We’re covering every state in order to answer questions about sales tax for merchants all over the country. We’re talking about Maryland in this post, which brings some good news: it’s very straightforward and simple! If you’ve sold something in this state and wondered about sales tax, you should be pleasantly surprised at what this destination-based state has to offer.
You’re a merchant living anywhere but Maryland
Does your business exist outside of Maryland and you otherwise have no sales tax nexus in the state? If so, you shouldn’t have to worry about sales tax compliance in Maryland.
You live and/or operate your business in Maryland
In this example, you and/or your business exist in Maryland. Your hair bow business has a very successful brick & mortar store in Catonsville, so you’re required collect and pay sales tax to the state.
The base rate for Maryland is 6% unless you’re selling certain vehicles or a mobile home. That’s fine and good, but what about local taxes? That’s where all the madness lies. But you’re in luck – Maryland doesn’t have local tax exceptions, so all you need to worry about is the 6%.
Easy enough, right? It’s nice to see states streamline this process for busy sellers.
You live out-of-state but use a 3rd party fulfillment service like FBA
Here, your business is located out of the state but you have nexus in Maryland from using FBA or another 3rd party service. Then you are required to collect sales tax from buyers and remit it to the state. (FYI, there’s no Amazon Fulfillment Center in Maryland yet, but one has been announced for spring 2015 so stay tuned to the TaxJar blog for updates.) Again, Maryland is a destination based state, so that means your concern is where the customer lives within the state of Maryland, not where your business exists.
Normally this would cause a huge problem as you might have to worry about local rates and other nonsense. However, as stated above, Maryland only has the 6% state rate and no local rates. This means if you do have nexus and need to collect you only need to charge 6%.
Here’s what you need to know about nexus from the Comptroller of Maryland website:
Filing sales tax in Maryland
If your business exists within Maryland or you have nexus, you must register your business with the state.
Maryland has a fairly simple setup for filing sales tax. Basically, every month on the 20th you have a due date, either monthly or quarterly. You have to file a tax return whether or not you actually have anything due. If the 20th falls on a weekend, simply pay on the next business day.
If you need to file a sales tax return in Maryland, TaxJar has your back. You can now enroll in AutoFile for the state of Maryland and we’ll automatically file your sales tax return for you! Find out more about AutoFile here.
Sales tax on shipping
According the Comptroller of Maryland website, separately stated shipping charges are not taxable. However, handling charges are part of the taxable price. If shipping and handling charges are combined, though, the shipping charge loses its exemption and the entire amount is subject to sales tax. At TaxJar, we tend to handle Maryland shipping charges as non-taxable.
Summary: Maryland manages to be straightforward
Maryland is a destination based state. If your business exists within the state, you’re required to collect and pay sales tax at a rate of 6%. If you’re outside of the state and have no nexus, you don’t have to do anything. If you have nexus, you must collect the 6% state rate. There are no local rates to worry about.
If you have to collect sales tax in MD, then you have to register your business with the state first. Luckily, the state then makes it easy to pay, with due dates every month on the 20th whether you are scheduled for quarterly or monthly sales tax filings. If the 20th is on a weekend, pay it on the first available business day.