Maryland tax pros get answers on Form 511 processing from Comptroller’s officials
It's tax season, and that means the members of the MACPA's Tax Community are doing what they do best — sharing resources, solutions, and expertise with their fellow practitioners.
Here's just one example, courtesy of MACPA State Tax Committee Chair Jeff Lawson. You'll find more Tax Community esources and advice here.
This week several members of the MACPA State Tax Committee met with the Maryland Comptroller’s Office Revenue Administration Division (RAD) officials to learn more about the status of 2020 Form 511 processing (i.e., not) and the related impacts on the PTE owners’ Forms 502 or 505. In the spirit of the working relationship the MACPA has with the Office, we conveyed information that we know of dozens, if not hundreds, of PTE returns that have not been processed, as well as the resulting problems of the individual PTE members not being properly credited for the PTE payments. We asked for information about the State’s plan and timeline and for recommendations on how we CPAs can best handle the issues.
Here are key takeaways for the PTE topic and a few other issues:
The plan and timing:
- The state officials explained to us the infrastructure issues that have led to the timing of the PTE returns processing. RAD plans to complete processing the filed 2020 Forms 511 within the next four weeks.
- After the Forms 511 have been processed, validation of member credits will continue. Practitioners whose clients have received a notice from the Comptroller should contact the tax practitioner hotline at (410) 260-7424 or via email at email@example.com.
- For 2021 filings, the state has worked through their normal process with software vendors to approve this year’s forms, including Form 511; the state provides updated listings of approved forms by vendor and tax form here. Recall that the process is that once the state has created each form, it is then up to each software vendor to create its own version of the form, test it, and have it approved by the state for the software clients (preparers) to be able to use the form. You will see by the list that many forms for many vendors have been approved, so that at this point if a form is not processable in your software, inquiries to the vendor is the best place to start.
- After completing the processing of the 2020 Form 511, the dtate will begin processing the filed 2021 Forms 511.
Recommendations to CPAs
- When preparing Form 511 or 510, be sure to present Maryland Schedule K-1 recipients with copies that have their unmasked full tax identification (Social Security) numbers. When owners attach those Maryland Schedules K-1 to their personal returns to support claims for credit, availability of the full tax identification number allows for a more efficient and accurate matching process between the entity return and the owner return.
- If your clients as PTE owners receive adjustment notices, indicating unprocessed or incorrectly processed credits related to Form 511, contact the Tax Practitioner Hotline (410-260-7424) or via email at firstname.lastname@example.org to report the notice. That team can notate the issue in order to avoid issuance of additional assessment notices and can offer any additional details, if any (e.g., are there noted questions about aspects of the return) to help complete the return’s processing.
- If you are aware of scheduled payments that have not yet been posted / withdrawn, contact the Tax Practitioner Hotline (410-260-7424) or via email at email@example.com to report and discuss how to resolve.
- Please note to use only the Tax Practitioner Hotline for these matters, and not general Taxpayer Services or phone numbers contained in notices the clients received.
- For the composite statements submitted by PTEs for non-resident taxes paid for their members in other states: When preparing those statements it is critical to follow the guidance outlined in Administrative Release 42 to include the name, title, and phone number for the person responsible for the accuracy of the information on the statement. RAD has been receiving returns with composite statements that do not contain the required contact information. If the state has questions about the return during processing, that contact information offers an opportunity for inquiries that can resolve the questions and thereby avoid the need for the state to issue notices.
- This year’s filing deadline change from April 15 to July 15 is different from last year’s. If you plan to rely on the extension, be sure to check the details announced in the Tax Alert. Recall that the due dates for 2022 estimated tax payments remain unchanged.
We thank the Comptroller’s Office for the usual spirit of partnership with the MACPA. They thanked us for our patience as they have been working through the issues on their end. This has been a tense few years for all of us. Hang in there. And do continue posting to the MACPA Tax Community board regarding other issues and suggestions.