The state of Maryland collects sales and use tax on most tangible personal property and some services. It also taxes some alcoholic beverages and vehicle rentals. A business that sells products or services in Maryland must register and collect Maryland sales tax. This is known as having sales tax nexus. The nexus threshold is $100,000 in annual Maryland sales or 200 separate transactions, whichever occurs first. Out-of-state sellers that meet the nexus threshold must also collect Maryland sales tax on shipping charges. The Maryland statewide sales tax rate is 6%. this applies to most goods and services sold in the state. There are some exceptions, though, like:
- Vehicle rentals: taxed at 11.5% (cars and recreational vehicles) or 8% (trucks)
- Alcoholic beverages: taxed at 9% (both packaged and for immediate consumption)
How to File Maryland Sales Tax?
When it comes to sales tax filing, Maryland can be a challenging state to navigate. Having the right crew onboard can help you steer clear of trouble in these murky waters. Start by determining whether your business has sales tax nexus in the state. Nexus is the anchor that creates your obligation to collect and remit sales tax in Maryland.
Once you know if you have nexus, register your Maryland business online using the Comptroller’s bFile system. Enter basic business information including your legal name, trade name, physical address, owner names and FEIN/SSN tax ID number. Once registered, you’ll be assigned a sales tax filing frequency based on your expected annual liability.
Maryland state law determines due dates for filing and paying sales tax. Payments must be received by the due date in order to avoid interest and penalty charges. If you are not sure what your due date is, contact the COM.. The state may apply a 10% penalty plus mandatory interest charges of no less than 1% per month on any outstanding tax balances. Penalties will increase the longer you wait to file your return and remit any collected tax. The good news is that the Comptroller offers vendor credit to encourage timely filing and payments. This discount is worth up to 1.2% of the first six thousand dollars of sales tax collected, and 0.9% on any additional amounts collected.
Audits
During a sales tax audit, the auditor will review your sales and use tax returns, general ledger, bank statements, and source documents. The auditor will then summarize the findings and present you with an audit assessment report. If you disagree with the results of an audit, you can file an appeal by letter with supporting documentation. Appeals are considered by the Maryland Comptroller’s Office.