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 tax is imposed on the entire price whether paid in the form of money, promises, barter or anything else of value. It includes the amount of liabilities assumed by the buyer, the value of services performed for the vendor and, except for federal food stamps, the face value of any coupon for which the vendor can get reimbursement from another source. The taxable price is not reduced for any expense or cost for labor or service rendered, material used or any property sold except as explained below.
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 sales and use tax is applied to the full price of the cigarettes without any deduction for tobacco taxes which may have been paid on the cigarettes.
Yes. For an interest charge to be deductible, it must be for credit extended to the buyer. Interest paid by the seller and re-billed to the buyer does not qualify. No part of a timely lease or rental payment may be treated as a deductible interest charge.
No. A store coupon is not included in the taxable price unless the vendor can get reimbursement from another source. Manufacturers' coupons, for which a store can get reimbursement, are included in the taxable price, however.
Warranty, maintenance, service agreement and insurance charges in connection with taxable sales are also taxable if the vendor requires them to be purchased or they are automatically included in the price of the merchandise. However, if the sale could be completed without paying these charges, they are not taxable.
Separately stated shipping charges are not taxable; however, handling charges are a part of the taxable price. Therefore, when the charges are combined, the shipping charge loses its exemption and the entire amount is subject to the tax.
Are all labor charges exempt? No. The tax applies to fabrication labor charges. Fabrication or assembly labor charges are taxable even if the customer provides the materials.
The restoration of used property to its original condition or usefulness is repair, which is not taxable. The creation or completion of a new or different item is fabrication, which is taxable.
Under Maryland law, an out-of-state vendor must register with the Maryland Comptroller's Office to collect the tax if the vendor has sufficient presence or "nexus" in Maryland. For more information, see Nexus Information.

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.
For more information, see Administrative Release No. 2, Interstate Commerce Tax Act - Domestic and Foreign Corporations - Nexus Requirements - Apportionment of Corporate Net Income

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:

  1. 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;
  2. 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;
  3. Enters the state on a regular basis to provide service or repair for tangible personal property;
  4. Regularly uses the person's vehicles to sell or deliver tangible personal property or a taxable service for use in the State; or
  5. 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:
    1. The person's gross revenue from the sale of tangible personal property or taxable services delivered in the State exceeds $100,000; or
    2. 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.

If the organization has a location in Washington, D.C, Virginia, West Virginia, Pennsylvania, or Delaware, it may qualify for an exemption. You should complete the Sales and Use Tax Exemption Certificate Application and submit it to the Maryland Comptroller's Office for consideration.
Yes. Under the Maryland sales and use tax law, each rental or lease payment is treated as a sale and is subject to the 6 percent tax rate. An 11½ percent tax is imposed on short-term passenger car and recreational vehicle rentals, while certain short-term truck rentals are subject to an 8 percent tax.
A resale certificate is a statement you produce and give to your supplier, stating that the merchandise you are purchasing is going to be resold or will become a part of a product that will be resold. To provide this statement, you must have a valid sales and use tax license. Although there is no specific form for a resale certificate, it must include a signed statement that the purchase is intended for resale, the purchaser's name and address, and the purchaser's Maryland sales and use tax license number. See a sample resale certificate. For more information, see Purchases for Resale or Business tax Tip #4, If You Make Purchases for Resale.
Yes and no. If you are purchasing materials that will be incorporated into the realty of a federal, state, or local government agency, you are not entitled to an exemption from the sales and use tax. You should pay the tax to your suppliers at the time of purchase. However, if you are purchasing merchandise for resale in its original form to a governmental entity, you may obtain a sales and use tax license that will enable you to issue resale certificates to your vendors. Equipment and tools purchased for your use in fulfilling a contract is taxable even if ownership will pass to the governmental entity after use. For more information, see Business Tax Tip #18, Real Property Contractors and Maryland Taxes.
If you are making purchases of products for resale as tangible personal property or incorporation into a product that will be sold as tangible personal property, you are required to obtain a sales and use tax license for the collection and remittance of the sales tax. The license authorizes a person to issue resale certificates to vendors containing the purchaser's sales and use tax account number. For more information, see Business Tax Tip #4, If You Make Purchases for Resale.
The 2007 Special Session of the Maryland General Assembly enacted legislation providing for two tax-free periods beginning each year. Listed below is information pertaining to each tax-free period.

