Maryland Sales Tax Payment Plan and Resolution
Checklist
Introduction
Maryland sales tax issues arise when a retailer or marketplace facilitator collects or owes sales tax but has not paid it to the state or has not filed required returns. Sales tax is collected from customers at the point of sale and held in trust by the seller for the Maryland Comptroller’s
Office. When payment is missed, late, or incomplete, the state may issue notices, demand payment, or take enforcement action.
What This Issue Means
A Maryland sales tax issue means that sales tax revenue collected from customers has not been paid to the state in full or on time, or that a sales tax return has not been filed when required. The state considers sales tax a liability because it belongs to Maryland, not to the business owner who collected it. When the Maryland Comptroller identifies unpaid or unfiled sales tax, the office typically responds with notices requesting payment or return information.
Why the State Issued This Notice
Maryland requires all retailers and marketplace facilitators to collect sales tax and remit it on a schedule set by the state. The Maryland Comptroller’s Office issues sales tax notices when collection records show a gap between what should have been collected and what was actually paid or reported. Common triggers include missed monthly or quarterly filings, zero-dollar returns followed by sales activity, or returns that show collected tax but with no corresponding payment.
What Happens If This Is Ignored
If an unpaid sales tax issue is not addressed, Maryland typically escalates its collection measures. The state may issue follow-up notices, assess penalties and interest, file a tax lien against business assets, or refer the account to a collection agency. Interest is calculated monthly at a rate equal to one-twelfth of the annual interest rate set by the Maryland
Comptroller. The penalty for late or unpaid sales tax is up to 10 percent of the unpaid tax under
Maryland tax codes.
Potential Enforcement Actions
Failing to comply with Maryland tax obligations can result in serious enforcement actions by the taxing authorities. The Maryland Comptroller’s Office has the legal authority to pursue wage garnishments, bank levy actions against your bank account, and seizure of business assets.
The state may also prevent renewal of your driver’s license, professional license, or other state-issued credentials until tax liabilities are resolved.
Step-by-Step Checklist
Step 1: Read the Notice Completely
Locate and read the entire notice or demand letter from the Maryland Comptroller’s Office. Note the specific amount owed, the tax period or periods involved, and any deadline stated in the notice.
Step 2: Gather Business Records
Collect sales records, point-of-sale reports, customer invoices, and bank statements for the months or quarters covered by the notice. Also, gather any previous sales tax returns you filed during this time.
Step 3: Compare Collections to Reports
Review your sales records and any filed tax returns to determine if the amount the Maryland
Comptroller is claiming matches your records. Note any discrepancies or missing tax periods for further investigation.
Step 4: Confirm Return Filing Status
Contact the Maryland Comptroller’s Office or access your online business account to confirm which returns were filed and which are missing. Some returns may not have been submitted even if you believed they were.
Step 5: Document Partial Payments
Review your payment records and bank statements to document any sales tax payments already made toward this debt. This helps clarify the remaining balance and demonstrates your payment history to the state.
Step 6: Calculate Total Amount Owed
Add the original tax amount, plus any penalties and interest that may have accrued. The notice typically includes this total, but confirm it matches the Maryland Comptroller’s calculation if possible to avoid future disputes.
Step 7: Contact the Collection Section
Call the Collection Section at 410-649-0633 or email cdcollectionbizz@marylandtaxes.gov to discuss your account. Be prepared to provide your business registration number and the notice number for accurate account identification.
Step 8: Request Calculation Clarification
If you believe the amount is incorrect based on your records, ask the Maryland Comptroller to explain how they calculated the amount owed—request written documentation of their calculation for your records and future reference.
Step 9: Explore Payment Options
Inquire whether the state offers an Installment Agreement, payment agreement, short-term extensions, or other collection alternative programs. Ask what the specific terms, timeline, and interest provisions would be for any payment arrangement you are considering.
Step 10: Get Payment Plan Terms in Writing
Ask the Maryland Comptroller’s Office to provide the proposed Installment Plans terms in writing before you commit to them. This should include the monthly amount, due dates, and the duration of the plan to avoid misunderstandings.
Step 11: File Missing Returns Immediately
If returns for certain tax periods were never filed, file them now. If you do not have complete records, file a return based on the information you do have and note that documents are incomplete.
Step 12: Make Payment or Arrange Plan
If you can pay the full amount online or by other methods, do so and request confirmation. If you are arranging an Online Payment Agreement, obtain written confirmation of the agreement before making the first payment to protect your rights.
Step 13: Keep All Documentation
Maintain copies of all notices, payment receipts, written agreements, and email correspondence with the Maryland Comptroller’s Office. Keep these records for at least seven years as required by standard tax documentation practices.
- Missing the deadline in the notice: Respond to any stated deadline, as ignoring it may
- Not filing missing returns before addressing payment: File any overdue returns as
- Assuming the debt will disappear if ignored: Sales tax debt does not expire simply by
- Not keeping records of payments or agreements: Always obtain written confirmation
- Failing to follow a payment plan agreement: If you agree to an Installment
- 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 14: Set Future Filing Reminders
Once this issue is resolved, track the due dates of your regular sales tax returns going forward.
Missing future filings will delay resolution and create new problems with the Maryland
Comptroller.
Resolution Options for Maryland Tax Debts
Small businesses and business owners facing Maryland tax liabilities have several options for resolution through the Maryland Comptroller’s Office. An Offer in Compromise may allow you to settle your tax debt for less than the full amount owed if you meet specific financial hardship criteria. Penalty abatement or penalty relief may be available if you can demonstrate reasonable cause for late filing or payment.
When to Seek Professional Help
Consider consulting a tax professional, such as a Maryland tax attorney, a Certified Public
Accountant, or an enrolled agent, if your tax liabilities are complex or substantial. Legal representation by a tax representative can help you navigate appeals, negotiate Installment
Agreements, or pursue penalty relief. Tax professionals understand Maryland Tax Court procedures and can represent you in disputes with taxing authorities.
Common Mistakes to Avoid result in additional penalties or escalated collection measures. The Maryland
Comptroller’s Office has enforcement authority that increases when deadlines are missed. soon as possible, even if you cannot pay the full amount. Unfiled returns are typically treated more seriously by the Maryland Comptroller than unpaid returns with complete documentation. waiting because interest and penalties continue to accrue. Collection measures typically escalate over time, including potential wage garnishments, bank levies, and asset seizures under Maryland Tax Law. of payments made and any payment agreement because disputes can arise later.
Without documentation, you may have difficulty proving compliance with the Collection
Section.
Agreement, you must meet every payment deadline because missing a payment may void the contract. Voided agreements typically result in immediate resumption of enforcement action by the Maryland Comptroller’s Office.
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.
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