Maryland 2023 Sales Tax Guide

Maryland Sales Tax in a Word

Maryland Sales Tax Contacts

Navigating the waters of Maryland sales tax can be a daunting task, but fear not, intrepid tax adventurers! You're not alone on this voyage. When you need assistance or have questions, the Maryland Comptroller's Office is your trusty port of call. Let's drop anchor and learn more about who manages Maryland sales tax and how to contact them.

The Maryland Comptroller's Office is the primary authority responsible for administering and enforcing sales and use tax laws in the state. This office is your go-to resource for all things related to Maryland sales tax, including registration, filing, and payment.

Should you find yourself in need of guidance or assistance, the Comptroller's Office offers several contact options to ensure you receive the support you need while navigating these tax-infested waters.

Mailing Address:

Comptroller of Maryland
Revenue Administration Division
110 Carroll Street
Annapolis, MD 21411

Email:

For general sales and use tax inquiries, send an email to: taxpolicy@marylandtaxes.gov

Phone:

If you prefer a more personal touch, the Comptroller's Office has a dedicated sales and use tax information line: (410) 260-7980 or toll-free within Maryland at 1-800-MD-TAXES (1-800-638-2937).

Online Resources:

For an abundance of information and resources at your fingertips, visit the Comptroller's website at www.marylandtaxes.gov. Here, you'll find useful tools, forms, publications, and FAQs to help you sail through Maryland sales tax with ease.

Now that you have the Maryland Comptroller's Office as your trusty ally, you're better equipped to tackle the challenges of Maryland sales tax with confidence. Remember, when the seas get rough, don't hesitate to reach out for assistance. Your tax-adventure crew is always here to help you safely navigate to your destination.

Do You Have Nexus in Maryland?

As you navigate the vast seas of sales tax, it's critical to determine whether your vessel has established nexus in Maryland. Nexus is like a powerful anchor that ties your business to the state, creating an obligation to collect and remit sales tax. In this section, we'll explore the different types of nexus that can create such obligations in Maryland.

What Creates Sales Tax Nexus in Maryland?

Maryland, like many states, has various ways a business can establish nexus. These include physical nexus, economic nexus, affiliate nexus, click-through nexus, and marketplace nexus. Understanding these types of nexus will help you determine if your business has obligations for Maryland sales tax.

physical nexus in Maryland

Physical nexus occurs when a business has a tangible presence in the state, such as:

• Having a brick-and-mortar location, office, or warehouse

• Storing inventory or using a fulfillment center

• Employing salespeople or representatives in the state

• Regularly conducting in-person sales or services in Maryland

If your business has a physical presence in Maryland, you're likely required to collect and remit sales tax on taxable sales made within the state.

economic nexus in Maryland

Economic nexus is established when a business has a significant economic presence in the state, even without a physical presence. In Maryland, economic nexus is triggered if, during the previous calendar year or the current calendar year:

• Your gross revenue from sales made to Maryland customers exceeds $100,000, or

• You have made sales to Maryland customers in 200 or more separate transactions

affiliate nexus in Maryland

Affiliate nexus occurs when a business has a relationship with an in-state entity that helps the business establish or maintain a market in Maryland. This can include:

• A parent company, subsidiary, or other related business entity operating in the state

• A representative or agent who refers customers to your business

If your business has affiliate nexus in Maryland, you may be required to collect and remit sales tax on taxable sales made within the state.

click-through nexus in Maryland

Click-through nexus is established when an out-of-state retailer contracts with a Maryland-based affiliate to refer customers through a website link or online advertisement. If the retailer's cumulative gross receipts from these referrals exceed $10,000 during the preceding four quarterly periods, they are required to collect and remit Maryland sales tax.

marketplace nexus in Maryland

Marketplace nexus occurs when a marketplace facilitator, such as Amazon or eBay, sells or facilitates the sale of a retailer's products to customers in Maryland. In this case, the marketplace facilitator is typically responsible for collecting and remitting sales tax on behalf of the retailer.