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.
The church or organization is required to produce a copy of its exemption certificate issued by the Comptroller's Office. You should make a note of the exemption number and its expiration date on your copy of the invoice. You may not accept an exemption certificate issued by another jurisdiction as evidence that the church or organization is exempt in Maryland. You may also verify the validity of an exemption number online. For more information, see Business Tax Tip #6, Retail Sales Involving Exemption Certificates.
When purchasing manufacturing machinery and equipment, you need only provide the seller with a certification letter that the equipment will be used predominantly in a production activity. The certification should be retained by the seller with the record of sale. Items purchased which are consumed during the manufacturing process may be purchased tax free by issuing vendors a resale certificate. Manufacturers claiming exemption on the purchase of utilities to run the exempt equipment must complete Form ST 206. You can also obtain Form ST 206 by contacting the Comptroller's Taxpayer Service Division at 410-260-7980, or toll-free 1-800-638-2937 from elsewhere in Maryland, Monday - Friday, 8:00 a.m. - 5:00 p.m. EDT.
Yes. Effective January 3, 2008, as a vendor, you may assume and absorb all or any part of the sales and use tax on a retail sale and pay that tax on behalf of the buyer. You must, however, continue to separately state the tax from the sales price at the time of sale to the purchaser. If you absorb all or any part of the tax on the sale, you must pay the tax with the return that covers the period in which you made the sale.
To change the name of your business, you must first report the change to the Maryland Department of Assessments and Taxation. (SDAT) link to by submitting a completed Trade Name Amendment or Cancellation Form with SDAT.

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

You need to submit a completed Combined Registration Application. You can either download the paper version or register online. You can use this application to register the following business tax accounts:

  • Admissions and amusement tax account
  • Income tax withholding account
  • Sales and use tax license
  • Use tax account
  • Tire recycling fee
  • Transient vendor license
  • Unemployment insurance account

You must have a federal identification number before you can register your business, unless you are only applying for a sales and use tax license. To apply for a federal identification number, visit the IRS Web site.

You need to download the paper version to apply for the following:

  • Alcohol tax license
  • Tobacco tax license
  • Motor fuel tax account
  • Sales and use tax exemption

Yes. You can file and pay employer withholding taxes and sales and use taxes online for free at the Maryland Tax Connect Portal. Electronic filing for businesses is fast, safe and easy. You can pay by direct debit and schedule debit payments up to the due date of the return.

The Electronic funds transfer (EFT) program is another easy way to file reports and remit taxes. You must first register by completing Form EFT-1, Authorization Agreement for Electronic Funds Transfer.

You can obtain the registration form and more information by calling Taxpayer Service at 410-260-7980, or 1-800-MD TAXES. 



You are required to fill out a MW506 form on an accelerated,  monthly, quarterly, seasonal or annual basis, depending upon the amount of tax withheld. You must file your MW506 form by the due dates, even if no tax was withheld. If no tax is due, file by telephone by calling 410-260-7225. See Filing Withholding Reports for more information about filing withholding reports, due dates, and filing frequency.

You can obtain preprinted coupons by calling our Taxpayer Service Division at 410-260-7980 from Central Maryland or toll-free 1-800-MD TAXES (1-800-638-2937) from elsewhere, Monday - Friday, 8:30 a.m. - 4:30 p.m. Please have your account number available when you call.

Yes. We can send you a confirmation letter if you call us at 410-260-7980 from Central Maryland or toll-free 1-800-638-2937 from elsewhere.

When you call, please provide us with the following information:

  • account number
  • name of company
  • your name and telephone number

No. You are not required by law to withhold; however, you may withhold as a courtesy to the employee. If taxes are not withheld, then the employee will need to make estimated tax payments. For more information see Taxable Wages.

Call our telefile line at 410-260-7225 or contact Taxpayer Service at 410-260-7980 or 1-800-638-2937 from elsewhere. Please be ready to provide:

  • the account number
  • type of tax (employer withholding, sales and use)
  • ending date of the report period

You will receive a confirmation number when you call the telefile line. However, our representatives staffing the Taxpayer Service line cannot provide confirmation numbers.

Use Form MW508 to reconcile the W2 and 1099 data filed on paper forms.

For magnetic media filers, the reconciliation information is contained in the new "RE" record, which includes all fields from Maryland Form MW508.

