Maryland tax systems back online after system upgrade; half of returns processed after pause

The Maryland comptroller’s office said Monday that it has processed about half of the roughly 530,000 state returns received this year, following delays due to a tax system upgrade at the start of the season.

State returns have been taking slightly longer — up to 10 business days — to process following the upgrade period that held up the office’s systems for roughly the first two weeks of the tax season, which opened Jan. 29. The state’s taxing authority said Monday that it expects processing times to speed up this week to the standard three to five days, as staff was working overtime.

The comptroller’s office had planned to pause processing early returns starting the evening of Jan. 30 as the office launched Maryland Tax Connect, a new portal now open for business tax filings that individual taxpayers will likely get to see in 2026.

The portal is a smaller piece of a larger overhaul to replace the state’s dated tax systems — in addition to the web portal for taxpayers, the project aims to move the comptroller’s internal processing “off the mainframe and into the cloud,” the office said in January.

The early season upgrade, where online filing was open but processing was paused on the state’s end, was originally expected to have the tax system offline through Feb. 5, though a comptroller’s office spokesperson said it was ultimately able to begin processing returns Feb. 9. A bug in the website had also prevented filers from checking the status of their returns, but that had been fixed by the time processing restarted, the office said.

More than 300,000 state returns were pending in a queue Thursday, when the office said its tax processing systems were “now fully operational” and that over 100,000 returns had been processed.

“We regret that some taxpayers were inconvenienced by the delay and were unable to immediately obtain information about the status of their state tax returns and refunds during the planned system outage,” the office said.

The new portal is the main, outside-facing piece of the state’s “Compass” project, an estimated $141 million overhaul of state tax systems written and builtbefore the new millennium.

Maryland Tax Connect, the main part of the Compass overhaul that taxpayers will notice, is supposed to be user-friendly and make the electronic filing process more efficient and secure.

The comptroller’s office said that the portal’s Feb. 6 release date was chosen to minimize disruptions, electing to make the pause ahead of the height of the season to avoid making taxpayers file after the April 15 deadline, while also giving businesses room to file their January returns. The office said that delaying implementation until any later “would have created additional reporting challenges and would end up costing the state millions of dollars,” but doing it earlier could have created a backlog of those who had extensions in 2022.

The first part of the large-scale upgrade went live in 2020. At the time, the comptroller’s office gave a timeline anticipating a 2022 rollout of its final pieces, business and income taxes. In a request for increased project funding, the office told the state’s Board of Public Works agenda last November that the delays and reshifting of certain release dates had been prompted by impacts from the coronavirus pandemic, as well as the scope and complexity of the project increasing, such as by having to add cannabis taxing.

Last year, Comptroller Brooke Lierman cited a weeklong outage later in the tax season, in March, as an example of why the upgrade was ultimately needed.

“This systems outage highlights the need for the Office of the Comptroller to modernize and update our legacy IT systems — some decades old — in order to improve the services offered by our agency,” she said.