Maryland Board of Public Works OKs $5.4 million to settle tax bill

Comptroller Brooke Lierman speaks at the Women of MACo luncheon in Ocean City in August. Staff file

The feds audited Maryland for the first time on record, and the state owes north of $5 million.

“This is a new one,” Comptroller Brooke Lierman said at a Board of Public Works meeting Wednesday. “I think it might be the first time that the state has ever been audited. We looked back as far as 30 years and it had not happened before.”

The board voted unanimously to settle the claims for over $5.4 million resulting from an audit of the 2020 tax year.

Deputy Comptroller Rachel Sessa said the IRS issued an initial finding that the state owed over $16 million before state agencies turned over documentation that brought the bill down to $5.4 million.

Sessa explained at the meeting that the state owed taxes for three main reasons.

Nine state agencies did not properly withhold employment taxes for some employees, a “handful” of employees from five agencies contributed to deferred compensation plans in excess of plan limitations, and the state was unable to prove instances of backup withholding being applied to vendors appropriately.

Sessa said the state may also have to pay interest on the $5.4 million.

“We’ve identified multiple corrective actions that the state plans to take just to make sure the issues found in tax year 2020 are addressed including a lot of education and training,” Sessa said.

Contact Dillon Mullan at [e-mail], 302-842-3818 or @DillonMullan on X.