Frost Law
The Comptroller of Maryland (the “Comptroller”) is currently auditing and assessing individuals as residents of the State, even though these individuals may not have been physically present in Maryland for the year or years under review.
If an individual is a resident of Maryland, then an income tax return must be filed if the individual meets certain filing requirements. An individual is a resident of Maryland if the individual maintains a domicile (i.e., a permanent home) or if the individual qualifies as a “statutory resident.” A “statutory resident” is defined as an individual who maintains a place of abode in Maryland for more than six months of the taxable year and is physically present in Maryland for 183 days or more during the taxable year. Separate rules may apply for part-year residents and military members and their spouses.
The Comptroller reviews for statutory residency to determine if an individual was physically present in the State for 183 days or more. The burden is on the individual under audit to demonstrate that they were not present in Maryland for 183 days or more.
A determination of “domicile” requires a more complex analysis where the total facts and circumstances of each case are reviewed. Maryland courts have defined the term to mean “the true, fixed, permanent home of an individual.” Blount v. Boston, 351 Md. 360, 367 (1998)(quoting Shenton v. Abbott, 178 Md. 526, 530(1940)). Courts have also held that once a domicile is established, it continues until superseded by a new domicile. An individual must take specific actions to change domicile, including being physically present in the new domicile and establishing ties that create the new domicile. Equally important, the individual must also sever ties with the old domicile. Two factors are prioritized for domicile determination: (1) where the individual lives; and (2) where the individual votes. Additional factors include family connections, driver’s license registration, and active business involvement.
The Comptroller is actively auditing individuals to ensure taxpayer obligations are satisfied. Audits may result in assessments attributing all income to Maryland without allowance for applicable tax credits, subtraction modifications, and other deductions which the taxpayer may otherwise be entitled to and would substantially reduce the tax burden. Subsequent collection action on assessed amounts may result in liens, levies, and/or wage garnishment.
The audit process will often begin with an Information Request Notice. This letter should not be ignored, and care should be taken in crafting an accurate response for the most favorable audit outcome.
Individuals claiming a change of residence to a jurisdiction that does not impose an income tax, such as Florida or Texas, may experience a higher level of scrutiny during the audit process.
Our experienced Maryland tax attorneys at Frost Law have the necessary experience handling residency tax audits to deliver the best results. If you have been selected for audit by the Comptroller of Maryland or wish to discuss further guidance on establishing a new permanent residence, please contact our team today at (410)497-5947 or schedule a confidential consultation.
The Comptroller of Maryland (the “Comptroller”) is currently auditing and assessing individuals as residents of the State, even though these individuals may not have been physically present in Maryland for the year or years under review.
If an individual is a resident of Maryland, then an income tax return must be filed if the individual meets certain filing requirements. An individual is a resident of Maryland if the individual maintains a domicile (i.e., a permanent home) or if the individual qualifies as a “statutory resident.” A “statutory resident” is defined as an individual who maintains a place of abode in Maryland for more than six months of the taxable year and is physically present in Maryland for 183 days or more during the taxable year. Separate rules may apply for part-year residents and military members and their spouses.
The Comptroller reviews for statutory residency to determine if an individual was physically present in the State for 183 days or more. The burden is on the individual under audit to demonstrate that they were not present in Maryland for 183 days or more.
A determination of “domicile” requires a more complex analysis where the total facts and circumstances of each case are reviewed. Maryland courts have defined the term to mean “the true, fixed, permanent home of an individual.” Blount v. Boston, 351 Md. 360, 367 (1998)(quoting Shenton v. Abbott, 178 Md. 526, 530(1940)). Courts have also held that once a domicile is established, it continues until superseded by a new domicile. An individual must take specific actions to change domicile, including being physically present in the new domicile and establishing ties that create the new domicile. Equally important, the individual must also sever ties with the old domicile. Two factors are prioritized for domicile determination: (1) where the individual lives; and (2) where the individual votes. Additional factors include family connections, driver’s license registration, and active business involvement.
The Comptroller is actively auditing individuals to ensure taxpayer obligations are satisfied. Audits may result in assessments attributing all income to Maryland without allowance for applicable tax credits, subtraction modifications, and other deductions which the taxpayer may otherwise be entitled to and would substantially reduce the tax burden. Subsequent collection action on assessed amounts may result in liens, levies, and/or wage garnishment.
The audit process will often begin with an Information Request Notice. This letter should not be ignored, and care should be taken in crafting an accurate response for the most favorable audit outcome.
Individuals claiming a change of residence to a jurisdiction that does not impose an income tax, such as Florida or Texas, may experience a higher level of scrutiny during the audit process.
Our experienced Maryland tax attorneys at Frost Law have the necessary experience handling residency tax audits to deliver the best results. If you have been selected for audit by the Comptroller of Maryland or wish to discuss further guidance on establishing a new permanent residence, please contact our team today at (410)497-5947 or schedule a confidential consultation.
