Frequently Asked Questions for Businesses
Answers to frequently asked questions about the admissions and amusement tax can be found in our business tax tips.
The taxable price may be reduced by separately-stated charges for installation, professional services, interest payments and delivery services. Additionally, the tax does not apply to consumer excise taxes, deposits, cash discounts and mandatory gratuity charges on food and beverage sales for groups of ten or fewer. Reductions to the taxable price must be made known to the buyer by documentary evidence in existence at the time of the sale. However, if these charges are included in a lump-sum price with no separate statement, the tax must be collected on the entire amount of the sale.
The Maryland corporation income tax applies to every Maryland corporation and every other corporation that has a nexus with Maryland. Nexus indicates a taxable connection between a corporation and a taxing authority. If a corporation conducts business activity within Maryland and exceeds the provisions of U.S.C.A. Title15, Section 381 of the Interstate Commerce Tax Act (P.L. 86-272), it has a nexus and must file a corporation income tax return, using Form 500.
The following list includes some in-state activities which generally create nexus and are outside the protection of U.S.C.A. Title 15 Section 381 (P.L. 86-272):
- Maintaining a business location in Maryland, including any kind of office.
- Ownership or use of property in Maryland, real or personal, whether the property is rented office space or equipment used in the manufacture and distribution of goods.
- Employees soliciting and accepting orders in Maryland.
- Installation or assembly of the corporation's product.
- Maintaining a stock of inventory in a public warehouse or placement of the corporation's inventory in the hands of a distributor or other non-employee representative.
- Sales persons making collections on regular or delinquent accounts.
- Technical assistance and training with Maryland offered by corporate personnel to purchasers or users of corporate products after the sale.
- Corporate personnel repairing or replacing faulty or damaged goods.
- Mobile stores in Maryland (such as trucks with driver-salesmen) from which direct sales are made.
Updated November 25, 2019
Maryland Law and Regulation on Out of State Vendors
Under Maryland law, a person who engages in the business of an out-of-state vendor must register with the Maryland Comptroller, collect and pay sales and use tax, and file Maryland sales and use tax returns. A person engages in the business of an out-of-state vendor if the person:
- Permanently or temporarily maintains, occupies, or uses any office, sales or sample room, or distribution, storage, warehouse, or other place for the sale of tangible personal property or a taxable service directly or indirectly through an agent or subsidiary;
- has an agent, canvasser, representative, salesman, or solicitor operating in the state for the purpose of delivering, selling, or taking orders for tangible personal property or a taxable service;
- Enters the state on a regular basis to provide service or repair for tangible personal property;
- Regularly uses the person's vehicles to sell or deliver tangible personal property or a taxable service for use in the State; or
- Sells tangible personal property or taxable services for delivery in the State, if, during the previous calendar year or the current calendar year, the person satisfies either of the following criteria:
- The person's gross revenue from the sale of tangible personal property or taxable services delivered in the State exceeds $100,000; or
- The person sold tangible personal property or taxable services for delivery into the State in 200 or more separate transactions.
See Md. Code Ann., Tax-Gen. §§ 11-701(b)(2)(i)-(b)(2)(iii) and COMAR 03.06.01.33(B)(4)-(5).
Engaging in the Business of an Out-of-State Vendor
The Comptroller's Office interprets Section 11-701(b) as broadly as is permitted under the United States Constitution.
The Comptroller considers the phrase "on a regular basis" as used in § 11-701(b)(2)(ii) to be met if a vendor, such as a furniture or appliance dealer, provides such service or repair as a customary, usual or normal course of business.
Section 11-701(b)(2)(ii) does not define the word "service" in the phrase "provide service or repair for tangible personal property." The Comptroller's Office, relying on a dictionary definition of "service," interprets the word to mean "installation, maintenance, or repairs provided or guaranteed by a dealer or manufacturer." See, for example, the American Heritage Dictionary, Second College Edition (1985).
A dealer or manufacturer that regularly installs, or who performs maintenance for, tangible personal property such as furniture or appliances is engaged in the business of an out-of-state vendor within the meaning of Section 11-701(b)(2)(iii).