To obtain Form MW508, e-mail us at taxhelp@marylandtaxes.gov. You can also request the form by calling 410-260-7980 from Central Maryland or toll-free 1-800-MD TAXES (1-800-638-2937) from elsewhere, Monday - Friday, 8:00 a.m. - 5:00 p.m.

Usually this is because of a missing report. The upper left-hand corner of the notice will show the period of the missing report with a date.

You must continue to file a return, whether or not you are withholding any income tax, until you give us written notice that you no longer have employees or no longer are liable to file the return.



You should show on your report (MW506) the proper amount of tax withheld. Send in the difference between the amount withheld and the amount of the credit. Please do not use the credit unless you have a notice from our office showing the credit.

You must request in writing that you would like to receive a refund of the credit. The request must contain an explanation of how the credit occurred.

You can close your withholding account by calling Taxpayer Service at 410-260-7980 or 1-800-638-2937 from elsewhere in Maryland, Monday - Friday, 8:30 a.m. - 4:30 p.m.

Please be ready to provide your

  • Name
  • Telephone number
  • Federal Employer Identification Number (FEIN)
  • Central Registration Number (CRN)
  • Reason for closing the account (out of business, no employees, etc.),
  • Closing date

You can also close your account by completing and remitting both the Final Return Form MW506FR available in your withholding coupon booklet along with your final return.  Both forms can be located in your coupon books or on the business tax forms page.

Employers having 25 or more W-2 wage statements to report are required by Maryland to file their annual reports electronically by using our online b-File application. b-File allows you to key in up to 250 W-2s and the MW508 year-end reconciliation form.

Employers with less than 25 may elect to file paper returns. However, we encourage all employers to file electronically since it saves time and processing costs.

For more information, see Year-End Reconciliation Requirements. or contact us by phone at 410-260-7150 or by e-mail at efilew21099help@marylandtaxes.gov.

To change the name of your business, you must first report the change to the Maryland Department of Assessments and Taxation. (SDAT) by submitting a completed Trade Name Amendment or Cancellation Form with SDAT.

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 Service Division
Annapolis, Maryland 21411

To report other business-related changes with SDAT, see SDAT's Forms and Applications

Find answers to questions regarding Maryland's sales and use tax with regard to out of state purchases, flea markets, alcoholic beverages and more.

Below you will find frequently asked questions concerning the Sales and Use tax.

Yes. Every time you purchase taxable tangible goods, whether in person, over the phone, or on the Internet, the purchase is subject to Maryland's 6 percent sales and use tax if you use the merchandise in Maryland. If you make a tax-free purchase out of state and need to pay Maryland's 6 percent use tax, you should file the Consumer Use Tax Return.

When you purchase goods from out-of-state businesses, they are not required to collect Maryland's sales and use tax unless they have a physical location, or deliver services, in Maryland. For more information, see Maryland's Sales and Use Tax

No. A store coupon is not included in the taxable price unless the vendor can get reimbursement from another source. Manufacturers' coupons are included in the taxable price since a store can obtain a reimbursement from the manufacturer.

For example, if you had a Mars grocery store coupon that was redeemable only at a Mars store - and not Food Lion, Giant or any other food store - the coupon would not be included in the taxable price. On the other hand, if you had a Welch's Grape Juice coupon that you could use in any store, then that coupon would be included in the taxable price.

No. Energy Star-rated clothes washers, refrigerators and air conditioners sold in Maryland are not exempt from the Maryland sales and use tax.

There is a tax-free three-day weekend during which the state sales tax will not apply to the sale of any Energy Star Product listed below, or solar water heater. The tax-free weekend for 2013 will occur the weekend of February 16, 2013, through February 18, 2013.

Energy Star Product means an air conditioner, clothes washer or dryer, furnace, heat pump, standard size refrigerator, compact fluorescent light bulb, dehumidifier, or programmable thermostat 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.

In general, food sales are subject to Maryland's 6 percent sales and use tax unless a person operating a substantial grocery or market business sells the food for consumption off the premises and the food is not a taxable prepared food. A grocery or market business is considered to be "substantial" if the sales of grocery or market food items total at least 10 percent of all food sales.

