Auditors: Franchot's office miscategorized 14,000 tax returns, sent $8.7 million to wrong towns

The office of Maryland Comptroller Peter Franchot distributed $8.7 million in tax revenues to the wrong towns in Montgomery County, state auditors say in a report to be released on Thursday.

Auditors blame the mistake on the erroneous classification of more than 14,000 returns.

Auditors also found problems with how the office handles out-of-state tax credits, keeps information secure, and issues replacement refund checks. The audit, obtained by The Baltimore Sun, is expected to be broadly released Thursday.

The comptroller's office said it has worked diligently to correct the mistakes.

Franchot, a Democrat, defended his office Wednesday.

"We have the finest comptroller's office in the country," he said. "I have a terrific staff of people."

Franchot said his office inherited the revenue distribution problem from previous comptrollers, discovered and corrected it. He said he worked with the Maryland Association of Counties to resolve the erroneous transfers, and put jurisdictions that had been overpaid on lenient repayment schedules.

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