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Maryland Sales Tax Guide

By Cristina Garza

Maryland is a state deeply steeped in history, science, and, of course, sweet, delicious crabs :p The 42nd smallest state in the union, Maryland has more historic landmarks per capita than any other, and is home to Science Capital Gaithersburg, MD where NIST is headquartered. The state is known as “Mini America” due to its incredible variety of climates and topographies. With so much to offer, it’s no surprise many people are happy to live and work in Maryland. If you’re one of the proud small business owners calling Maryland home, you’ll want to stay in line with the Comptroller of Maryland's sales and use tax laws to keep things on an even keel. No worries! We have assembled this all-in-one guide for sales tax so that you can meet all the sales tax requirements for a small business in Maryland. 

After reading this guide, you will have learned:

  • How to be prepared for your call with the Comptroller of Maryland.
  • How to contact the Comptroller of Maryland.
  • When to charge sales tax in Maryland.
  • What goods, products, and services are taxable in Maryland.
  • When you establish a sales tax nexus with the state of Maryland, and the nuances of various thresholds.
  • How to register for a sales tax license in Maryland.
  • How to collect sales tax in Maryland.
  • How to file and pay sales tax in Maryland.

If, after reading, you still have any questions to help you determine your tax sales obligations in Maryland and how to fulfill them, we are here for your small business bookkeeping needs! 

 

Maryland Sales Tax Contacts

Maryland Sales Tax Contacts

✅  Do you need to get in touch with the Comptroller of Maryland?

✅  Are you uncertain about whether to visit, call them, or contact them through their website?  

✅ Do you wonder what information you should have ready before you contact them?

 

If you answered “Yes” to any of these questions, please read onward, as we have just the information you need! :)

The Comptroller of Maryland is reachable by phone at 800-638-2937. 

You can also shoot a message to them via email, or you may visit one of their twelve physical locations. If you are hoping for the fastest response, we always suggest you call rather than send a message or visit in person. 

When you do call the Comptroller of Maryland, you will want to have some information on hand. It will save time to have the following information easily accessible before you call: 

  • Taxpayer Name
  • EIN
  • Sales & Use Tax ID Number

If you are calling on behalf of an individual or a business, or having a third party call on your behalf, you must have a Maryland Power of Attorney (form  548, PDF) signed before you call or else you will be wasting your time; they can only help if you have a completed POA form. 

Should you have more questions, please feel free to contact us so we can assist you with your sales tax needs.

 

Maryland Sales Tax Registration

Maryland Sales Tax Registration

Are you a new business selling tangible property in Maryland? If yes, you are going to want to register your business with the Comptroller of Maryland so that you can pay your sales tax on time. 

You need not fret as this is a relatively simple process and one for which you’re about to be fully prepared. We are going to outline the steps below so you are totally ready to register for your sales tax license.

 

Here we go! Remember...

Preparation is key. 

Let’s get started!

 

 

How do I register to collect sales tax in Maryland?

You can apply or register for a Maryland state sales tax permit by visiting the Comptroller of Maryland website and following the instructions provided.

Maryland also has an old school paper based form (PDF) you can print and mail in, but this is going to be a much slower setup and with a greater possibility for errors. We don’t recommend it, but want to make the option available in case it suits the needs of someone out there. 

 

 

What information do I need to register for a Maryland sales tax permit?

Great question!

Before you sign up for Maryland sales tax permit you’ll want the following information on hand:

  • Business name
  • Business entity type 
  • Description of business activities
  • Date business activities began or will begin
  • Business address and mailing address
  • Business contact information
  • Associated business entities 
  • NAICS code that best matches the business
  • Federal Employer Identification Number (FEIN)

Don’t forget! Preparation is key. When you have all this information ready, you can go online and register for your permit at the Maryland Combined Registration Application website. 

 

 

How much does it cost to register for a Maryland sales tax permit?

We are happy to say: The price for a sales tax permit in Maryland is zero! :) Nothing beats free!

 

 

Do I need a Federal Tax ID Number or EIN to register for a Maryland sales tax permit?

Absolutely, yes! You will definitely need one, but if you don’t already have one and need to get a new EIN, it’s a painless process. You can register for a Federal EIN right here :). 

 

 

Which agencies in Maryland do I need to additionally register with?

You may need to apply to some of the following agencies: 

You’ll want to give this some thought and do a little research or investigating; every business is unique and, as such, there are different rules, regulations, and laws that may apply. 

We suggest contacting the Comptroller of Maryland to verify which additional government agencies you may be required to register with. 

 

*****

 

Hooray!!!

You are now prepared to register for your Maryland sales tax permit in Maryland. 