For more information, see Sales of Food

No. The Maryland sales and use tax does not apply to the sales of cars or boats since those items are already subject to titling taxes. Sales of motor vehicles are subject to the Maryland motor vehicle titling tax which is administered by the Maryland Motor Vehicle Administration. Boat sales are subject to a boat titling tax which is administered by the Maryland Department of Natural Resources. On the other hand, the sales and use tax does apply to car and boat rentals, under different tax rates. An 11.5 percent tax is imposed on short-term passenger car and recreational vehicle rentals. Certain short-term truck rentals are subject to an 8 percent tax.

It depends. Charges for warranties, maintenance, service agreements and insurance are taxable if the buyer is required to purchase them or they are already included in the price of the merchandise. However, if the sale could be completed without paying these charges, then the charges are not taxable.

Private vendors or franchisees selling on military bases, or other United States Government properties, must charge the sales tax on all sales of tangible personal property and taxable services statutorily subject to the tax. The tax must be charged on sales to military and other Government personnel as well as civilians. There is an exemption from the tax for sales made at a vending machine facility operated under the Maryland Vending Program for the Blind that is located on property on military bases.

Sales made by the United States Government, or any of its agencies, on Government property are exempt from the sales and use tax, regardless of whether the purchasers are military and Government personnel or civilians.

For example, sales of food by a fast food vendor on a military base are subject to the tax if the vendor or franchisee is ABC Company. The same sales made on a military base where the vendor or franchisee is the United States Government, or an agency of the Government, are not subject to the tax.

Below you will find frequently asked tax questions concerning out of state purchases.

Basically, yes. Maryland does, however, grant a credit for the sales tax paid to another state up to the amount of the Maryland tax. In addition, a 10 percent depreciation allowance may be taken for each full year the property is used by the purchaser before being brought to Maryland.

Maryland grants a credit for sales tax paid to another state up to the amount of Maryland's six (6%) percent sales and use tax liability.

For example, if you paid a four (4%) percent sales tax to another state, you would be liable only for the difference, or two (2%) percent Maryland sales and use tax when you brought the property into Maryland. If you paid a six (6) or higher percent sales tax to another state, you would not be liable for Maryland sales and use tax when you brought the property into Maryland.

Yes. However, you may claim a ten (10%) percent depreciation allowance for each full year you used the property before you brought it to Maryland. Only the depreciated value is subject to tax.

The tax applies only to the cost of materials and purchased fabrication services, not to the full market value of the goods. The value of your labor is not taxed.

Below you will find frequently asked tax questions concerning flea markets.

Yes. Maryland law requires that vendors display their licenses at any location where sales are made. This will save you valuable selling time because representatives of the Comptroller's Office do not have to ask for your registration number.

The tax is on the transaction or sale and not on the property sold. The same item will generate tax each time it is sold unless it is specifically sold for resale.

Yes. Nonprofit organizations must collect tax on merchandise they sell, even if the goods are donated to them. Private individuals must also collect tax even if they plan to donate the proceeds to a nonprofit organization. Private individuals are not eligible for a sales and use tax exemption certificate. Sales by religious organizations and sales of food by volunteer fire companies and veterans' organizations are exempt.

Always collect tax on sales to other dealers unless they present you with a resale certificate bearing their Maryland sales tax registration number. However, out-of-state dealers who are not required to collect the Maryland tax may use their out-of-state sales tax registration number on a resale certificate to purchase antiques and used collectibles. Dealers from states that do not impose a sales tax may provide a valid trader's license or comparable document. Resale certificates are not valid for cash, check or credit card sales of less than $200 unless the product is delivered to the customer's place of business.

Yes. Effective January 3, 2008, a vendor may assume and absorb all or any part of the sales and use tax on a retail sale and pay that tax on behalf of the buyer. The vendor must, however, continue to separately state the tax from the sales price at the time of sale to the purchaser. If the vendor absorbs all or any part of the tax on the sale, the vendor shall pay the tax with the return that covers the period in which the vendor makes the sale.

Below you will find frequently asked tax questions concerning food and beverages.

Yes. However, when calculating if a business meets the 10 percent threshold for a substantial grocery or market business, you may not include sales of single servings, heated or prepared food or sales to be consumed on the premises.

Yes. A caterer serving food at a customer's premises must collect the tax on the food sold. A caterer must collect the tax in this situation even if the caterer also conducts a substantial grocery or market business.

Yes. Sales of food to patients in a hospital when the food charges are included in the regular room rate are exempt. Sales of food and beverages on vehicles operating in interstate commerce are exempt. In addition, the tax does not apply to a sale of crabs for consumption off the premises where sold. Sales of seafood to be consumed off the premises where sold are also exempt if the seafood is not prepared for immediate consumption.

