Comptroller of Maryland Update on PTE Tax Return Processing

November 16, 2023

The Maryland Comptroller’s office has acknowledged the difficulties faced by taxpayers and practitioners regarding filing personal income tax returns, specifically involving refundable credits from pass-through entities (PTE) paying entity-level tax, and has outlined measures being taken to address this situation.  

The Comptroller’s office has introduced a validation report that automatically validates credit amounts for over 70% of claimed PTE credits. At the same time, a team of revenue agents has been trained specifically for the task of validating and resolving PTE returns. 

To mitigate the impact on practitioners and taxpayers, the Comptroller’s office is implementing the following policy adjustments: 

  1. Establishment of a dedicated team to handle practitioner calls and implement required account adjustments more efficiently.
  2. Temporary cessation of Income Tax Assessment Notices for “underpayment” until a higher accuracy rate is achieved. Taxpayers will still receive notices informing them that the credit cannot be granted due to incomplete PTE payments.  

In order to expedite the processing of your transactions and reduce error rates, the Comptroller’s office recommends the following when submitting returns involving PTE credits:

  1. File personal and PTE tax returns electronically 
  2. Pay all estimated payments electronically
  3. Double-check PTE payments to match disclosed amounts
  4. Verify that PTE has made reported tax payments
  5. Add the PTE credit amount as income on the individual return
  6. Utilize electronic versions of Schedule K-1 for faster processing

We appreciate your patience and understanding as we work together with the Maryland Comptroller’s office to navigate these challenges. As always feel free to reach out to us with any questions or concerns you may have and we will be happy to assist you.


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