Let’s summarize what we have covered so far:  

  • Have all the required information easily accessible before registering online.
  • Acquire a tax ID or EIN before registering for a Maryland sales tax permit.
  • Register online at the Comptroller of Maryland's Combined Registration Application site.
  • Look into what other agencies you may have to additionally register with.

Registering for your Maryland sales tax permit will be stress free as long as you are adequately prepared. We always recommend organizing all the essential information in a folder, preferably mirroring paper files with a system like Box.com or Dropbox (something we’re happy to handle for our customers). 

 

 

Maryland Sales Tax FAQ

Maryland Sales Tax FAQ 

By now, you may have already contacted the Comptroller of Maryland and applied for a Maryland sales tax permit. 

Once you have a license to collect and remit sales taxes in Maryland, you will probably be asking yourself two questions: 

  • When do I charge a sales tax in Maryland?
  • What goods and services are subject to sales taxes in Maryland? 

We are going to go over some common questions that our clients ask. We believe the answers to these questions will help you appreciate the nuances of taxable goods so you can be confident in fulfilling your tax obligations. 

Let’s start with the first question…

 

 

What goods and services are considered taxable in Maryland?

The following items are all taxable in the state of Maryland: 

  • Sales of tangible goods at retail.
  • Property rentals, leases, or licenses [e.g. commercial, mini-warehouse]
  • Charges for admission to any place of amusement, sport, or recreation.
  • Manufacturing or producing goods for retail sales.
  • Operating vending machines or amusement rides.

With exception to a few special cases, most tangible goods are taxed at the same rate in Maryland.

 

The bottom line is …

Your business must pay taxes on sales of any non-exempt goods.

 

*****

 

Let’s now review some of our clients’ frequently asked questions:

  • Is Maryland an Origin or Destination sales tax State?
  • What creates a sales tax nexus in Maryland?
  • What is the economic threshold in Maryland?
  • Does Amazon have fulfillment centers in Maryland?
  • Does Maryland have a Click-Through Nexus?

 

To best understand your tax obligations, new businesses need to consider how they are doing business and the type of relationships they have with buyers and any third parties to their transactions (such as affiliate marketers). 

 Let’s discuss some questions that will help you understand the nature of your small business and the subsequent tax implications.   

 

 

Is Maryland an origin or destination-based sales tax state?

Maryland is a destination-based sales tax state. This means you charge sales tax based on the location of the purchaser rather than that of the seller. Maryland is one of those magical states that doesn’t permit additional local taxing, so it’s the same rate throughout the state! 

 

 Protip: Charge the customer tax based on their location.

 

 

What creates a tax nexus with the state of Maryland?  

Having nexus, also known as "sufficient business presence,” with Maryland means your business has established a taxing connection with a state. When this happens, you are required to collect and remit sales tax in Maryland because you created a sales tax Nexus.

Even if your business maintains its main headquarters in another state, you may still have to charge and pay sales tax to the Comptroller of Maryland even if you never step foot in Maryland.   

 

So, how do you create a sales tax Nexus in Maryland?

 

A business establishes a nexus in Maryland by:

  • having a business location in Maryland;
  • having property stored in Maryland;
  • employing any person in Maryland;
  • contracting with a salesperson or other agent in Maryland;
  • leasing equipment used in Maryland;
  • performing services in Maryland;
  • licensing the use of intangible property in Maryland, or transporting property in Maryland using the taxpayer’s vehicles.

Let’s talk a bit more specifically about where your goods are stored such as in the instance of an Amazon warehouse. 

 

 

Does Amazon have fulfillment centers in Maryland?

Yes, there are three of them at the time of this article’s publishing:

 

  • 2010 Broening Hwy // Baltimore, MD // 21224
  • 5501 Holabird Ave // Baltimore, MD // 21224
  • 600 Principio Parkway West // North East MD // 21901-2914

 

This is relevant if you sell your products on Amazon or are recognized as an Amazon FBA (Fulfillment by Amazon) seller. When Amazon stores your products in one of its fulfillment centers in any state, including Maryland, this triggers a sales tax requirement. If Amazon is storing your products in a warehouse in Maryland, you have created a taxing connection with the state of Maryland.

We can help guide your small business through this. We use tools like A2X and Wherestock to identify where our clients' inventory is currently being held and shipped from so that we can keep them in compliance.

 

 

Does Maryland have economic nexus?

Yes! This means that even if your business isn’t located in the state or doesn’t in any traditional way create nexus, you may still have to register and pay sales tax in Maryland.

 

The threshold for creating economic nexus with Maryland is to have over $100,000/year in sales to Maryland purchasers or over 200 separate transactions in a year. 

