Tax Exemptions

Sales and Use Tax Exemptions

There are sales and use tax exemptions on certain types of repairs and sales.

NonProfits and other Qualifying Organizations

The Comptroller's Office issues sales and use tax exemption certificates to certain qualifying organizations, entitling them to make specific purchases without paying sales and use tax and is renewed every five (5) years.

The following organizations can qualify for exemption certificates:

  • Nonprofit charitable, educational and religious organizations
  • Volunteer fire companies and rescue squads
  • Nonprofit cemetery companies
  • Qualifying veterans organizations
  • Government agencies
  • Credit unions

By law, Maryland can only issue exemption certificates to qualifying, nonprofit organizations located in Maryland or in any of the following adjacent jurisdictions: Delaware, Pennsylvania, Virginia, West Virginia and Washington, D.C.

Certificates issued to nonprofit religious, educational, and charitable organizations, nonprofit cemeteries, credit unions, qualifying veterans organizations and volunteer fire companies or rescue squads are printed on white paper with blue ink and contain an expiration date of September 30, 2022. Certificates issued to governmental entities are printed on white paper with red ink and contain no expiration date.

An organization may use its exemption certificate to purchase tangible personal property that will be used in carrying on its work. This includes office supplies and equipment and supplies used in fundraising activities, but does not include items used to conduct an "unrelated trade or business" as defined by Section 513 of the U.S. Internal Revenue Code.

The exemption certificate is a wallet-sized card, bearing the holder's eight-digit exemption number and an expiration date. An exemption certificate is not transferable and applies only to purchases made by the registered organization. It may not be used to purchase items for the personal use of officials, members or employees of the organization, or to purchase items that will be donated to the organization.

An exemption certificate should not be confused with a resale certificate, which is used by manufacturers, wholesalers and retailers to purchase, free of tax, the items they sell.

Economic Development Projects

Maryland law permits an exemption from sales and use tax on certain materials and equipment for use in certain areas. These areas include:

  • Target redevelopment areas in Baltimore County that were previously owned by Bethlehem Steel Corporation, or any of its subsidiaries, and are participating in the Voluntary Cleanup Program under the Environment Article (TG § 11-232);
  • Laurel Park racing facility site in Anne Arundel County, and Pimlico site in Baltimore City (TG § 11-236);
  • Qualified opportunity zones in Baltimore County that have been designated as an enterprise zone under the Economic Development Article, designated an opportunity zone under the Internal Revenue Code, and were previously owned by the United States; and target redevelopment areas in Washington County that have been designated enterprise zones under the Economic Development Article, and were previously owned by the United States or CSX Railroad (§ 11-238);
  • Public school facilities managed by the Maryland Stadium Authority in Baltimore City (TG § 11-241);
  • Real property in Cecil County that was previously owned by the federal government (§ 11-242); and
  • Hagerstown Multi-Use Sports and Events Facility, a sports entertainment facility, or a Prince George's County Blue Line Corridor facility (§ 11-243).

Construction material means an item of tangible personal property that is used to construct or renovate a building, a structure, or an improvement on land and that typically loses its separate identity as personal property once incorporated into real property. Construction material includes building materials, building systems equipment, landscaping materials, and supplies.

Warehousing equipment for projects in target redevelopment areas in Baltimore County that were previously owned by Bethlehem Steel Corporation or its subsidiaries (§ 11-232), or in a federal facilities redevelopment area (§ 11-242) is also exempt from sales and use tax. Warehousing equipment means equipment used for material handling and storage, including racking systems, conveying systems, and computer systems and equipment.

A buyer of construction materials must provide the vendor with evidence of eligibility for the exemption issued by the Comptroller. Exemption certificates for economic redevelopment projects are eight and a half by eleven-inch certificates bearing the Comptroller's embossed seal.

