Statement of Comptroller Peter Franchot Regarding Local Income Tax Payments
Annapolis, Md. (November 16, 2016) – Today, Comptroller Peter Franchot shared the results of a comprehensive outside audit of payments by the Comptroller of Maryland to counties, municipalities and special taxing districts for the tax years 2010-2014 at the Joint Committee on the Management of Public Funds. Comptroller Peter Franchot released the following statement:
 “In the Comptroller’s Office, we pride ourselves in the national reputation we’ve earned as one of the pre-eminent state tax administrators in the United States, and remain dedicated every day to a steadfast commitment to respect, responsiveness, and results. It is in that spirit, that when we were made aware of a small number of issues related to local income tax distributions, we immediately acknowledged it, promptly conducted an internal review, and commissioned an independent audit to determine the entirety of the issue.

“That independent audit has just been completed and it concluded that for tax years 2010 to 2014, our office had a 99.9 percent accuracy rate. While I believe that a 99.9 percent accuracy rate affirms the hard work of the men and women who work with me every day, it doesn’t meet the high standards we set for ourselves.

“The independent audit, which my office conducted proactively, identified discrepancies with $12.7 million out of the $14.9 billion in local income tax revenue we processed for those five tax years. We are currently contacting the affected jurisdictions directly, and those jurisdictions that are owed money will receive payment within days. For those jurisdictions that owe money as a result of this reconciliation process, we are mitigating the financial impacts by providing ample time for long-term budget planning. Those jurisdictions will not have to begin repaying what is owed until 2024, and they will have the flexibility to repay the funds over the course of ten years from that point forward.

“This review has been an instructive process for us in the Comptroller’s Office, providing an opportunity to redouble our commitment to improve the way we deliver results on behalf of Maryland’s taxpayers. In order to get the 99.9 percent effectiveness rate we currently have to the 100 percent we aspire to achieve, I have implemented a new initiative called “Project Perfect.” This agency-wide effort involves making necessary technological upgrades and procedural modifications to ensure our system is equipped for our unique taxpayer coding needs, performing comprehensive, independent biennial audits and continuously verifying taxpayer addresses, among other enhancements to our tax administration procedures.

“Maryland is unique in the country in the way our Comptroller’s Office collects local income taxes on behalf of every one of the State’s counties, municipalities and special taxing districts. I truly appreciate the continued collaboration with our local government partners – including the Maryland Municipal League and the Maryland Association of Counties – whose effective partnership allows us to carry out this complex taxing structure to benefit our state’s taxpayers.”