No minimum number of service or repair visits is required to meet the definition. If it is the vendor's policy to provide service or repair for tangible personal property, and the vendor in fact provides such services or repairs during the audit period, these services or repairs will be regarded as regular. On the other hand, any services or repairs that are provided on a discretionary and infrequent basis will not be regarded as regular.
The Comptroller's Office will examine all relevant information in making a determination about whether a person engages in the business of an out-of-state vendor under § 11-701(b)(1-4). This information includes advertising materials, promotional literature, websites, representations made to prospective customers before sale, whether the vendor routinely employs service or repair personnel or regularly contracts for such services or repairs, and the vendor's description of its business operations as contained in business documents and submissions to government agencies.
Sales of Tangible Personal Property or Taxable Services for Delivery into Maryland
The nexus requirements contained in COMAR 03.06.01.33(B)(5) became effective October 1, 2018. Out-of-state vendors with more than $100,000 in sales or at least 200 separate transactions into Maryland must register and collect sales tax. The Comptroller's Office has published guidance for out-of-state vendors to determine if registration is required.
Guidance on Sales of Tangible Personal Property or Taxable Services for Delivery into Maryland
Sales and Use Tax Alert - Issued September 2018
Registration
If you are required to register with the Maryland Comptroller's Office, a Maryland Combined Registration Application can be found here.
One-Time Events or Shows
If you are going to participate in a one-time event or craft show involving the sale of tangible personal property in Maryland, you may not need to register with Maryland. However, you will need to obtain a Temporary Sales & Use Tax License. Information on obtaining a Temporary Sales & Use Tax License can be found here.
Closing a Sales and Use Tax Account
If you have determined that you no longer have nexus with the State of Maryland, are not required to file Maryland sales and use tax returns, and do not need to retain your account to claim a resale exemption, you can close your Maryland sales and use tax account by filing the Maryland Sales and Use Tax Final Return Form. Form 202FR is available here.
Contact Us
If you have any questions on Maryland's law and regulations on out-of-state vendors, please contact the Comptroller's Office at remotesellers@marylandtaxes.gov.
Shop Maryland- Tax-Free Week on Clothing and Footwear, Excluding Accessory Items
Beginning in calendar year 2010 and each year thereafter, there will be a one week tax-free period for back-to-school shopping in Maryland during August in which the sales and use tax does not apply to the sale of any items of clothing or footwear, excluding accessory items, if the taxable price of the item of clothing or footwear is $100 or less. The 2016 tax free period will occur the week of August 14-20. Accessory items that are not exempt from the sales and use tax during the tax-free week include jewelry, watches, watchbands, handbags, handkerchiefs, umbrellas, scarves, ties, headbands, and belt buckles.
Shop Maryland- Tax-Free Weekend on Energy Star Products
Beginning in calendar year 2011 and each year thereafter, there will be a tax-free three-day weekend during February in which the sales and use tax will not apply to the sale of any Energy Star Product listed below. The 2017 tax free weekend will occur the weekend of February 18-20. Energy Star Product means an air conditioner, clothes washer or dryer, furnace, heat pump, standard size refrigerator, compact fluorescent light bulb, light-emitting diode (LED) light bulbs, dehumidifier, programmable thermostat or boiler that has been designated as meeting or exceeding the applicable Energy Star efficiency requirements developed by the U.S. Environmental Protection Agency and the U.S. Department of Energy. Please note that under Energy Star requirements, no dryer has an Energy Star rating and therefore dryers do not currently qualify for this tax-free period.
For more details, see our Sales and Use Tax Alert on Tax-Free Periods.
Next, send us a letter or e-mail confirming the new business name and attach a copy of your completed Trade Name Amendment, Cancellation Form or Amended Articles of Incorporation.
Please include the following in your correspondence:
- Former business name
- New business name
- Business address and telephone number
- Nine-digit federal employer identification number (FEIN) or eight-digit Maryland central registration number
You can contact us by e-mail at taxhelp@marylandtaxes.gov or write to:
Comptroller of Maryland
Revenue Administration Center
Taxpayer Identification
Annapolis, Maryland 21411
To report other business-related changes with SDAT, see SDAT's Forms and Applications