Maryland Sales Tax License Revocation and Business
Shutdown Checklist
Introduction
If your Maryland sales tax license has been revoked or you are closing your business, understanding the process is essential to avoid ongoing penalties and collection actions. A sales tax license revocation means the Comptroller of Maryland has cancelled your authority to collect Sales and Use Taxes on behalf of the state.
This typically happens when a business fails to file required sales tax returns, fails to pay sales tax owed, or violates other sales tax regulations. Ignoring a suspension or revocation, or failing to close your sales tax account properly, can result in additional penalties, collection actions, and tax liability even after your business has stopped operating.
What This Issue Means
A sales tax license revocation is an administrative action by the Comptroller of Maryland that cancels your legal permission to operate as a sales tax vendor in Maryland. When your license is revoked, you are no longer authorized to collect sales tax from customers or file sales tax returns as a licensed business. This is different from voluntarily closing your business. A revocation is typically initiated by the state when specific conditions are not met, such as failure to file returns, failure to pay outstanding taxes, or noncompliance with sales tax regulations under Business Regulation statutes.
Why the State Issued This or Requires This
Maryland requires a sales tax license for specific administrative reasons. Code Regs.
03.06.03.06 in the Library of Maryland Regulations. The most common triggers are failure to file sales tax returns for multiple periods, failure to pay sales tax that was collected or owed, or providing false information on your Business License application.
The state also revokes licenses when a business fails to respond to the notice requirement or to communications regarding outstanding tax obligations. The Comptroller of Maryland uses revocation as a disciplinary action to ensure compliance with state tax law under Title 12 of the
Tax – General Article and to protect the state’s ability to collect taxes owed.
What Happens If This Is Ignored
If you continue to operate without an active sales tax license or do not address the revocation, the Comptroller of Maryland will continue collection procedures. This may include sending
additional notices, pursuing civil collection actions, placing Tax Liens on business or personal property, or implementing license hold releases affecting your professional license or vehicle registration. Delinquent taxpayers may face wage garnishment, bank levies on their bank accounts, or suspension of their motor carrier authority. Penalties and interest continue to accrue on any unpaid taxes during this period.
Understanding Related Tax Obligations
Beyond Sales and Use Taxes, businesses must address other tax obligations with the
Comptroller of Maryland. Employee withholding taxes must remain current to avoid additional license suspension actions by the Department of Labor, Licensing, and Regulation. If you owe income tax or Property tax obligations, the state may pursue coordinated collection efforts, including garnishment or levy actions. Understanding your total Tax Debt helps you negotiate effectively with the Comptroller’s collections unit and potentially qualify for an offer of compromise program.
Step-by-Step Checklist: What to Do After Receiving a
Revocation Notice
Step 1: Review the Revocation Notice
Read the entire notice carefully and identify the specific reason for revocation, noting any dates, account numbers, and filing or payment deadlines mentioned in the document under the notice requirement.
Step 2: Gather Your Business Records
Collect sales tax returns filed in the past 12 to 24 months, bank statements, sales receipts, price lists, goods offered for sale documentation, payment records, and copies of any prior notices from the Comptroller of Maryland.
Step 3: Contact the Comptroller of Maryland
Call the Comptroller at 410-260-7980 or 1-800-638-2937 to ask for the specific reason your license was revoked, request a detailed statement of account, and inquire about the appeals process options and deadlines.
Step 4: Determine Your Outstanding Tax Balance
Request a detailed account statement from the Comptroller showing all periods owed, verify the amounts by reviewing your own records and returns, and ask about any penalties and interest added to your tax liability.
Step 5: Evaluate Your Appeal Rights
If the revocation is recent, ask the Comptroller about appeal procedures through the Maryland
Office of Administrative Hearings and deadlines, noting whether you need a tax attorney or professional help for your tax dispute.
Step 6: File a Final Sales Tax Return
If you are closing your account, file a final return covering the last period your business operated and collected sales tax, indicating on the return that this is your final filing per Maryland
Regulations.
Step 7: Arrange Payment or Payment Plan
Contact the Comptroller’s collections unit to discuss installment plans, offer of compromise options, or hardship relief if you cannot pay the full amount, understanding that payment arrangements are commonly offered but not guaranteed.
Step 8: Submit Payment and Confirmation
Make payment through the method specified by the Comptroller, include your account number and tax period covered, and request a receipt or confirmation for your records to document resolution of your Tax Debt.
Step 9: Follow Up in Writing
Send a follow-up letter or email to the Comptroller confirming what you submitted, including the date, amount, and account information, and keep a copy for your records and any future tax dispute.
- Ignoring the revocation notice entirely: The state does not stop pursuing collection
- Failing to respond to follow-up communications: If the Comptroller sends additional
- Operating your business without addressing the revocation: Continuing to sell
- Not filing a final return when required: Even if your license is revoked, you may still
- Missing appeal deadlines: If you disagree with the revocation, act quickly to
- Failing to keep proper documentation: Documentation is critical, and without proof of
- Not requesting itemized account statements: Before paying or setting up a plan, get
- Confusing record retention requirements: Maryland law requires businesses to keep
- Failing to address other license holds: If you have unpaid taxes affecting your
- 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 10: Handle Business Entity Dissolution Separately
If dissolving your business entity, file dissolution documents with the Maryland State Department of Assessments and Taxation separately through the Clerk of the Circuit Court, as closing your sales tax license does not automatically dissolve your business entity.
Common Mistakes to Avoid based on silence, and continued inaction typically leads to escalated collection procedures, including license hold releases, Tax Liens, and wage garnishment actions. notices or requests for information, respond within the Business days timeframe provided to avoid worsening your tax liability and additional penalties. taxable items without an active license is itself a violation that can result in additional
penalties, collection actions, and potential criminal charges for fraudulent use of a revoked license. be required to file a final return for the period your business operated, and skipping this step leaves your account incomplete with ongoing tax liability. understand appeal rights through the appeals process and deadlines, as missing a deadline may eliminate your ability to challenge the decision through the Maryland Office of Administrative Hearings. what you submitted or when you paid, disputes are harder to resolve through the tax dispute process and may result in duplicate assessments or penalties. a detailed breakdown of what the state says you owe to protect yourself from overpaying or underpaying the actual balance of your Tax Debt. all records about sales and purchases for four years, not a flexible three to five year period, per Maryland regulations and MD code requirements. professional license through the Department of Labor, Licensing, and Regulation or vehicle registration, address these holds separately to restore your full licensing status.
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