Maryland Sales Tax Guide for Businesses
- Sales Tax Rate
- Local Taxes
- Comptroller of Maryland
- Tax Line
We wrote this guide for online sellers who want to know if they even have to bother with sales tax in Maryland, and if so, how best to tackle the sales tax situation in the Old Line State.
After reading this, you’ll know:
- Do you or don’t you need to collect Maryland sales tax?
- Which customers do you collect from?
- How much do you collect?
- What do you do with all the sales tax you’ve collected?
- Way more than you probably ever wanted to know about Maryland sales tax
Do you have sales tax nexus in Maryland?
Good news! You only have to begin thinking about Maryland sales tax if you have sales tax nexus in Maryland.
“Sales tax nexus” is just a fancy way of saying “significant presence” in a state.
Maryland considers a seller to have sales tax nexus in the state 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 sales tax nexus in Maryland if you sell on FBA?
If you sell on Amazon FBA, you might soon have sales tax nexus in Maryland. Amazon is soon planning to open a Fulfillment Center in Baltimore.
Once this fulfillment center is open, you can do one of two things to determine whether or not you have items stored in an FBA warehouse in Maryland:
- Login to Amazon Seller Central and pull your inventory report
- Sign up for a 30-day free trial of TaxJar and find out from where your Amazon inventory ships with our Amazon badge feature
Once it is open, you may find that your inventory is stored in Maryland’s Amazon fulfillment center:
|Warehouse Code||Address||County||Tax Rate|
|BWI1||2010 Broening Hwy. Baltimore, MD 21224||Baltimore||6%|
|BWI2||5501 Holabird Avenue, Baltimore, MD 21224||Baltimore||6%|
Is what you’re selling even taxable?
You’ve probably read this far because you realized you have sales tax nexus in Maryland. Your next step is to determine if what you’re selling is even taxable.
Services in Maryland are generally not taxable. So if you’re a freelance writer or a plumber, you’re in luck and you don’t have to worry about sales tax. But watch out – if the service you provide includes creating or manufacturing a product, you may have to deal with the sales tax.
Tangible products are taxable in Maryland , with a few exceptions. These exceptions include snack food, prescription medicine and medical devices, and farm equipment.
So if you sell toys, then charge sales tax to your Maryland customers.
But if you’re a graphic designer, don’t charge sales tax to your Maryland customers.
If you have sales tax nexus in Maryland and your products are taxable, your next step is to register for a sales tax permit.
How to Register for a Sales Tax Permit in Maryland
Sellers with sales tax nexus in Maryland must apply for a Maryland sales tax permit.
Don’t skip this step! Maryland considers it unlawful to collect sales tax in their name without a permit. Go here for more on how to register for a sales tax permit in Maryland.
How to Collect Sales Tax in Maryland
So you’ve determined that you have sales tax nexus in Maryland and what you’re selling is taxable. And you’re all set and registered for your Maryland sales tax permit.
The next step is to determine how much sales tax to collect.
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.
Example: You live and run your business in Baltimore, MD in the 21117 zip code. You have a customer in Annapolis in the 21401 zip. You would charge your customer the rate for where they live which is the state sales tax rate of 6%, because Maryland doesn’t have local taxes.
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%.
Example: You live in Colorado, but have sales tax nexus in Maryland due to hiring your sister who lives there. If you sell a product to a customer in Annapolis, you would charge the state sales tax rate of 6%.
What are the Amazon sales tax settings for Maryland?
If you are an Amazon pro seller and use Amazon to collect sales tax, be sure you have your Maryland sales tax settings entered correctly. Find step-by-step instructions for setting up your Amazon sales tax settings here.
|If you are a…||State tax||County tax||City tax||District tax||Custom rate||Is shipping taxable?||Is gift wrapping taxable?|
|Seller living in Maryland||X||N/A||No||No|
|Seller living outside of Maryland||X||N/A||No||No|
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.
|8||College Park||30,413||Prince Georges||6.00%|
|19||Havre de Grace||12,952||Harford||6.00%|
Caption: The Top 20 cities in Maryland by population
When are Maryland Sales Tax Returns Due?
Maryland sales tax returns are always due the 20th of the month following the reporting period. You’ll be assigned a sales tax filing frequency when you apply for your Maryland sales tax permit.
2016 Maryland Monthly Sales Tax Filing Due Dates
|Taxable Period||Due Date|
|January||February 22, 2016*|
|February||March 21, 2016*|
|March||April 20, 2016|
|April||May 20, 2016|
|May||June 20, 2016|
|June||July 20, 2016|
|July||August 22, 2016*|
|August||September 20, 2016|
|September||October 20, 2016|
|October||November 21, 2016*|
|November||December 20, 2016|
|December||January 20, 2017|
2016 Maryland Quarterly Sales Tax Filing Due Dates
|Taxable Period||Due Date|
|Q1 (Jan - Mar)||April 20, 2016|
|Q2 (Apr - Jun)||July 20, 2016|
|Q3 (Jul - Sep)||October 20, 2016|
|Q4 (Oct - Dec)||January 20, 2017|
2016 Maryland Semiannual Sales Tax Filing Due Dates
|Taxable Period||Due Date|
|Semiannual (Jan - Jun)||July 15, 2016|
|Semiannual (Jul - Dec)||January 16, 2017*|
2016 Maryland Annual Sales Tax Filing Due Dates
|Taxable Period||Due Date|
|Year 2016||January 20, 2017|
*indicates a due date pushed back due to a weekend or holiday
You can also click here for a chart of Maryland sales tax filing due dates.
How to File Sales Tax in Maryland
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
We’ll walk you through these steps.
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 File online at the Maryland Department of Revenue. 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.
Other Facts You Should Know about Maryland Sales Tax Filing
There are a few more things you should know about sales tax in Maryland:
- Late Filing Penalty 10% penalty and interest at no less than 1% per month
If you do not file a missing return after receiving a notice, an estimated assessment may be levied and additional penalty applied. Additionally, a $30 service charge is applied for bad checks.
Maryland requires that any seller with a sales tax permit file a sales tax return on your due date even if you don’t have any sales tax to report or pay.
Many states understand that collecting sales tax is a difficult burden on merchants, and will provide a discount to help alleviate some of this burden. In Maryland, as long as the sales tax is paid on time, a discount is available. The allowable discount for timely filing and paying is 1.2% of the first $6,000 collected and 0.9% for the amount above $6,000. The discount is capped at $500 for each return. If you are filing a consolidated return, or are eligible to file a consolidated return, the total maximum discount allowed for all returns for any one period is $500.
Maryland Sales Tax Holidays
Maryland has 2 sales tax holidays in 2016:
February 13-15, 2016: Energy Efficient Appliances Sales Tax Holiday August 9-15, 2016: Back to School Sales Tax Holiday
Check here for more information about Maryland’s sales tax holidays including how to handle sales tax holidays as an online seller.
And that’s it. You’ve mastered Maryland sales tax filing! Now that sales tax is out of the way, you can get back to what you do best – running your business.
Maryland Sales Tax Resources
For more about Maryland sales tax, check out the Maryland section of the TaxJar blog.