 

For  more information keep an eye on Maryland DOR’s remote sellers page.

 

Does Maryland have click-through nexus?

No, Maryland has no special requirements for affiliate sales at this time. 

 

 

Is Maryland a streamlined sales tax state?

No, Maryland is not a member of the SSP. Fingers crossed they might join this efficiency boosting project 🤞!

 

 

More effectively manage your tax needs by keeping this guide handy. 

You and your business can be better equipped to avoid situations like paying fines, paying back taxes that you did know you had to pay in the first place, or facing an audit by the tax authorities in Maryland.

 

 

Collecting Sales Tax in Maryland

Collecting Sales Tax in Maryland

By now you know if you are a business that has established a nexus with Maryland. So you have an understanding about whether, or when, you are required to collect sales tax. Knowing this is just half the battle! Now, we are going to help you with the next half of the battle: how to navigate the process of collecting taxes.

Let’s review some common questions our clients have asked regarding their Maryland Sales Tax obligations. 

  • How do I collect Maryland Sales Tax?
  • Who is eligible for Maryland Sales Tax exemptions?
  • What should I do if my customer is exempt from sales tax in Maryland?
  • What happens if I lose a Maryland nontaxable transaction certificate? 

After reading this, you will be better equipped to determine when --and when not-- to collect sales tax in Maryland.

 

 

How do I collect Maryland sales tax?

Because Maryland is a destination-based sales tax state, your business should charge sales tax based on the location of the purchaser, at the time of the transaction. This is usually as simple as configuring the Point-of-Sales system accordingly. The nice thing with Maryland is there are no complicating, compounding jurisdictions. Just one simple rate for the state.

 

 

What are the current Maryland sales tax rates?   

At the time of this article’s publication, Maryland’s state-wide sales tax rate is 6% for most tangible goods. There are special taxes on alcohol (9%), car rentals (11.5%), and small truck rentals (8%). There is some variability for certain special situations. Since sales tax rates may change, we suggest utilizing the above links to stay up to date.

It always helps to be accurate and up to date with this type of information! :) 

 

 

What is exempt from Maryland sales tax?

Here is a sample list of exemptions: 

  • Purchases for resale
  • Everyday clothing items
  • Medical supplies
  • Groceries 

Maryland has a page that goes into detail on their special taxing situations. Beyond that, everything is included in taxable goods. 

 

 

Who are eligible for Maryland sales tax exemptions?

At this point, you should know what products are exempt from sales tax in Maryland. You also want to know who may be exempt. 

Under Maryland law, the type of buyer or the way the goods will be used can qualify can buyer for a sales tax exemption. A good example of this is a merchant purchasing goods for resale, aka a wholesaler.

Other common examples of an exempt buyer may include:

  • Government agencies
  • Non-profit organizations
  • Religious groups
  • Out-of-state buyers (should their business not have nexus in their home state).

 

 

What should I do if my customer is exempt from sales tax in Maryland?

Purchasers who are tax exempt must have completed an exemption certificate (PDF) and must present their completed exemption certificate at the time of purchase. It is then incumbent upon the seller to hold on to this exemption certificate. Failure to do so may leave you unable to justify tax exempt sales.

Maryland provides a website to determine whether an exemption certificate is valid. Note that determining the validity via the website doesn’t reduce the requirement to hold on to the certificate for bookkeeping purposes.

 

 

What happens if I lose a Maryland sales tax exemption certificate?

Naturally this issue is best to be avoided entirely! Imagine finding out you’ll be audited and discovering you cannot produce a required exemption certificate. That nightmare scenario would mean you could be held liable to pay all taxes on behalf of the buyer. This is a bad situation and can be easily avoided by taking proper care with your paperwork… which happens to be one of our specialties! :) 

 

 

Does Maryland have a sales tax holiday?

Yes, two breaks a year from the tax man’s ever watchful gaze. The first is Shop Maryland Tax Free Week, which starts the second Sunday in August to the following Saturday and grants a reprieve on back to school type items under $100. Then there is Shop Maryland Energy, a three-day weekend that starts on the Saturday that follows the third Monday in February. During that tax holiday sales of certain Energy Star appliances are exempt from tax.

 

***** 

 

We have now covered who you need to collect sales taxes from, how to determine whether goods for sale are deemed taxable, what goods and services fall under tax exemptions, who is eligible for tax exemption certificates, and, finally, the process of collecting sales tax in Maryland state. 

Now that we’re this far down the rabbit hole there’s only one thing we need to learn about next… how to pay the piper! 

