During the November 2007 special session, the Maryland General Assembly passed legislation creating 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.

While the Maryland Chamber was pleased the study arose as an alternative to mandatory unitary combined reporting, the legislation as drafted goes beyond what the government needs to do further analysis. As part of the study, the legislation imposes extensive new reporting requirements on corporations. No other state imposes reporting requirements that are this extensive.

The Maryland Chamber strongly supports legislation, SB 444/HB 664, which would reduce the most onerous and unnecessary aspects of the reporting requirements, while still enabling the commission to gather the information the State needs. The legislation:

• Defines “corporate group” required to file the data statements to include only corporations that are subject to U.S. federal income tax.
• Defines “doing business in the State” to remove issues not approved by the U.S. Supreme Court.
• Adds new section allowing corporations the option to replace the individual reporting lists with a single report of an actual combined reporting return filed in another state, substituting Maryland apportionment factors and identifying the resulting difference in Maryland tax.
• Provides for termination of reporting requirements after 2010 tax year, to match the term of the Business Tax Reform Commission.
• Adds provision that the information provided in these date requirements will not be disclosed to other states or to federal government.
• Requires Comptroller to develop a penalty system in place of the specified $10,000 fine and 5-year imprisonment penalties.
• Changes the due date of Comptroller’s report to March 1st (the vast majority of corporate tax returns are filed October 15, so December 15 report date is difficult).
• Retains requirement for 2006 tax year data, but clarifies that 2006 information is due together with 2007 income tax return.
• Requires Business Tax Reform Commission and Comptroller to review requirements and make recommendations for further changes if needed.

To learn more about the reporting requirements, and the Chamber’s efforts to moderate them, contact Karen Syrylo, CPA, at ksyrylo@mdchamber.org.