.05 Refunds of Sales and Use Tax.

A. General.

(1) The Comptroller shall treat any request for a credit as a request for a refund.

(2) The Comptroller shall deny any request for a refund received more than 4 years after the tax was paid by the applicant to the Comptroller or to a licensed tax collector.

(3) If the request for a refund is for taxes previously paid with a return, and from which a collection discount was deducted by the person making the request, the Comptroller:

(a) If the entire amount of the taxes previously paid with a return was subject to the collection discount, shall deduct from the approved amount the amount of the collection discount; or

(b) If the entire amount of the taxes previously paid with a return was not subject to the collection discount:

(i) Shall deduct from the approved amount the amount of the collection discount if, after excluding the approved amount from the total amount of tax previously paid with the return, the taxpayer would not exceed the collection discount limitation; or

(ii) May not deduct from the approved amount the amount of the collection discount if, after excluding the approved amount from the total amount of tax previously paid with the return, the taxpayer would still exceed the collection discount limitation.

(4) The Comptroller shall pay interest on the refund from the 45th day after the claim is filed, in the manner required by statute, to the date on which the refund is paid, unless the claim for refund is based on an error or mistake of the claimant not attributable to the State or a unit of State government.

(5) For sales and use tax assessments made after June 30, 1989, a credit is authorized for tax overpayments for the periods covered by the assessments. The credit will be permitted during the course of the audit to the extent that it can be verified at that time. In all other instances, taxpayers should file a documented claim for a refund identifying the assessment claim to which the refund relates.

(6) A person may appeal a denial of a refund by applying for a hearing. The hearing process is governed by COMAR 03.01.01.04.

B. Special Provisions for Licensed Taxpayers.

(1) Refunds Up to $1,000.

(a) A licensed taxpayer who is entitled to a refund of not more than $1,000, but not to exceed the amount of tax to be paid with a current return, may request the refund by deducting the amount requested from the total tax due with any return, in the space provided on the return.

(b) A licensed taxpayer electing the method in §B(1)(a) of this regulation shall keep all records and documents relating to and supporting the request for a period of 4 years from the date of the return on which the request was made. If, within 4 years from the date of the return, the Comptroller determines that any portion of the refund taken with the return was improper, a deficiency assessment shall be levied, including penalty and interest, against the taxpayer for the improper amount.

(2) Refunds in Excess of $1,000.

(a) A licensed taxpayer who wishes to claim a refund in excess of $1,000, or in excess of the amount to be reported with a return, may not deduct the amount from the return, but may only file a claim for refund.

(b) If any portion of the claim in §B(2)(a) of this regulation is approved, the Comptroller may either issue a check for the amount approved or credit the licensed taxpayer's account, or do a combination of both. The amount of any credit in a licensed taxpayer's account, up to the amount due with a subsequent return, may be deducted from the taxpayer's remittance enclosed with that return.

(3) Cancelled and Returned Sales. If a licensed vendor has refunded the purchase price and tax to a customer for a cancelled sale, the vendor may deduct the amount of the purchase price refunded from the total amount reported as taxable sales on a return, and the amount of tax refunded from the total amount reported as tax collected on the return, provided the vendor keeps accurate records of the transaction.

C. Special Provisions for Requests for Refund of Sales and Use Tax Assumed or Absorbed by a Vendor.

(1) Subject to the provisions of §B of this regulation, a vendor who has assumed or absorbed sales and use tax on a retail sale or use may claim a refund of sales and use tax, penalty, or interest erroneously paid in excess of the amount properly and legally payable to the Comptroller.

(2) Records and documents relating to and supporting the request for refund of assumed or absorbed sales and use tax, penalty, or interest shall:

(a) Show that sales and use tax was separately stated from the sale price on any record of sale; and

(b) Conclusively demonstrate that the vendor paid the sales and use tax on behalf of the buyer.