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Learn the fundamentals of sales tax
Do you need to collect sales tax in Maryland?
You’ll need to collect sales tax in Maryland if you have nexus there. There are two ways that sellers can be tied to a state when it comes to nexus: physical or economic. Physical nexus means having enough tangible presence or activity in a state to merit paying sales tax in that state. Economic nexus means passing a states’ economic threshold for total revenue or the number of transactions in that state.
Do you have physical nexus in Maryland?
Maryland considers a seller to have physical nexus if you have any of the following in the state:
- An office or place of business
- An employee present in the state
- Goods in a warehouse
- Ownership of real or personal property
- Making repeat entries to the state for service or repair to tangible personal property
You can click here to read exactly what the Maryland Department of Revenue (Maryland’s taxing authority) has to say about what constitutes sales tax nexus in Maryland.
Do you have economic nexus in Maryland?
Effective October 1, 2018, Maryland law states that vendors who make more than $100,000 in sales annually in the state or more than 200 transactions in the state in the previous or current calendar year to have economic nexus. This means the state considers these vendors obligated to collect sales tax from buyers in the state in accordance with Maryland’s tax law. You can read Maryland’s economic nexus guidance for sellers here and you can read more about economic nexus in every state here.
Is what you’re selling taxable?
Services in Maryland are generally not taxable, with a few exceptions.
Tangible products are taxable in Maryland, with a few tax exemptions. These exemptions include snack food, prescription medicine and medical devices, and farm equipment.
Is SaaS taxable in Maryland?
SaaS is taxable in Maryland. (Source)
How to get a sales tax permit in Maryland
Register online or download the paper sales and use tax permit application at the Comptroller of Maryland.
If you choose to fill out the paper application, mail it to:
Comptroller of Maryland
Revenue Administration Center
110 Carroll Street
Annapolis, Maryland 21411-0001
Or fax it to: (410)260-7908
What information is needed to register for a sales tax permit in Maryland?
- Reason for your application
- Basic business information
- Your business type (sole proprietorship, corporation, etc.)
- The type of business you run (dry cleaner, limousine, food and beverage, etc.)
- The start date you’ll begin collecting sales tax
- Other business owners
If you live and operate your business out of state, but have sales tax nexus due to storing products in a warehouse, such as in an Amazon Fulfillment Center, still enter your permanent business address.
It is free to register for a sales tax permit in Maryland. Other business registration fees may apply.
Collecting Sales Tax
The sales tax rate you collect in Maryland depends on whether you are based in Maryland or out-of-state.
How to Collect Sales Tax in Maryland if you are Based in Maryland
Maryland is a destination-based sales tax state. So if you live in Maryland, collecting sales tax is based on where your customer lives. Luckily, Maryland is one of the few states with no local tax rates, so you would only charge the state sales tax rate of 6%.
You can look up your local sales tax rate with TaxJar’s Sales Tax Calculator.
How to Collect Sales Tax in Maryland if you are Not Based in Maryland (But Have Maryland Sales Tax Nexus)
Maryland wants sellers who made a sale into Maryland from outside the state to charge sales tax based on the destination of the buyer. Fortunately, this is easy because the sales tax rate across the board in Maryland is 6%, and no local tax rate to worry about.
Should you collect sales tax on shipping charges in Maryland?
Separately stated shipping charges are not taxable. However, handling charges are and if the shipping and handling charges are combined, then the shipping charge loses its exemption.
When are Returns Due?
When you file and pay Maryland sales tax depends on two things: your assigned filing frequency and your state’s due dates.
How often will you file sales tax returns in Maryland?
States assign you a filing frequency when you register for your sales tax permit. In most states, how often you file sales tax is based on the amount of sales tax you collect from buyers in the state.
In Maryland, you will be required to file and remit sales tax either monthly, quarterly, semiannually or annually.
Maryland sales tax returns are always due the 20th of the month following the reporting period. If the filing due date falls on a weekend or holiday, sales tax is generally due the next business day.
Filing Sales Tax
When it comes time to file sales tax in Maryland you must do two things:
- Calculate how much sales tax you owe
- File a sales tax return
- Make a payment
How to Calculate How Much Sales Tax You Owe in Maryland
Calculating how much sales tax you should remit to the state of Maryland is easy with TaxJar’s Maryland sales tax report.
All you do is connect the channels through which you sell – including Amazon, eBay, Shopify, Square and more – and we’ll calculate exactly how much sales tax you collected. All the information you need to file your Maryland sales tax return will be waiting for you in TaxJar. All you have to do is login.
How to File and Pay Sales Tax in Maryland
You have three options for filing and paying your Maryland sales tax:
- File online – Visit the Maryland Department of Revenue’s Comptroller’s Office. You can remit your payment through their online system. Click here for our step-by-step guide to filing a Maryland sales tax return.
- File by mail – You can use Form 202 and file and pay through the mail, though you must file and pay online if your tax liability in the previous year was $1,000,000 or more.
- AutoFile – Let TaxJar file your sales tax for you. We take care of the payments, too. You’ll never have to worry about spreadsheets, calculations or filling out complex sales tax returns.