Get ahead of the curve with our Maryland Sales Tax Guide, offering insights into compliance, rates, and business regulations.
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The Maryland sales tax rate in 2023 is 6%. This comprises a base rate of 6% with no additional local rates..
The Maryland statewide sales tax rate of 6% has remained the same. However, Maryland made changes regarding the taxation of cannabis. Beginning July 1, 2023, a 9% sales tax rate applies to retail sales of adult-use cannabis.
To calculate Maryland sales tax, multiply the 6% tax rate by the purchase price. For example, on a $100 sale, the sales tax would be $6.
The buyer's location determines the tax rate in destination-based sales tax states. In origin-based states, it is determined by the seller's location.
Maryland is a destination-based sales tax state. Sellers must charge the 6% state tax rate based on the customer's ship-to address.
As of 2023, Maryland is not a Streamlined Sales and Use Tax Agreement (SST) member state.
Yes, you need a Maryland seller's permit even if you only sell goods wholesale and do not make any retail sales.
Yes, you need a temporary seller's permit in Maryland if you are making retail sales for a short period, even if you are based out of state.
Some common exempt goods in Maryland include non-prepared food sold at grocery stores, prescription and over-the-counter medicines, medical supplies and equipment, and most agricultural products and farm equipment.
Some exempt services include medical services, educational services, services provided to exempt organizations, and personal services such as haircuts and laundry.
No, most non-prepared groceries are exempt from sales tax in Maryland. Prepared foods sold at grocery stores are taxable.
All clothing purchases are subject to Maryland's 6% statewide sales tax.
Digital products like ebooks, streaming media, and software downloads are not subject to Maryland sales tax, effective July 1, 2022.
Yes and no, it depends on if the purchaser is a consumer or a business.
Services are generally exempt from taxes in Maryland. However, the state does tax some enumerated services like transportation, credit reporting, and commercial cleaning. However, most personal and professional services are not taxable.
Maryland levies excise taxes on alcohol, tobacco, motor fuel, and adult-use cannabis. The rates are:
Out-of-state sellers with no physical presence in Maryland may have economic nexus based on $100,000 in annual sales or 200 separate transactions. Remote sellers meeting either threshold must register and collect Maryland sales tax.
Let’s look at the steps to collect sales tax in Maryland now.
Even if you do not have a physical presence in Maryland, you may still have economic nexus based on $100,000 in annual sales or 200 separate transactions in the state. Register with the Comptroller of Maryland and begin collecting Maryland sales tax if you meet either threshold.
Out-state sellers can establish nexus in Maryland in two main ways:
Once you have a sales tax nexus in Maryland, you must apply for a sales tax license online through the Comptroller's website. This will allow you to collect and remit Maryland sales tax appropriately.
In Maryland, separately stated shipping charges on otherwise taxable sales are exempt from sales tax. However, handling fees are taxable. If shipping and handling charges are combined into one line item, the entire charge becomes taxable in Maryland.
So sellers should break out the shipping fees on a separate line from handling and the cost of goods on all orders shipped to Maryland buyers to keep the shipping portion tax-exempt.
All businesses registered to collect sales tax in Maryland must file returns and remit tax monthly or quarterly, depending on their assigned filing frequency. Returns must be filed even for periods with no tax due.
Maryland offers paper and online filing options through the bFile system on the Comptroller's website. Electronic payment must also be submitted by the due date to avoid penalties.
The Comptroller of Maryland assigns filing frequencies to each business based on their sales volume. Due dates vary for monthly and quarterly filers:
Monthly:
Returns and payments are due by the 20th day of the month after the reporting period ends. For example, the January sales tax is due February 20.
Quarterly:
For quarterly filers, returns are due on the 20th day after each calendar quarter ends:
Late filings in Maryland incur a 10% penalty of the taxes due, plus mandatory interest charges of at least 1% per month. Total penalties will not exceed 25% of the taxes due.
Returns are due on the 20th of the month following the end of the reporting period.
For example, 2023 Q4 returns covering October - December sales are due January 20, 2024.
Monthly returns are due by the 20th of next month. After each calendar quarter, quarterly returns are due April 20, July 20, October 20, and January 20.
Yes, every business with a Maryland seller's permit must file a sales tax return for each assigned reporting period, even if they did not collect any sales tax. A $25 penalty may apply for failure to file a zero return.
You can submit a written request for a 6-month filing extension to the Comptroller of Maryland. However, this is only an extension to file. Any taxes owed must still be paid on time to avoid penalties.
You can file an amended Maryland sales tax return Form SUTAMEN to correct oversights or errors from a previous return. You must pay any additional tax owed plus applicable interest and penalties.
Maryland's standard late filing penalty is 10% tax due plus mandatory interest charges. If filings and payments are more than 30 days past due, an additional 25% penalty of the taxes owed may apply.
Maryland's audit and appeals process involves the Maryland Comptroller's Office reviewing a business's records, sales invoices, bank statements, and sales tax returns to verify accuracy and completeness.
Audits aim to ensure proper payment of sales taxes owed and detect any underpayment, but the process can feel daunting for small business owners unfamiliar with tax codes.
If an auditor finds discrepancies in tax payments during their rigorous examination, businesses can contest these findings through a formal appeals process. Navigating audits and appeals requires thoughtful preparation and a meticulous approach.
Mistakes can happen even if a business tries its best to file accurate sales tax returns. The Maryland Comptroller’s Office conducts periodic audits of companies to review if the correct amount of sales tax was reported and paid. Companies have the right to appeal the results if their audit determines issues.
Audit Process
During a Maryland sales tax audit, the auditor will review your sales tax returns, sales records, general ledger, bank statements, and source documents. You should gather all relevant documentation and know your record-keeping system to answer auditor questions.
While getting audited and disputing results through appeals can feel uncomfortable, remember the Comptroller’s Office simply wants to ensure all Maryland businesses properly comply with sales tax laws. Guidance is available if you have questions.
You can also contact tax experts here at Numeral if you require assistance with managing sales tax audits or appeals in Maryland.
Here are the steps for registering for sales tax in Maryland:
Follow these simple steps to register and obtain your no-cost Maryland sales tax license through the Comptroller's convenient online registration system:
That's it! You'll be collecting and charging sales tax legally in no time. Reach out if our team can help explain the process in more detail
Online sellers must register in Maryland if they:
Meeting any of these thresholds creates an obligation to collect and remit state sales tax.
There is no fee to obtain a Maryland sales tax license. You simply register online for free through the Comptroller's website.
For sales tax questions and audit appeals in Maryland, contact:
There you have it—a full-fledged guide on Maryland's sales tax regime. Need help filing taxes for your ecommerce store? Get a demo with Numeral now.
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