By understanding the various types of nexus that can create sales tax obligations in Maryland, you'll be better equipped to determine if your business is anchored in this state. Should you find yourself tethered to Maryland sales tax, fear not, for your trusty tax-adventure crew is here to help you navigate these waters with ease.

Maryland Sales Tax Registration

It's time to embark on the next leg of our Maryland sales tax adventure: registration. Before you can collect and remit sales tax in this state, you need to register for a Maryland sales tax license. In this section, we'll guide you through the registration process, discuss costs, and explore additional agency registrations that may be required.

How to Register for Sales Tax in Maryland

To ensure smooth sailing in Maryland sales tax waters, follow these steps to register for a sales tax license:

1. Gather the necessary information: Before you begin the registration process, gather the following details to make the process as seamless as possible:

   • Business name and address

   • Legal structure (e.g., sole proprietorship, partnership, corporation, etc.)

   • Federal Tax ID Number (EIN) or Social Security Number (for sole proprietors)

   • Names, addresses, and Social Security Numbers of all owners, partners, or corporate officers

   • North American Industry Classification System (NAICS) code that best describes your primary business activity

2. Visit the Maryland Comptroller's Online Service Center: Access the Maryland Comptroller's Online Service Center to begin the online registration process.

3. Create an account or log in: If you're a new user, you'll need to create an account. If you already have an account, log in with your username and password.

4. Complete the Combined Registration Application (CRA): Once logged in, select the "Register a New Business" option and complete the Combined Registration Application (CRA) to apply for a Maryland sales tax license. The application will ask for the information you prepared earlier, as well as details about your business activities, estimated taxable sales, and more.

5. Submit your application: After completing the CRA, review your application for accuracy and submit it electronically. You should receive a confirmation number upon submission.

6. Obtain your sales tax license: Once your application is approved, you'll receive your Maryland sales tax license by mail. This may take up to 4-6 weeks, so be sure to plan accordingly.

How Much Does it Cost to Register for a Maryland Sales Tax License?

Good news, fellow tax adventurers! There is no fee to register for a Maryland sales tax license. Your journey through Maryland tax waters just got a little smoother.

Do I Need a Federal Tax ID Number or EIN to Register for a Maryland Sales Tax License?

Which Agencies in Maryland Might I Need to Register With Additionally? 

Depending on the nature of your business, you may need to register with additional agencies in Maryland. Some examples include:

• Maryland Department of Assessments and Taxation: If you're forming a corporation, LLC, or partnership, you'll need to register with the Maryland Department of Assessments and Taxation.

• Maryland Department of Labor: If you have employees, you'll need to register with the Maryland Department of Labor for unemployment insurance and other employer-related responsibilities.

• Local city or county offices: Certain localities may require business licenses or permits, so be sure to check with your city or county offices.

With your Maryland sales tax license in hand, you're ready to embark on the next leg of your tax adventure. Keep your compass pointed toward success, and remember that your trusty tax-adventure crew is always here to help you navigate these waters

Collecting Sales Tax in Maryland

Is Maryland aN Origin or Destination Sales Tax State? 

Maryland is a destination-based sales tax state. This means that sales tax is based on the location where the buyer receives the item or service, rather than the location of the seller. As a seller, you'll need to determine the appropriate sales tax rate for each sale based on the buyer's location, which may require using tax software or tools provided by the Maryland Comptroller's Office.

What Sales are Subject to Sales Tax in Maryland?

In Maryland, sales tax applies to the sale of tangible personal property and certain services. Examples of taxable sales include:

• Retail sales of tangible personal property, such as clothing, electronics, and furniture

• Sales of prepared food and beverages

• Sales of digital products, including e-books, digital music, and streaming services

• Rental of tangible personal property

• Certain services, such as commercial cleaning, security, and telecommunications services

Is Software as a Service (SaaS) taxed in Maryland?

What is Exempt from Maryland Sales Tax?