No. For sales and use tax purposes, soft drinks, bottled water, alcoholic beverages, candy and confectionery are not "food." The sale of any of these items is, therefore, not entitled to any of the exemptions for sales of food, including the exemptions for sales of food by volunteer fire companies and veterans organizations. Neither water nor ice is food, although they may be treated as food when sold as components of food.

The tax does not apply to eligible food purchased with federal food stamps. Food stamp eligible food encompasses everything that is considered food for sales and use tax purposes, plus soft drinks, candy, confectionery, water, ice and otherwise taxable and prepared foods.

If a customer purchases both taxable and nontaxable food stamp eligible food with a combination of food stamps and cash, credit card or debit card, the vendor must apply the food stamps to the eligible taxable items first, and then any remaining food stamps to the eligible nontaxable items. After application of the food stamps, the balance of the eligible taxable items paid for with cash, credit card, or debit card is subject to tax.

Your sales and use tax registration number is an eight-digit number that has been assigned to your business. You'll find your registration number on each sales and use tax return we send you and on your sales and use tax license.

You must clearly document the reason for all tax-exempt sales. Otherwise you will be held responsible for uncollected tax, plus penalty and interest. You should establish procedures to obtain valid resale certificates at the point of sale, and review your files periodically for accuracy and completeness.

Make certain that you do not allow resale exclusions on cash, check or credit card sales of less than $200 when you do not deliver the goods sold directly to the buyer's retail place of business.

You should keep resale certificates on file as part of your business records. You must be able to match your sales records with the appropriate resale certificates for audit purposes.

No. Retailers licensed and remitting taxes in other states may apply to the Maryland Comptroller's Office for a refund.

However, an out-of-state vendor who has been issued a temporary permit to collect the Maryland tax may use the number on that permit to make tax-free purchases for resale at the show for which the permit was issued. Temporary permits bear six-digit numbers and are issued by the comptroller's Special Events Section.

No. If you frequently deal with the same supplier, you may provide that supplier with a blanket resale certificate stating that all purchases are for resale. Then all you have to do is give the supplier your sales and use tax registration number.

No. Exemption certificates are issued by the Comptroller of Maryland to qualifying nonprofit organizations and government agencies to make purchases for their own use. The exemption certificate is a wallet-sized card bearing the holder's eight-digit exemption number. Certificates issued to nonprofit organizations have a specific expiration date, presently September 30, 2017 for religious, educational and charitable organizations, cemeteries, credit unions, and volunteer fire companies or rescue squads and September 30, 2017 for certain veterans organizations and their auxiliaries and units. Certificates issued to government agencies have no expiration date. Organizations and government agencies presenting exemption certificates are exempt from the sales and use tax on purchases of materials and supplies to carry out their work. On the other hand, a resale certificate allows a person to make tax-free purchases for resale, not for use.

Although there is no specific form for a resale certificate, it must include a signed statement that the purchase is intended for resale, the purchaser's name and address, and the purchaser's Maryland sales and use tax registration number.

In a typical transaction, you would sell merchandise to a vendor who is not registered to collect Maryland sales and use tax. The unregistered vendor asks you to deliver the merchandise to a customer in Maryland. In this case, you must:

  • Require the vendor to obtain a Maryland sales and use tax license and provide a valid resale certificate; OR
  • Charge the vendor the tax based on the amount of the sale. You are responsible for collecting or documenting the tax on your sale to the vendor.

No. Licenses should be issued only to those businesses that are required to be licensed by the state. Requesting an unnecessary license only creates extra paperwork and hampers timely service to businesses that need assistance. To determine if you need a license, contact your local Clerk of the Court or call the State License Bureau at 410-260-6240.

Businesses located in Maryland may need to obtain one or more of the following licenses from their local Clerk of the Court: Traders, Traders Show, Chain Store, Cigarette, Special Cigarette, OTP, Tobacconist, Commercial Garage, Console Machine, Construction Firm, Out of State Contractor, Hawkers & Peddlers, Junk Dealers, Laundry, Micro-Market, Pinball, Plumber & Gas Fitter, Restaurant, Storage Warehouse, Vending Machine, Wholesale Dealer Farm Machinery, Electronic Smoking Devices Retailer, and Vape Shop Vendor.