The Comptroller will issue an exemption certificate to an entity upon receipt and approval of a written request. The request should be on the requesting entity's letterhead and must be signed by an authorized officer. The request must also include the legal name of the entity, Federal Employer Identification Number, physical business address, and mailing address. To qualify for the exemption certificate, the applying entity must own the property or obtain written confirmation from the owner that it is qualified to make purchases of construction materials and/or warehouse equipment subject to the particular exemption. This written confirmation must be attached to the entity's written request for an exemption certificate. The applying entity must have no outstanding tax liabilities and it must be in good standing with the State Department of Assessments and Taxation before the Comptroller will issue an exemption certificate.

Send the request to ECDEVCERT@marylandtaxes.gov or to:
PO Box 1829 - Legal Section
Attn: Redevelopment Sales and Use Tax Exemption
Annapolis, MD 21404-1829

If you are making a sale to an exempt organization, you must record the organization's name and certificate number on the record of sale. You must also see the exemption certificate before completing the sale.

You do not need to keep a copy of the certificate unless the organization is purchasing gas, electricity, steam, oil or coal.

You can check the validity an exemption certificate online.

Use our Verify Tax Exemptions online service to verify the validity of Tax Exemption certificates presented to you. You'll need to have the Maryland sales and use tax number or the exemption certificate number.

To apply for an exemption certificate, complete the Maryland SUTEC Application form. The application may also be obtained by calling Taxpayer Service at 410-260-7980, or toll-free 1-800-638-2937 from elsewhere in Maryland, Monday - Friday, 8:30 a.m. - 4:30 p.m. EDT

There is no provision for applying for the exemption certificate online. You must complete the hard copy version of the application to apply for the certificate.

Nonprofit organizations must include copies of their IRS 501 (c) (3) determination letter, articles of incorporation and their organization's bylaws with the completed application. Failure to do so will result in the application being returned.

Mail the completed application and required documents to:

Central Registration Section - SUTEC
Comptroller of Maryland
Revenue Administration Division
PO Box 549
Annapolis, MD 21404-549

To request duplicate Maryland sales and use tax exemption certificate, you must submit a request in writing on your nonprofit organization's official letterhead and indicate the reason for your request. Unless the reason for your request is that your original sales and use tax exemption certificate is lost or misplaced, you must include with your request your original sales and use tax exemption certificate card or a duplicate certificate will not be issued.

You must also include your organization's Federal Employment Identification Number (FEIN) and indicate any change in the organization's name, address (physical and mailing address must be indicated), phone number, and contact person. Please note that letter requests must be signed by an authorized officer of the organization. If there was an organization name change, you must include official documents from the Maryland Department of Assessments and Taxation confirming the name change.

Mail the request, original certificate card, and any necessary documents to:

Central Registration Section - SUTEC
Comptroller of Maryland
Revenue Administration Division
PO Box 549
Annapolis, MD 21404-549

For more information about duplicate exemption certificates, call Taxpayer Services at 410-260-7980, Monday - Friday, 8:30 a.m. - 4:30 p.m.

SALES AND USE TAX EXEMPTION CERTIFICATE RENEWAL APPLICATION

Completing the renewal application

In May 2022, the Comptroller's Office will mail notice of the upcoming renewal period and instructions to all nonprofit organizations holding a valid Maryland sale and use tax exemption certificate with a September 30, 2022, expiration date. The due date for returning the completed application is August 1, 2022. Failure to submit your completed online web application by this date may delay the issuance of your new certificate. Certificates are renewed every five (5) years.

If your organization does not receive a Renewal Notice by June 15, 2022, you may contact Taxpayer Services Division for more information by phone at 410-260-7980 or toll-free 1-800-638-2937 from elsewhere in Maryland, Monday - Friday, 8:30 a.m. - 4:30 p.m.

