Auditor: $8.7M In County/Muni Income Taxes Distributed Incorrectly

An audit has found that nearly $9 million in local income taxes were incorrectly distributed to municipal governments by the Office of the Comptroller.

An independent audit, contracted through the Comptroller’s office, has determined that a multi-year problem of assigning tax returns to municipal addresses in Montgomery County resulted in incorrect assignment of revenues to various cities and towns. The net result: an accumulated overpayment to some cities, an underpayment to some others, and a substantial underpayment to Montgomery County government.

As preliminary news of this administrative problem arose prior to the 2016 legislative session, the General Assembly passed a new law governing the terms of settling any such overpayments and underpayments (not jsut the incident cases). MACo supported that bill, which ultimately provided a ten-year repayment schedule for local governments found to have been over-distributed. Those under-distributed are to be made whole immediately.

In Baltimore Sun coverage of the audit (based on a pre-release copy), the paper reports:

Auditors blame the mistake on the erroneous classification of more than 14,000 returns.

Auditors also found problems with how the office handles out-of-state tax credits, keeps information secure, and issues replacement refund checks. The audit, obtained by The Baltimore Sun, is expected to be broadly released Thursday.

The comptroller’s office said it has worked diligently to correct the mistakes.

Michael Sanderson

Executive Director Maryland Association of Counties