Have to Pay? What You Can Do After a Use & Sales Tax Audit in Maryland

If you’re a Maryland small business owner who has just gone through a use or sales tax audit, you may now be facing a bill from the Comptroller of Maryland for tax, interest, and possibly penalties. 

It’s normal to feel overwhelmed. After all, this type of state audit can significantly impact your cash flow and operations. But you do have options, and there are steps you can take to both protect your business and move forward confidently. 

S.H. Block helps Marylanders like you navigate the complexities of tax audits. Let’s talk about what to do after a sales or use tax audit and how to address your responsibilities in a proactive, clear‑headed way.  

And anytime you would like to discuss your situation directly with a tax professional, please don’t hesitate to contact us and request a consultation. 

Understanding Your Audit Outcome

After a sales or use tax audit, the Comptroller’s office will issue an audit findings report that outlines whether: 

• You owe additional tax
• Interest and penalties have accrued
• Any or no changes are required

In Maryland, the Compliance Division enforces all tax laws administered by the Comptroller, and audits are part of that enforcement effort.  

The key thing to remember is this: an audit report isn’t the end of the process. It’s the beginning of the next step in compliance, and one you shouldn’t put off.  

Here’s how you can proceed: 

Carefully Review Your Use or Sales Tax Audit Report

As soon as you receive the audit report: 

1. Read every page: Understand the period covered, the specific taxes assessed, how the Comptroller’s office calculated tax due, and whether penalties or interest were included.
2. Compare with your records: Verify that the amounts reflect your own books and records.
3. Note deadlines: Maryland’s appeals and compliance processes operate on strict timelines. Missing one can limit your options.

If anything isn’t clear, don’t ignore it. Ask for clarification from the Comptroller’s office and document the communication. We can also speak with the Comptroller’s office on your behalf. 

For general business tax information and forms, visit the Comptroller’s Business Tax Services page.  

Determine Whether You Agree or Disagree with the Assessment

If you agree with the findings

Your primary focus should be payment planning. You will want to get your tax liability resolved as efficiently as possible while minimizing penalties and interest accumulation. 

If you disagree with part or all of the assessment

Maryland gives you a chance to seek a reconsideration or appeal. While this blog focuses on what to do after an audit when you may owe, it’s worth noting that you don’t have to accept everything at face value. If there’s a legitimate reason to dispute a finding, you have the right to appeal.  

Disputing an assessment changes the timeline and strategy. So, if the liability appears incorrect, don’t wait to act. You typically have 30 days to appeal the tax assessment after it has been mailed. 

Explore Your Payment Options

Once you’ve determined you owe, you may want to avoid a simple one‑time payment if that’s likely to strain your cash flow or disrupt your business. Fortunately, the Comptroller’s office offers options. 

Pay in Full Online

You can make payments directly using the Maryland Tax Connect system.  

This is usually the fastest way to settle your balance, but it’s not always the most practical method for small businesses with limited liquidity. 

Request a Payment Plan

If you can’t or don’t wish to pay the total in one lump sum, you can contact the Comptroller’s Collections Division and request a payment plan. 

You are not required to file a hearing if you agree with the amount but cannot afford to pay in full right away. Instead, you can negotiate a monthly installment plan based on what you can reasonably afford.  

Confirm Methods for Online Payment

You can also make direct payments and estimated tax payments through the Comptroller’s portal, which offers several secure options.  

Keeping your payments planned and timely can help you avoid escalated interest and additional penalties. And, if the above options do not quite work for you, talk with us. Alternative plans and settlements may be available. 

Stay Current with Future Filings and Payments

Owing payments from a use or sales tax audit can understandably take your attention away from regular compliance. But falling behind after an audit can worsen your situation quickly. 

Here’s how to stay current: 

• Schedule all filing deadlines on your calendar right away.
• Use Maryland Tax Connect to file returns and pay on time.
• Even if you anticipate owing money, file on time and then handle the tax owed. Late filings can carry separate penalties.
• Consider making estimated payments if your business expects ongoing sales/use tax obligations.

Timely and accurate filings not only reduce future risk but may also improve your standing in any future compliance contact from the Comptroller. 

Document Everything from Here On Out

Whether you’re paying down a liability or negotiating terms, documentation matters. Keep records of: 

• Your audit report
• All correspondence with the Comptroller
• Copies of payments made
• Installment agreement details
• Any adjustments or negotiations

These records help if you have questions later or if your business faces another audit or compliance check. 

Learn From the Audit to Strengthen Your Compliance

A completed audit—especially if you owed money—provides valuable feedback about where your business systems may need to improve. Use the insights from your audit to fix gaps such as: 

• Sales tax collection errors
• Misclassified exempt or taxable items
• Incorrect exemptions or documentation
• Use tax oversights for out‑of‑state purchases

For ongoing compliance best practices, check out our blog on proactively managing sales and use tax compliance in Maryland.  

Common Questions After a Sales & Use Tax Audit

Here are answers to typical questions we hear from Maryland business owners who owe tax after an audit: 

What if I cannot afford to pay all my liability right now?

You can request a payment plan with the Comptroller’s Collections Division if you agree with the assessment but cannot pay in full. Interest will continue to accrue, but you can avoid more severe collection actions if you’re communicating and cooperating.  

Is there an appeals process if I disagree with the tax audit findings?

Yes. If you believe the audit findings or assessment are incorrect, you can file an appeal through the Maryland Comptroller’s Service Portal.  

Will interest and penalties keep growing while I negotiate?

Interest does continue to accrue on unpaid balances, and penalties may remain if they were assessed. That’s why it’s important to resolve the liability as soon as feasible and to secure an installment agreement if needed. 

Can the state take action if I don’t pay?

Yes. If unpaid liabilities remain without resolution or communication, the Comptroller can file liens, levy bank accounts, or pursue more aggressive collection measures.  

How S.H. Block Tax Services Can Help After an Audit

Facing a use or sales tax liability after an audit can feel like walking a tightrope. At S.H. Block Tax Services, we help Maryland business owners navigate these situations with clarity and confidence. We can assist you with: 

• Reviewing your audit findings and identifying calculation issues
• Communicating with the Comptroller on your behalf
• Crafting payment strategies that fit your business cash flow
• Exploring ways to minimize penalties and interest
• Building systems that reduce future risk

Whether you’re planning your next steps after an audit or simply want a second review, we’re here to help you protect your business and move forward with confidence. 

Ready to discuss your situation? Call S.H. Block Tax Services at (410) 872‑8376 or fill out our contact form to reach out to us today. We’re ready to help Maryland businesses work through their tax audit challenges. 

This article is based on tax laws, regulations, and administrative guidance in effect at the time it was written. Tax law and IRS procedures are subject to change, and interpretations may evolve. As a result, some information in this article may become outdated. This content is provided for general informational purposes only and should not be relied upon as tax or legal advice. Readers should consult a qualified tax professional regarding their specific situation.