ATTENTION

All Maryland 2022 SUTEC renewal applicants, verify your organization’s name is identical with the Internal Revenue Service (IRS) and Maryland Department of Assessment and Taxation (MDAT), IRS tax exemption status and current good standing status prior to completing and submitting your renewal application to prevent processing delays using the following links below:

All other 2022 SUTEC renewal applicants located in DC, DE, VA, WV and PA, please verify your organization’s name is identical with the IRS and the state where the organization is physically located and registered, IRS tax exemption status and current good standing status prior to filing a renewal application to prevent processing delays using the following link below:

  • IRS verification of name and tax exemption status: bServices Exempt Org Renewal - Exempt Org Renewal (marylandtaxes.gov) Enter IRS EIN number / Search
  • Please have a current certificate of good standing from the state where your organization is physically located. You will be prompted to submit the certificate with the online 2022 SUTEC renewal application.
    • For Organizations Physically Located in Delaware
      You must attach a current non-returnable copy of a certificate of good standing from the Delaware Division of Corporations.
    • For Organizations Physically Located in Pennsylvania
      You must attach a current non-returnable copy of a certificate of good standing from the Pennsylvania Department of State.
    • For Organizations Physically Located in Virginia
      You must attach a current non-returnable copy of a certificate of good standing from the Virginia State Corporation Commission.
    • For Organizations Physically Located in West Virginia
      You must attach a current non-returnable copy of a certificate of good standing from the West Virginia Secretary of State.
    • For Organizations Physically Located in Washington, D.C.
      You must attach a current non-returnable copy of a certificate of good standing from the District of Columbia Department of Consumer and Regulatory Affairs.

In Addition, you must have the following information before you can renew your organization's Maryland Sales and Use Tax Exemption Certificate:

  • Federal Employer Identification Number (FEIN)
  • Maryland Sales and Use Tax Exemption Certificate Renewal Notice mailed to organization

If the name of the organization has changed, you must upload a copy of the amended articles of incorporation. You must also upload documentation from the IRS if there has been a change in your organization's FEIN.

It is not necessary to renew exemption certificates issued to government agencies since those certificates do not expire. All organizations are urged to submit the renewal through the application online. If you are unable to complete the online web application, you may download a paper application. Although paper submissions are accepted, the processing time will be delayed because all paper applications must be manually reviewed.

Sales and Use Tax Exemption Certificate Renewal FAQs

Purchases made by veterans organizations and their auxiliary units are exempt from Maryland sales tax if the purchases are made for the organization's exempt purposes.

The exemption became effective on July 1, 2006. Exemption certificates issued to qualifying veterans' organizations will expire on September 30, 2017. The new exemption certificate is a white card with green printing, bearing the organization's eight-digit exemption number. Certificates are renewed every five (5) years.

The organizations or their auxiliaries or units must possess a 501(c)(19) letter of determination from IRS as evidence of qualification for the exemption. For more information on obtaining a letter of determination from IRS, visit the IRS Web site.

To apply for an exemption certificate, print a copy of Maryland SUTEC Application and submit the completed application with a copy of the 501(c)(19) letter of determination, articles of incorporation and bylaws. The application may also be obtained by calling Taxpayer Service at 410-260-7980, or toll-free 1-800-638-2937 from elsewhere in Maryland, Monday - Friday, 8:30 a.m. - 4:30 p.m. EDT

A contractor may use an organization's exemption certificate to purchase materials that will be used to construct, improve, alter or repair the real property of private, nonprofit charitable, educational, and religious organizations; volunteer fire companies and rescue squads; and nonprofit cemeteries. The materials must be incorporated into the realty to qualify for the exemption. Sales of materials used to improve the realty of government entities, credit unions and veterans organizations are taxable, and their certificates may not be used by contractors.

A contractor may use an exemption certificate from a nonprofit organization if the first two digits of its exemption number are:

  • 29 (religious organizations),
  • 31 (charitable and educational organizations), or
  • 33 (volunteer fire departments, rescue squads and ambulance companies).

Purchases made by using the following charge cards are subject to the Maryland sales and use tax since they are billed directly to the individual and are not treated as direct sales to the federal government:

  • 30 (government agencies), or
  • 32 (credit unions), or
  • 34 (veterans organizations).

