Maryland Unfiled Sales Tax Returns: Step-by-Step
Checklist
What This Issue Means
An unfiled sales tax return occurs when a registered Maryland business fails to submit required monthly, quarterly, or annual filings by the due date. The Comptroller’s Office tracks compliance automatically and identifies missing returns through its tax system. This does not necessarily mean you owe tax, but it does mean the state has no record of your filing and cannot verify your reported activity.
Why Maryland Requires This
Maryland depends on sales tax revenue to fund essential public services and infrastructure programs across the state. When businesses register for a sales tax permit, they create an ongoing obligation that continues until the account is formally closed. The Maryland Revenue
Administration Division monitors filing compliance to ensure all registered businesses submit returns on schedule and report collected taxes accurately.
What Happens If This Is Ignored
The Comptroller’s Office sends notices requesting overdue filings when returns remain outstanding beyond their due dates. If returns remain unfiled after notice and demand under
Tax-General Code Section 13-303, the state may assess an estimated tax liability based on available information. Late returns over 30 days incur a 10% failure-to-file penalty plus interest at 11.4825% annually for 2025, and enforcement actions may include federal tax liens, levies, or license revocation hearings.
Understanding Penalties and Interest
Past due tax returns trigger specific financial consequences under Maryland law that accumulate over time. The failure to pay penalty and interest charges begins accruing from the original due date, regardless of when you eventually file. Understanding these penalties for unfiled sales and use tax helps businesses calculate total amounts owed and prioritize resolution efforts.
Returns filed 1 to 30 days late may incur a 5% penalty, while returns over 30 days late face a
10% penalty. Interest compounds at the annual rate set by the Comptroller, and businesses cannot claim Maryland’s vendor discount when filing or paying late. Tax attorneys or qualified tax preparers can help calculate the correct tax liability, including all penalties and interest.
Step-by-Step Checklist
Step 1: Gather Account Information
Locate your sales tax permit number and registration documents from the Maryland
Comptroller’s Office. If you cannot find this information, contact Taxpayer Services at
410-260-7980 or 1-800-638-2937 to verify your account details and registration status.
Step 2: Identify Missing Periods
Determine which return periods are unfiled by reviewing any assessment letters or notices received from the Comptroller’s Office. If you have not received notices, contact the Comptroller directly to request a Statement of Accounts that shows the periods flagged as unfiled in their system.
Step 3: Collect Financial Records
Gather all sales records, invoices, receipts, and accounting documents covering each unfiled period identified in Step 2. These records provide the data needed to accurately complete your returns, calculate taxes owed, or verify zero filing for return periods.
Step 4: Calculate Tax Amounts
Use your financial records to determine total sales, taxable sales, exempt sales, including agricultural products with valid exemption certificates, and tax collected for each period.
Separate calculations by period and ensure figures match your accounting system records before transferring amounts to the return forms.
Step 5: Obtain Correct Forms
Access Form 202 for regular Sales & Use Tax returns through the Comptroller’s website or
Maryland Tax Connect platform. Form 202 is the official sales tax return form, and you will need one completed form for each unfiled period you are addressing.
Step 6: Complete Each Return
Fill out Form 202 for each missing period with all required information, including sales amounts, tax rates, and calculations. If you need guidance on specific lines or calculations, contact a
Maryland Sales and Use Tax Attorney or the Comptroller’s Office before submitting.
Step 7: Submit Returns and Payment
File completed returns through Maryland Tax Connect or mail them to the Revenue
Administration Division at 110 Carroll Street, Annapolis, MD 21411-0001. Include payment for
any tax owed, noting that late filings cannot claim the vendor discount regardless of payment timing.
Step 8: Request Payment Arrangements
Contact the Comptroller’s Office before or immediately after filing if you cannot pay taxes in full.
Payment plans may be available, and requesting arrangements demonstrates a good-faith effort to resolve your tax issue despite financial constraints.
Step 9: Keep Documentation
Retain copies of all filed returns, payment confirmations, and proof of submission for your business records. This documentation protects you in case of disputes and provides evidence of your filing dates if questions arise about your account status.
- Missing response deadlines: State notices include specific deadlines for responding,
- Filing incomplete returns: Incomplete returns may be rejected or require correction,
- Ignoring zero tax periods: Maryland requires a return to be filed even when no tax is
- Not requesting penalty abatement: Maryland Tax-General Code Section 13-714 allows
- Using incorrect forms: Form 202 is the sales and use tax return form, not Form 505,
- Confusing state and federal obligations: Unfiled state tax returns are separate from
- 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: Monitor for Response
Watch for follow-up notices from the Comptroller’s Office after filing sales and use tax returns and respond promptly to any requests. The state will process your filings, calculate tax penalties, and issue notices explaining amounts due or confirming account updates.
Common Mistakes to Avoid and missing these dates can trigger additional enforcement actions, including estimated assessments or license revocation proceedings. Always respond before the stated deadline. causing further delays and potentially generating additional penalty notices. Review each line carefully before submission to ensure all required information is provided. due for a filing period. Failing to file zero returns results in civil penalties identical to missing returns with tax due, so file all periods regardless of tax owed. penalty waivers for reasonable cause, but taxpayers must request this relief. If you have valid reasons for the failure to file, submit a written request explaining your circumstances after filing returns. which is for nonresident income tax returns. Using the wrong form causes processing delays and does not satisfy your sales tax return filing obligation. federal tax return obligations managed by the Internal Revenue Service. Resolving
Maryland sales tax issues does not address federal tax liens or IRS audit matters, which require individual attention.
When to Seek Professional Help understand Maryland tax law and procedures. Tax attorneys can represent you in negotiations with the Revenue Administration Division, challenge estimated assessments, or request penalty abatement based on reasonable cause. A tax preparer familiar with sales and use tax can ensure accurate calculations and proper reporting of exempt sales.
If your business faces potential criminal prosecution for willful failure to file or tax evasion allegations, consult legal counsel immediately. While civil penalties for late filing are common, criminal penalties require deliberate intent and generally involve more serious circumstances.
Professional guidance helps protect your rights and navigate complex tax issues effectively.
Closing
Unfiled tax returns require prompt attention but can be resolved by filing missing returns and addressing amounts owed. Understanding the requirements and following a structured process helps reduce complications and prevent further enforcement action. Contact the Maryland
Comptroller’s Office at 410-260-7980 for assistance with specific questions about your account or filing requirements.
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