Legislation was passed during the November 2007 special session to create the Maryland Business Tax Reform Commission. The Commission will review and evaluate the state’s current business tax structure and make recommendations for changes.

Policies to be studied include mandatory unitary combined reporting, gross receipts taxes, value added taxes, alternative minimum taxes, and more.

As part of the study, the legislation imposes extensive new reporting requirements on corporations as part of their corporate tax return or for publicly traded companies with any minimal business activity in Maryland, effective for taxable years beginning after December 31, 2005. While the Maryland Chamber was pleased the study arose as an alternative to adopting the combined reporting method for corporate income tax returns, the legislation as drafted goes beyond what the government needs to do further analysis.

The new requirements will put huge burdens on businesses in terms of the time and costs for gathering and reporting the data. Some of the requirements actually carry the possibility of legal challenge, such as the fact that they apply to corporations that have no nexus within Maryland. The Comptroller’s Office will also be burdened with additional costs for computer resources and staffing to handle the data and required reports (they estimate $500,000 for computer programming and $300,000 for personnel costs). The Maryland Chamber is seeking changes to the provisions, so that the information necessary to do the desired calculations is collected but unnecessary and overly burdensome requirements are removed.

To learn more, contact Karen Syrylo at ksyrylo@mdchamber.org.