State Income Tax Audits

The Comptroller of Maryland selects returns for audits based on various factors, including discrepancies with reported income, unusual deductions, or involvement in transactions with other taxpayers under examination. Audits are typically initiated through mailed notices.

Documentation Requirements

During audits, taxpayers usually receive a document request form. This form outlines the requested documents, due dates, Comptroller representative contact information, and preferred submission methods.

The Comptroller may request specific documents including, but not limited to, W-2 forms, 1099 forms, receipts, bills, canceled checks, legal documents, loan agreements, and business logs. Retaining all documents used to prepare your Maryland tax return for at least three years from the filing date is crucial.

Preparing for a Sales Tax Audit

Preparation is key to successfully navigating a Maryland tax audit. Start by gathering all relevant documents for the tax year under review, including income statements, receipts, bank statements, and any documentation supporting deductions or credits claimed. Organize these documents chronologically and by category. Create a system to track correspondence with the Comptroller’s office, including dates of letters received and responses sent. Contact the relevant institutions to obtain copies if you’re missing any documents.

Reviewing your income tax return thoroughly is helpful, refreshing your memory on the reasons behind each entry. Consider creating a written explanation for any complex or unusual items on your return. If you used a tax preparer, consult with them to understand their rationale for certain positions taken on your return. Remember, being well-prepared helps the audit process run more smoothly and demonstrates your commitment to compliance, which can positively influence the auditor’s perception.

Disagreeing with Proposed Adjustments

If you disagree with the proposed adjustment(s), you have several options:

Requesting a conference with the auditor or supervisor

File an appeal with the Comptroller’s Office

Appeal to the Maryland Tax Court

Pay the tax and file a claim for refund

The Role of Tax Attorneys in the Maryland Audit Process

Tax attorneys are crucial in guiding taxpayers through the Maryland audit process. They can help interpret the audit notice, determine the scope of the audit, and develop a strategy for responding. Tax attorneys can communicate directly with the Comptroller’s office on your behalf, relieving you of the stress of dealing with auditors and ensuring that your rights are protected throughout the process.

These professionals are skilled in presenting your case in the most favorable light, explaining complex transactions, and providing legal justification for positions taken on your return. If disagreements arise, they can negotiate with the Comptroller’s office and, if necessary, represent you in appeals or Maryland Tax Court. Moreover, tax attorneys can identify potential issues that may arise during the audit and proactively address them.

Their knowledge of Maryland tax law and Comptroller procedures can often lead to more favorable outcomes, potentially reducing or eliminating proposed adjustments. By engaging a tax attorney, you’re not just hiring a representative; you’re gaining an advocate who can navigate the complexities of Maryland tax law and procedures to protect your interests.

Partnering with Azarvand Tax Law

Navigating a Maryland income tax audit requires attention to detail, adherence to deadlines, and understanding of state tax laws and audit processes. Our attorneys at Azarvand Tax Law are dedicated to advocating for your rights and ensuring a fair and equitable audit process. We provide personalized assistance for peace of mind during your Maryland income tax audit journey.