aware of the issue and is requiring you to resolve it. The Maryland Office of the Comptroller has statutory authority to collect all
Maryland taxes owed by businesses.
Why the State Issued This or Requires This
Maryland law requires all businesses that collect sales tax from customers to file regular sales tax returns and pay the tax owed to the state. The Maryland General Assembly, including the
Maryland Senate and Maryland House of Delegates, has established sales and use tax requirements that the Comptroller of Maryland enforces through its Compliance Division. The state issues enforcement actions when it identifies that a business has not met these requirements. Common triggers include missing returns, returns filed late, payments that did not arrive on time, or audits that reveal unpaid sales tax from previous periods.
What Happens If This Is Ignored
If an enforcement action is not addressed, the Comptroller of Maryland typically continues its collection efforts through additional notices, penalties, and interest on the unpaid amount. The state may place a lien on business assets or take collection action, such as wage garnishment or bank account levies. In severe cases involving intentional evasion, the matter could escalate to the Maryland federal court for enforcement or criminal prosecution. The longer the issue
remains unresolved, the larger the total amount owed becomes due to accumulating interest and penalties.
What This Does Not Mean
An enforcement action does not automatically mean that criminal charges will be filed against you or that your business license will be revoked immediately. Civil tax collection cases handled by the Maryland Office of the Comptroller are separate from criminal tax fraud prosecutions, which involve willful attempts to evade Maryland taxes. It also does not mean that all of your assets will be seized without further notice or opportunity to respond. An enforcement action is a collection tool, not a criminal prosecution.
Step-by-Step Checklist
Step 1: Verify the Enforcement Notice Details
Open the notice and check the business name, address, and tax identification number to confirm that the notice is addressed to your business and not a similar entity.
Step 2: Understand What Is Being Claimed
Read the notice carefully to identify which period or periods are in question, the specific tax amount claimed, any penalties listed, and any interest calculation shown on the document.
- Sales tax returns: Locate your Maryland sales and use tax returns for the periods
- Payment records: Find records of payments made to the Comptroller of Maryland
- Prior correspondence: Gather any correspondence with the Maryland Office of the
Step 3: Gather Your Business Records
mentioned in the notice to compare what was filed against what is being claimed. during those periods, including receipts, invoices, or bank statements that show sales activity.
Comptroller about sales tax, including prior notices or letters, along with copies of your business registration and sales tax permit documentation.
Step 4: Review What You Filed or Paid
Compare the amounts shown on your filed returns with the amounts claimed in the enforcement notice, and check your bank records or payment receipts to confirm what was actually paid.
Look for any gaps in filed returns where no return was submitted, and note any discrepancies between what you reported and what the state is claiming.
Step 5: Contact the Comptroller of Maryland
Call the Comptroller of Maryland at the phone number listed on the enforcement notice with your case number, business name, and tax identification number ready. Ask for clarification on what the enforcement action addresses and why it was issued, and request information about your account status and any amounts owed. Take notes on the conversation, including names, dates, and any information provided.
Step 6: Determine If You Owe Sales Tax
Review your sales records to determine if you collected sales tax from customers during the period in question, and calculate what you believe you owe based on your records. Maryland’s standard sales tax rate is 6% for most goods, but certain services, such as data and information technology services, are taxed at 3%. If you collected tax but did not remit it, note the amount and reason it was not paid.
Step 7: Respond to the Enforcement Notice
Check the notice for a deadline to respond or take action, and prepare a written reply that addresses the claims if the notice requires a response. Include copies of relevant documents, such as returns, payment receipts, and sales records, with your response, and clearly explain which portion you dispute and why if you believe there is an error. Send your response to the address listed on the enforcement notice, keeping a copy for your records.
Step 8: Address the Amount Owed
If you owe sales tax, determine what amount you can pay immediately, and if you cannot pay the full amount, apply for a payment plan through the Comptroller’s online MyCOMConnect website. Make any payment you can before the deadline shown on the notice, include your case number or reference number with any payment, and keep proof of payment such as a receipt, confirmation, or bank record.
- Missing deadlines: If the enforcement notice lists a deadline for response or payment,
- Ignoring follow-up notices: The state sends multiple notices as part of the standard
- Sending incomplete information: If the state requests specific documents or
- Not keeping records of communication: When you call the state, email, or mail
- Assuming the notice is a mistake: While errors do occur, assuming a notice is wrong
- State tax notice review and response
- Penalty and interest reduction options
- Payroll and trust fund tax assistance
- Payment plan and relief eligibility review
- Representation with state tax agencies
Step 9: Follow Up
After contacting the state or submitting your response, note the date and what was discussed or submitted, and wait for the state’s reply or next communication. Keep all notices and correspondence together in one file, and be prepared to provide additional information if the state requests it.
Understanding Your Rights and Protections
The Maryland General Assembly has established taxpayer rights and protections through legislation that governs how the Comptroller of Maryland conducts enforcement actions. Recent bills passed by the Maryland Senate and Maryland House of Delegates have strengthened taxpayer protections and established clear procedures for collection activities. Taxpayers have
the right to appeal assessments, request hearings, and dispute enforcement actions through established administrative processes.
If you believe the enforcement action involves serious errors or potential fraud by a third party, the Maryland Whistleblower Reward Program allows individuals to report tax fraud involving state taxes. The program provides rewards for information leading to the recovery of unpaid
Maryland taxes when certain thresholds are met.
Relationship to Other Maryland Tax Obligations
While this checklist addresses Maryland sales and use tax enforcement specifically, businesses should understand that the Comptroller of Maryland oversees multiple tax types that may affect their operations. Business owners may also have obligations related to Maryland individual income tax for themselves and their employees, payroll withholding taxes, and corporate income taxes. The Maryland Office of the Comptroller administers these various Maryland taxes under authority granted by the Maryland General Assembly. Understanding your complete tax obligations helps prevent future enforcement actions across different tax types.
Common Mistakes to Avoid meeting it is important, as missing it can result in additional penalties or escalated collection action. enforcement process, and ignoring any of them does not halt the process, as each notice must be reviewed and addressed. information, sending only partially responsive materials may delay resolution; provide the requested materials as completely as possible. documents, always keep notes and copies because these records prove you took action and what you communicated. without reviewing your records is a common mistake, so verify the facts before deciding whether to dispute the claim.
Received a State Tax Notice?
If you’ve received a state tax notice and aren’t sure how to respond, we can help you review your options and next steps.
20+ years experience • Same-day reviews available
