Maryland Sales Tax Handbook

RATE OF SALES TAX:

6.00%

LOCAL & COUNTY MAXIMUM RATES:

None

What Are the Taxable Goods and Services?

The first step in sales tax compliance is determining if the items or services your firm offers are taxable in Maryland.

Traditional Products and Services

Physical goods, such as furniture, household appliances, and automobiles, is subject to sales tax in Maryland.

Prescription and non-prescription medication, food, and fuel are all tax-free purchases.

Digital Products and Services

A digital item or service is anything that is supplied electronically, such as a music downloaded from iTunes or a movie bought from Amazon.

Businesses in Maryland are not required to collect sales tax on the sale of digital products or services.

Maryland, however, has one exemption to this restriction. Businesses are required to collect sales tax on pre-written computer software offered online.

How to Register for Sales Tax in Maryland

If you have concluded that you must charge sales tax on part or all of the products and services that your company sells, the next step is to apply for a seller’s licence.

This enables your company to collect sales tax on behalf of the municipal and state governments.

You will need the following information to register:

The purpose of your application
Basic business knowledge
Your company’s nature (sole proprietorship, corporation, etc.)
The nature of your business (dry cleaner, limousine, food and beverage, etc.)
The day you will begin collecting sales tax.
Other entrepreneurs

A Resale Certificate might help you save money.

When acquiring items for resale, your firm does not have to pay sales tax if you obtain a resale certificate, also known as a reseller’s permit.

Sales Tax Collection

After obtaining your seller’s licence and starting your company, you’ll need to figure out how much sales tax to charge various consumers. It is critical for company owners to collect the right rate of sales tax to avoid penalties and the danger of expensive audits.

When computing sales tax, consider the following types of transactions:

Retail Sales
Shipping inside the state

Out-of-State Purchases

Sales inside the state

It is simple to calculate sales tax on products sold in Maryland. Simply impose a flat sales tax of 6.000% on all products, whether sold in-store or sent across the state.

Out-of-State Purchases

Maryland firms must only pay sales tax on out-of-state transactions if they have a presence in other states.

Nexus indicates that the company has a physical presence in another state.

Common nexus types include:

A physical place, such as an office, retail shop, or warehouse.
An employee who works from home or as a roaming sales representative.
An affiliate marketer
Dropshipping from a third-party vendor.
A temporary physical site, such as a festival or fair booth.

Submit Your Sales Tax Return

You’re ready to submit your sales tax return now that you’ve obtained your Maryland seller’s permit and understand how to charge the correct amount of sales tax to all of your customers. You avoid penalties and fines, be sure to meet all filing dates.

How to File a Claim

Businesses in Maryland are required to file sales tax forms and make sales tax payments online.

How Frequently Should You File?

The frequency with which you must submit is determined by the total amount of sales tax collected by your firm.

In general, all Maryland businesses will begin submitting quarterly sales tax reports. If your company receives more than $100.00 in sales tax every month, you must submit sales tax reports on a monthly basis. Any company that wants to submit sales tax returns on an annual basis must apply with the State of Maryland.

Deadlines for Filing

The deadline for all Maryland sales tax returns is the 20th of the month, unless it is a weekend or federal holiday, in which case the deadline is moved to the next business day.

Penalties for Filing Late

Maryland imposes a fine of up to 25.00% of the amount due, plus 12.00% interest on the total amount owed, for late filing.