Ah, exemptions – the hidden treasure of the sales tax world! Maryland offers several sales tax exemptions, including:

• Sales of prescription drugs and medical equipment

• Sales of groceries and unprepared food items

• Sales of agricultural supplies and equipment

• Sales of manufacturing machinery and equipment

• Sales to non-profit organizations, governments, and schools

Who is Eligible for Maryland Sales Tax Exemptions?

What Should I Do If My Customer is Exempt from Sales Tax in Maryland?

If you have a customer who is eligible for a Maryland sales tax exemption, you should:

1. Obtain a completed Maryland sales tax exemption certificate from the customer

2. Keep the certificate on file for at least four years, in case of an audit

3. Do not collect sales tax on the exempt sale

Remember, it's important to verify the validity of the exemption certificate and ensure it's properly completed before accepting it.

What Happens If I Lose a Maryland Sales Tax Exemption Certificate?

If you lose a Maryland sales tax exemption certificate, you may be held responsible for the uncollected sales tax during an audit. To avoid this, it's crucial to maintain organized records and promptly request a replacement certificate from your customer if one is lost or damaged.

As you navigate the bustling waters of collecting sales tax in Maryland, remember that your trusty tax-adventure crew is always here to help. With a firm grasp of the Maryland sales tax landscape, you can confidently chart a course towards success! 

Filing and Paying Sales Taxes in Maryland

Now that we've explored the exciting world of collecting sales tax in Maryland, it's time to discuss the next stage of our journey: filing and paying those taxes. In this section, we'll cover when to file and pay, how to file your sales tax return, potential penalties, and any incentives offered by Maryland.

What If a Maryland Sales Tax Filing Date Falls on a Weekend or Holiday?

How Do I File a Maryland Sales Tax Return?

To file your Maryland sales tax return, gather your wits, your sales records, and follow these steps:

1. Determine your taxable sales: Review your sales records for the filing period and calculate the total amount of taxable sales, as well as the amount of sales tax collected.

2. Visit the Maryland Comptroller's Online Service Center: Access the Maryland Comptroller's Online Service Center to file your sales tax return electronically.

3. Log in or create an account: If you're a new user, you'll need to create an account. If you already have an account, log in with your username and password.

4. Complete the sales tax return form: Once logged in, select the "File Sales and Use Tax Return" option. You'll be prompted to enter your sales and tax information, as well as any deductions or exemptions that may apply. (Need refresher on use tax? Check out our sales tax vs use tax blog here.)

5. Review and submit your return: Double-check your return for accuracy, and make any necessary adjustments. Once you're satisfied with your return, submit it electronically. You should receive a confirmation number upon submission.

6. Pay your sales tax due: If you owe sales tax, you can pay it online using the Comptroller's Online Service Center. Accepted payment methods include electronic check, credit card, or debit card.

Filing your Maryland sales tax return online offers several benefits, including faster processing, fewer errors, and instant confirmation of your submission. So, make sure to hoist your sales tax flag high and sail confidently through the filing process!

What are the various penalties that can be assessed for sales tax filing in Maryland?

In the turbulent waters of sales tax, it's important to avoid penalties that can sink your ship. Maryland may assess the following penalties for sales tax filing violations:

• Late filing penalty: 10% of the tax due per month (or fraction thereof), up to a maximum of 25% of the tax due

• Late payment penalty: 10% of the tax due

• Interest: 1% per month on the unpaid balance

5 Tips to Avoid Common Mistakes When Filing Maryland Sales Tax Returns

Have sales tax in more than one state?

Check out All of our Sales Tax Guides

And don't forget to check out our blog about Economic Nexus, which serves as an invaluable resource for businesses who have sales that are subject to sales tax. 

This blog is for informational purposes only and the information is accurate as of 2023-06-19. If you want legal advice on sales tax law for your business, please contact a State and Local Tax (SALT) professional. Keep in mind that sales tax regulations and laws are subject to change at any time. While we strive to keep our blog current, this blog possibly may be out of date by the time you review it.