Does Your Business Have to Collect and File Sales Tax in Maryland?

If you make sales in Maryland that are subject to the state sales tax, you need to obtain a sales and use tax license from the Comptroller of Maryland. You can use the Maryland Combined Registration Online Application to register for sales and use taxes as well as other taxes that may apply to your business in Maryland, such as state income tax withholding and unemployment insurance, if your business has employees.

According to the Comptroller of Maryland, the state sales tax is 6% and there are no local sales taxes in Maryland. Certain sales are exempt from sales tax, including most sales of food by grocery or market businesses. Medicine, manufacturing machinery and equipment, certain agricultural equipment and supplies, certain vehicle rentals, sales of mobile homes, and sales of energy for residential use are exempt from sales tax. Sales of alcoholic beverages are subject to a 9% sales tax.

You can file your state sales tax returns for free online by using the Maryland bFile application.

Sales from out-of-state

If you make sales in Maryland from outside the state, you would have to register with the Maryland Comptroller, collect state sales tax, and file sales tax returns if you have nexus in Maryland. You would have nexus if you have a physical presence in Maryland, such as an office, sales room, or warehouse; if you have an agent, representative, or salesperson operating in the state; or if you enter Maryland regularly to provide service or repair to tangible physical property.

Flea market sales

According to the Maryland Comptroller, sales at a flea market are subject to sales tax. There is an exemption for isolated sales of less than $1,000, for example sales of household goods. But a full or part-time dealer would need a sales tax license. You could apply for a 30-day permit, for example if you only sell at one or two flea markets a year. Or you can apply for a sales tax license using the online registration mentioned above.

Purchases for resale

If you purchase items for resale, or that you will incorporate into something you manufacture to sell, you can be exempt from paying the state sales tax if you provide the vendor with a resale certificate. The Maryland Comptroller points out that there is no specific form or resale certificate, but on the website there is a sample resale certificate that you can use. The certificate must be signed and must include your name and address and your sales tax registration number.

If you sell items for resale without charging sales tax, you should keep the purchasers’ resale certificates with your sales tax records.

Sources:

Maryland Combined Registration Online Application, Comptroller of Maryland

Maryland bFile, Comptroller of Maryland

Sales and Use Tax, Comptroller of Maryland

Reference:

• Information for Business Taxpayers: business.marylandtaxes.com/default.asp
• Maryland Checklist for New Businesses: www.dat.state.md.us/sdatweb/checklist.html
• Maryland Small Business Development Center: www.mdsbdc.umd.edu/