No. The Trader's License requirement applies to both wholesale and retail businesses.

A trader's license applies to a trader or vendor in a fixed location. A Trader’s show license is designed for traders who rent space temporarily from a promoter and derive less than 10 percent of their gross annual income from show events.

Builders are required to obtain a construction license, in addition to any registration required under the Maryland Home Builder Registration Act. Construction companies building new homes or entering into contracts to sell new homes should contact the Home Builder Registration Unit of the Maryland Attorney General's Office at 410-576-6573. Any construction being performed on an existing Residential Property must contact MHIC at 410-230-6309.

Yes. They may be required to obtain a nonresident construction license, which entails a $60 fee in Baltimore City and a $50 fee in the 23 counties of Maryland.

The licensing requirements that affect auctioneers depend on whether the auctioneer is holding inventory or merely providing a service.

This form is an effective tool that allows the licensee to provide an inventory value which determines the price amount of the license and speeds up the issuing process. You can download the Declaration of Inventory Form or obtain a copy by contacting the State License Bureau at 410-260-6240.

The State License Bureau can answer questions, provide helpful brochures and offer other assistance in special cases. We can provide the Clerks of the Court access to important data, including information provided by the Maryland Department of Assessments and Taxation. We can also provide important data to local government finance officials, helping them to expedite license clearances. In addition, agents from the Comptroller's Field Enforcement Bureau can resolve cases involving bad checks issued to local governments. For more information, contact the State License Bureau at 410-260-6240.

No. A new owner is not liable for the delinquent licenses of a previous owner. Our law enforcement agents will pursue these delinquent matters with the previous owner.

The Clerk of the Court Office will notify the State License Bureau. Agents from the Field Enforcement Bureau will then contact the delinquent business and confiscate the business license, if necessary, to resolve the matter.

The statute of limitations for delinquent licenses is four years.

Any person who might have received a poor product or unsatisfactory service from a business should contact the Maryland Attorney General's Office Consumer Protection Division at 410-528-8662. Complaints can also be referred to the Better Business Bureau.

Trader's license fees are based on the average commercial inventory that a business owns. The fees increase as the inventory values increase. Currently, the fee amounts range from $15 to a maximum of $800 ($2,125 in Baltimore City).

The state and local agencies listed below must verify that an applicant renewing a license has paid all states taxes due - or made a satisfactory payment arrangement - before the license can be renewed:

  • Comptroller of Maryland
  • Clerks of the Circuit Court
  • Department of Labor, Licensing and Regulation
  • Department of Health and Mental Hygiene
  • Motor Vehicles Administration (excluding driver's licenses and vehicle registration renewals)
  • Department of Natural Resources
  • Department of the Environment

If you hold a license issued by one of these agencies, you should file any necessary tax returns and pay all taxes due without delay.  If you wait until license renewal time to resolve a tax liability, your renewal may be delayed.

It is paid by wholesalers when they purchase tax stamps.

The Master Settlement Agreement (MSA) is an agreement that signed in November, 1998, by attorneys general in 46 states and five U.S. territories and the tobacco industry. The agreement resolved lawsuits filed by the attorney general against the tobacco industry and provided the states funding intended for tobacco prevention and control. Under the MSA, Maryland was awarded $1 billion over 10 years, beginning July 1, 2000. The Maryland legislature enacted Senate Bill 896/House Bill 1425 in April, 2000, which created the Cigarette Restitution Fund Program (CRFP). The CRFP oversees the use of MSA funds which are currently being used to fund activities and projects.

Other Tobacco Products (other than cigarettes).

July 1, 2000

Whoever reports the tax, should remit the tax, be it the wholesaler, retailer or consumer. If the wholesaler remits the tax, they should provide the retailer with a letter saying the tax was paid on their behalf. A wholesaler must report monthly. A retailer or consumer must report quarterly the date the product was purchased. Ultimately, the wholesaler has the primary responsibility to pay the tax.

The tobacco manufacturer pays the tax on the amount it costs to make the OTP product, not the invoice amount.

Yes, if the OTP is sold to Maryland by the manufacturer. Anyone who holds a cigarette license is obligated to submit the OTP tax.

No, the "wholesaler" for the purpose of this tax, means a person located in or out of the state who sells to a retailer in Maryland. The tax shall be paid by the wholesaler who sells the OTP to a retailer in Maryland. Subwholesalers are responsible for remitting the OTP tax on sales to Maryland retailers for the report month.

