Overview
The Maryland Comptroller appears to have denied all refund claims for the 2022 digital advertising gross revenues (DAGR) tax! The denial notices were seemingly dated on or around October 11, 2023, and were sent via certified mail two weeks ago. The denial notices require immediate action by taxpayers, so if you filed a refund claim in Maryland, read on.
The notices argue that the taxpayers failed to demonstrate that tax was overpaid and, regardless of whether a hearing was requested before a final determination by the Comptroller, instruct taxpayers that they “must appeal in writing within 30 days of the date of this notice” to the Maryland Tax Court. This immediate ticket to the Maryland Tax Court skips the typical Hearings and Appeals Division and is consistent with rumors we learned of last month. The Comptroller also made a corresponding update to the 2022 Form 600 instructions, making it clear that it would send all tax refund claims to the Maryland Tax Court.
Taxpayers have not received electronic notification of their refund claim denials, so if you are waiting for an email, it’s not likely to arrive. Denial notices are coming through the United States Postal Service and are subject to delays as a result. According to the Comptroller’s letters, any delay in actual receipt of the notice does not delay the already short 30-day deadline to file an appeal. The Comptroller takes the position that the 30 days begins from the date listed on the letter despite contrary statutory language that calculates the deadline to be “within 30 days after the date on which a notice is mailed.” (Md. Code Ann., Tax-Gen. § 13-510(a) (emphasis added).)
Given the rash of activity in the last few days, it appears that the Comptroller has or is denying all refund claims and sending taxpayers to the Maryland Tax Court.
Practice Note: If you have received a notice and need assistance, please contact the authors of this article. Again, the Comptroller is taking the position that taxpayers have just 30 days from October 11 (the date listed on the notices reviewed) to file an appeal with the Maryland Tax Court or they lose their opportunity to obtain their refund. The Comptroller is also raising procedural challenges to taxpayers’ abilities to file in the Maryland Tax Court. Understanding these procedural issues will be critical to preserving your ability to receive a refund.
If your company has a DAGR tax refund claim pending with the Comptroller and has not received a notice in the mail yet, it may be prudent given the apparent en masse mailing to contact the Comptroller’s office immediately and confirm whether one was mailed.
