Md. Code Regs. 24.05.06.12

Current through Register Vol. 51, No. 24, December 2, 2024

Section 24.05.06.12 - Audits and Inquiries

A. Audits.

(1) If the Department becomes aware of facts and circumstances that reasonably warrant an audit of the factual or accounting basis of a business entity's claim of eligibility for a tax credit under this chapter or of a claim of tax credit under this chapter, the Department may require at any reasonable time before or after the issuance of a certificate of eligibility for tax credit that any information provided to the Department by a business entity be audited.

(2) The Department may require at any reasonable time an audit of any information submitted to the Department:

(a) By any business entity that applies for certification by the Department of tax credits under this chapter; and

(b) By any business entity that has been certified by the Department for a tax credit.

(3) An audit under §A(2) of this regulation shall be directed to the business entity's basis for its claim of eligibility for the tax credit under this chapter.

(4) An audit under §A(2) of this regulation shall be conducted at the business entity's expense by an independent auditor selected by the business entity and reasonably satisfactory to the Department.

(5) The Department may initiate an audit by delivering to the business entity a written request for the performance of an audit stating the scope of the audit to be undertaken and the matters to be examined in the course of the audit.

(6) Within 10 business days after a business entity receives a request from the Department for the performance of an audit under this regulation, the business entity shall submit to the requesting agency a written response naming the independent auditor selected by the business entity.

(7) If the Department approves the auditor, it shall give written notice to the business entity that it approves the auditor and shall provide instructions to the auditor for the scope and conduct of the audit.

(8) If the Department disapproves of the selected auditor, it shall give written notice to the business entity of the disapproval and of the reasons for it. The business entity shall, within 5 business days after receipt of notice of the Department's disapproval of an auditor, select an alternative auditor and submit to the Department a written response naming the alternative independent auditor selected by the business entity.

(9) The process pursuant to §A(5)-(8) of this regulation for the selection and approval of an auditor will continue until the Department approves an alternative proposed auditor pursuant to §A(7) of this regulation.

(10) The approved auditor shall proceed to conduct the audit with due diligence and dispatch, and in accordance with the Department's instructions. Within 90 days of the Department's notice approving the selection of an auditor, the auditor shall submit to the Department and to the business entity a full report of its audit procedures, tests, matters examined, and findings.

(11) The Comptroller retains its audit authority under the Tax-General Article, Annotated Code of Maryland.

B. Inquiries; Duty of Business Entities to Respond.

(1) If the Department becomes aware of facts and circumstances that reasonably warrant further inquiry into the factual basis of a business entity's claim of eligibility for a tax credit under this chapter, or the basis of the business entity's claim of a tax credit under this chapter, the Department may make written inquiry, including a request for the production, inspection, or copying of documents specified in the inquiry, of any business entity or holder of a certificate of eligibility for a tax credit under this chapter to obtain information bearing on the eligibility of the business entity or of the business entity's partners, shareholders, members, or beneficiaries for that credit. The inquiry may include, but may not be limited to, whether the claimed costs were in fact incurred in the State.

(2) A business entity to which a written inquiry from the Department is directed under §B(1) of this regulation shall submit a full and complete written response, with copies of all requested documents, within 45 days of the date of the inquiry. The response shall be verified as true and correct by oath or affirmation made under penalty of perjury by the individual proprietor or by an individual officer, partner, or member of the business entity.

Md. Code Regs. 24.05.06.12

Effective date: 40:25 Md. R. 2071, eff.12/23/2013