My Business Was Audited

If you do business in Maryland, you need to know what to expect if you're ever audited by the Comptroller's Office. Some audits are triggered by information on tax returns, but others are done randomly. Follow the links below for information about the entire audit process.

The Audit Process

The Comptroller's Office will call or write taxpayers to schedule audits. Maryland businesses will receive about a week's notice, while out-of-state businesses will receive more time to prepare. The Comptroller's Office is flexible about scheduling audits; however, businesses asking for lengthy postponements may need to sign an extension of limitations for the period of time covered by the audit.

Only if we can't contact you by phone or letter will an auditor stop by your business to schedule an audit. When the Comptroller's Office auditor meets with you to audit your business records, they will show you a photo I.D. on their first visit. We urge taxpayers who have any doubt about the authenticity of an I.D. to telephone us immediately at 410-767-1501 in the Baltimore area or 1-800-492-1752 if the business is located outside the Baltimore area.

During this initial contact, the auditor will ask general questions about the business and schedule an appointment to start the audit. You will also be asked to have certain records available to start the audit. In addition, the time period subject to the audit will be discussed.

The audits usually begin with you having an opening conference with the auditor. The auditor will ask for a brief description of the business steps involved in making products, in sales, or in providing services and will ask how the business accounts for the taxes involved in the audit. You may want to take the auditor on a tour of your business or facility, so that he or she will better understand how all of the various components of the business relate to the records.

Very few audits involve a complete review of all the records in the audit period. Records are reviewed for a sample period usually agreed on by you and the auditor. Don't let the request for records overwhelm you, but don't wait until the day of the audit to start to gather the records, either. Try to have as many of the requested records available on the first day of the audit. If you're having problems gathering the records you need to be sure to gather information to get the audit started. Taxpayers are often granted extra time to gather records that are in storage.

If you have a problem finding a particular record we've asked for, talk to the auditor about it. They'll try to work with you to complete the audit as easily and efficiently as possible.

When the audit is completed, the auditor will hold a closing conference with you, and you will receive a complete copy of the auditor's working papers. During the conference, be sure that you understand everything on the audit working papers. You will be required to sign an acknowledgement of the audit closing meeting. Remember, not every audit results in a tax assessment, so the audit results may be good news.

Resolving Audit Problems

If you believe the auditor is being unreasonable or you have problems with the audit process that the auditor cannot resolve, you should contact the auditor's supervisor at 410-767-1501 in the Baltimore area or 1-800-492-1752 if the business is located outside the Baltimore area. In most cases, the field audit supervisor can resolve the problem and get the audit process moving.

If you disagree with the results and the auditor cannot resolve the disputed issues, the auditor will explain to you how to file an appeal. The first appeal step for most tax types is an administrative hearing. If the issues are not resolved in an administrative hearing then the audit results can be appealed to the Maryland Tax Court.

Types of Audits We Conduct

All taxes administered by the Comptroller's Office are subject to the audit review process. And our job is to educate the taxpayer and assure that businesses comply with tax laws. By utilizing the links below, you can familiarize yourself with the tax or fee applicable to you and your business.

Audit Resources

The links listed below will provide you with information regarding tax legislation, tax alerts, tax bulletins and tips, notices regarding filing requirements, types of business taxes that are audited and record keeping guidelines.

To learn more about your rights during the audit and appeals process, you can see the section, Your rights as a Maryland taxpayer. You should also review the section, What sales records do I need to keep?  Copies of this literature can be requested through our Forms-by-Fax system at 410-974-3299 (ask for item 3003 on index 2).