 

Filing and paying sales tax in Maryland

Filing and Paying Sales Tax in Maryland

It is time to talk about filing and paying your sales taxes in Maryland. In this section, We are going to cover the following frequently asked questions from our clients:

  • When is Maryland Sales Tax due?
  • What are the Maryland Sales Tax thresholds?
  • What if a Maryland Sales Tax filing date falls on a weekend or holiday?
  • How do I file a Maryland Sales Tax Return?
  • How do I correct a Maryland Sales Tax return?
  • What happens if I don’t collect sales tax?
  • What happens if I file or pay my sales tax return late?
  • Do I need to file a return if I don’t collect any sales tax in Maryland?
  • If I close my business, do I need to file a final sales tax return?
  • Does the Comptroller of Maryland offer a discount for filing on time?

By the time you finish reading this, you will feel confident enough to file and pay your Maryland Sales Tax.

 

 

When is Maryland sales tax due?

Maryland sales tax payments are due no later than the 20th day following the reporting interval.

 

 

What are the Maryland sales tax filing interval thresholds?

The thresholds for filing intervals are based on the expected or actual tax liability owed:

 

Tax Amount Owed monthly*

Filing interval

From $0 to $700

Quarterly 

Greater than $700.01

Monthly

 

Maryland may elect to place a business on annual or semi-annual filing at the Comptroller’s discretion.

 

Not sure how to determine your tax filing frequency?

You can review your eCommerce or Point-of-Sale Software to see the volume of sales you have generated. 

Don't worry though! The state will let you know when your due dates change. :) 

Keep an eye out for notices in your mail from the State of Maryland so that you don't miss any shift in deadlines.

 

 

What if a Maryland sales tax filing date falls on a weekend or holiday?

The deadline is moved to the next business day, typically the Monday following the weekend or the day after the holiday. Where possible, we always suggest filing well before the holiday, of course ;). 

 

 

How do I file a Maryland sales tax return?

Paper: Paper forms aren’t published online. Individualized forms are attained by calling 410-260-7951 [or via the bFile website]. 

Electronic: File online via the bFile website and submit payment via EFT.

 

  

How do I correct a Maryland sales tax return?

In order to correct a return you actually have to reach out to the Comptroller of Maryland by phone (410-260-7980) or email to request a correction. 

 

 

What happens if I don’t collect sales tax?

If you were required to collect sales taxes and failed to do so for whatever reason, that’s a big no-no! The business may be held liable for the due tax, although Maryland is one of the few states that may also potentially go after the consumer for the tax. Which can certainly create a bad impression with the customer! 

Always be sure to collect sales tax at the point of sale. Attempting to collect after the fact will be time consuming and most likely unsuccessful. 

 

Protip: You may still be responsible for remitting sales taxes even if you failed to collect them. 

 

What happens if I file or pay my sales tax return late?

The Comptroller of Maryland charges 10% penalty for late filing and interest will be applied at not less than 1% ongoing until payment is made.

 

 

Do I need to file a return if I don’t collect any sales tax in Maryland?

Yes, Maryland requires businesses file a “Zero-Tax” return even when they have no sales during a taxing period. In addition to the bFile site, they actually have a special phone line for these zero tax returns: 410-260-7225

 

 

If I close my business, do I need to file a final sales tax return?

Yes, Maryland requires businesses to file a special form (PDF) when closing their doors.

 

 

Does the Comptroller of Maryland offer a discount for filing on time?

Yes, Maryland offers a rather generous timely discount! They’ll chop 1.2% off the first $6k and 0.9% on the remainder up to a maximum of $500 per return. Take advantage and file and pay on time.

 

*****

 

Now that we covered all our bases for filing and paying sales taxes in the state of Maryland, you should feel more at ease about the process.

 

Some things to remember:

  • Due dates are important. If anything, file and pay your taxes early.
  • There are three payment plans for filing and paying your sales taxes depending on how much you collect in sales tax on average in a month.
  • You can file and pay your taxes electronically or by mail
  • If you need to amend a return, you may do so electronically or by paper.
  • If you don’t collect sales tax and you were supposed to, you (not the buyer) is liable to pay the sales tax to the state of Maryland.
  • You will have to pay late fees if you fail to file your tax return on time and/or if you fail to make your tax payment on time.
  • Even if you collect no sales tax, you still need to file a return.
  • You need to file a “Final return” when you close your business.

 

Now, you are ready to file and pay your sales tax in Maryland. If you have any more questions, feel free to contact us.

  

📞 Book a Free Consultation Here 


 

Please note: This blog is for informational purposes only and the information is accurate as of 7/19/2019. If you want legal advice on sales tax law for your business, please contact a Sales Tax 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.