The following sales made by nonprofit organizations are exempt from the Maryland sales and use tax:

  • Sales by churches or religious organizations for their general purposes.
  • Sales of food by schools other than post-secondary institutions.
  • Sales of food by a nonprofit organization if there are no facilities for food consumption on the premises and the food is not sold within an enclosure for which a charge is made for admission.
  • Sales of food served by a volunteer fire, ambulance or rescue company or an auxiliary if the proceeds are used to support the organization.
  • Sales of magazine subscriptions in a fundraising activity by an elementary or secondary school in the state if the net proceeds are used solely for the educational benefit of the school or its students.
  • Sales made in hospital thrift shops operated entirely by volunteers selling only donated articles for the benefit of the hospital.
  • Sales made by an auctioneer for a bonafide church, religious organization or other non-profit organization exempt from taxation under Section 501(c)(3) of the Internal Revenue Code if the proceeds are used for exempt purposes. Unless the organization is a church or religious organization, only the portion of the price that qualifies for a deduction as a charitable organization under IRS quidelines is exempt from the sales and use tax.
  • Sales by out-of-state nonprofit organizations that are exempt from income tax under Section 501(c)(3) or Section 501(c)(19) of the Internal Revenue Code that have a location in Maryland or are located in an adjacent jurisdiction and satisfy one of the following conditions:
    • The organization provides its services in Maryland on a routine and regular basis;
    • The adjacent jurisdiction does not impose a sales or use tax on a sale to a nonprofit organization made to carry on its work; or,
    • The adjacent jurisdiction has a reciprocal exemption from sales and use tax for sales to nonprofits located in adjacent jurisdictions similar to Maryland's exemption.

Only churches, religious organizations and government agencies may use an exemption certificate to purchase items for resale without paying sales and use tax. All other organizations must issue a resale certificate, with their Maryland sales and use tax license number, to purchase items tax-free for resale.

Any organization making ordinarily taxable sales of tangible personal property, including meals, must obtain a sales and use tax license and collect and remit the tax, even though the organization has an exemption for items it purchases. The organization must collect tax on sales to anyone, including members, students and beneficiaries, even if the item has been donated or sold at or below cost.

Tax should not be collected on sales of goods to PTAs and similar groups associated with non-public schools if the property will be donated to an exempt school. Local PTAs may use their school's exemption certificate when claiming exemptions. Tax should be collected, however, on sales of items to PTAs that they will use in their operations, but which are not donated to schools.

NOTE: The Maryland sales and use tax exemption certificate applies only to the Maryland sales and use tax. A nonprofit organization that is exempt from income tax under Section 501(c)(3) or Section 501(c)(19) of the Internal Revenue Code, and holds a valid Maryland sales and use tax exemption certificate, is still be liable for other state and local taxes in Maryland, such as local hotel taxes.

Government employees may use the Maryland sales and use tax exemption certificate to make purchases of goods for the government unit. However, the sales and use tax law does not expressly exempt sales to a government employee who, for example, rents a hotel room or purchases a meal and pays for it with cash, personal check or personal credit card. Those employees are required to pay the Maryland sales and use tax to the vendor.

The tax is due on those transactions even though the employee may have documentation provided by the government agency that the purchaser is a government employee or may be reimbursed by the government for those expenses.

Federal government charge card purchases

Federal government purchases made by using the following charge cards administered by the U.S. General Services Administration's GSA SmartPay charge cards are exempt from the Maryland sales and use tax since they are billed directly to the federal government:

  • Purchase MasterCard cards with the first four digits of 5565 or 5568.
  • Purchase VISA cards with the first four digits of 4614 or 4716.
  • Fleet VISA cards with the first four digits of 4486.
  • Fleet MasterCard cards with the first four digits of 5563 or 5568.
  • Fleet WEX cards with the first four digits of 6900 or 7071.
  • Fleet Voyager cards with the first four digits of 7088.
  • Travel MasterCard cards with the first four digits of 5565 or 5568, and with a sixth digit of 0, 6, 7, 8 or 9.
  • Travel VISA cards with the first four digits of 4486, 4614, or 4615, and with a sixth digit of 0, 6, 7, 8 or 9.

Purchases made by using the following charge cards are subject to the Maryland sales and use tax since they are billed directly to the individual and are not treated as direct sales to the federal government:

  • Travel MasterCard cards with the first four digits of 5565 or 5568, and a sixth digit of 1, 2, 3 or 4.
  • Travel VISA cards with the first four digits of 4486 or 4614, and a sixth digit of 1, 2, 3 or 4.