No. However, keep supporting documentation for audits, should they occur.

No. The tax rate is 15 percent of the "wholesale price". The wholesale price is defined as "the price for which a wholesaler buys other tobacco products". The tax must be calculated on the cost of the OTP sold during the report month.

Contact the Field Enforcement Bureau at 410-260-7490. Agents do not apply the stickers.

The stickers will be mailed to the Vending Machine Operator, providing the following information: name, company name (if applicable), and address.

21 years of age. See Criminal Law, 10-107.

No, provided that proper work permits are in place

Contact the Maryland Department of Occupational Safety and Health at 410-767-2215.

Five cartons per person. Importing more than five cartons is a felony if transported. See Tax General TG 12-104 and TG 13-1015.

The Maryland Comptroller's Field Enforcement Bureau handles the enforcement of state laws governing cigarettes and tobacco.

Contact your local jurisdiction's law enforcement agency.

The current tax rate is $2.00 per pack of 20.
July 1, 1999 – Tax rate increased from $.36 to $.66 per pack of 20.
June 1, 2002 - Tax rate increased from $.66 to $1.00 per pack of 20.
Effective January 1, 2008, the rate increased from $1.00 to $2.00 per pack of 20.

No. It is illegal to purchase cigarettes over the Internet.

All cigarettes manufactured or sold in Maryland must be tested and marked as Fire Safe Cigarettes. See also Business Regulation BR 16-602.

The Field Enforcement Bureau of the Comptroller of Maryland's Office is responsible for checking the quality of petroleum products sold in Maryland. Motor fuel inspectors cover every region of the state. They enforce provisions regulating containers and vehicles used to transport and store all motor fuels, signs advertising prices for gasoline and special fuels, and waterborne movements of motor fuels - interstate, intrastate and/or all points of the supply chain, from terminal or ship to bulk plant, to distributor, to retail service station.

At retail service stations, the inspector will look for the price posted, brand identification, pump price display, pump decals that show octane ratings, color coded fills, the four most recent delivery tickets, registration certificate and any appropriate special fuels tax exemption certificate. The inspector will draw and pay for each grade of product to be tested at the Comptroller's petroleum testing lab in Jessup, although some tests are conducted on site.

The inspector will want to see the trader's license and retail sales tax license for the business, and will inspect all cigarette inventory for proper stamps as well as reviewing all delivery invoices for cigarettes, other tobacco products and alcoholic beverages.

At bulk locations

The inspectors will check the vehicles for Department of Transportation markers, compartments, loading documents, transfer documents, name on tanks and color coding.

On The Spot Tests

On site testing includes tests for water and sediment in storage tanks, and a screening for octane.

Testing At The Lab

Once initial tests are done, samples are taken to the comptroller's petroleum testing lab. Samples are chilled before testing to preserve the integrity of the testing process. The testing lab conducts quality control tests to make sure petroleum products meet Maryland specifications. Routine tests include vapor pressure, distillation, octane ratings, water and sediment, oxygen content and percentage and type of oxygenate, if any, in gasoline.

Special fuels

Fuel oils, diesel fuels and kerosene are tested for flash point, distillation, sulphur content, API gravity, and, if applicable, viscosity, color and cetane index or cetane number.

Sample locations are randomly selected for analysis. The laboratory participates in national and regional exchange groups as part of its quality assurance program.

The inspector will leave a warning, noting the problem discovered and the time permitted to correct the problem.

The lab targets for a 24-hour turnaround. If a sample fails a test, a field inspector is immediately dispatched to issue a "stop sale" order for the fuel that does not meet specifications. The "stop sale" will be removed when the problem is corrected. Inspectors work with the distributor to discover the source and correct the problem.

We will tell you the problem with the fuel. You must contact the supplier to find out if the problem is correctable on site or if the product must be removed. You must contact the Field Enforcement Bureau at 410-260-7388 to discuss the proposed remedy. Once you receive authorization and the remedy is performed, contact us and we will re-sample the product promptly.

No. It's illegal to sell motor fuel that fails to meet quality standards. Penalties for not complying with the motor fuel inspection law and the stop sale order include a fine of up to $5,000 and/or one year in jail, a court ordered injunction prohibiting sale of the product and suspension of your registration.

EFT FAQs