The 2021 Maryland Relief Act is a package of financial benefits for Maryland residents and businesses. The act includes, among other things, direct stimulus payments to families, increased unemployment benefits, and new grant and loan programs for businesses and nonprofits.
And of special interest to TaxJar customers, they are also providing a sales and use tax credit to Maryland sales taxpayers. Here’s what that means for vendors who collect and file sales tax in Maryland.
The Maryland Relief Act’s Sales and Use Tax Credit, Explained
Eligible Maryland vendors who file and pay sales and use tax can take a credit of up to $3,000 per sales tax filing for filings during the months of March, April and May 2021. The total credit is not to exceed $9,000 for the three month period.
For example, say you file and pay Maryland sales tax monthly. Your sales tax liability in Maryland for the month of March 2021 is $3,500. You can claim a credit for the first $3,000 of that sales tax collected and keep that money in your bank account. You’d still be required to pay the remainder of your sales tax collected ($500 in this case) to the state.
If your sales tax bill is less than $3,000 you can claim a credit for the entire amount. For example, say you have collected $2,500 in sales tax from Maryland customers in March, and owe that to the state in your April filing. You are still required to file a Maryland sales tax return, but since you are eligible to claim the entire $2,500 as a tax credit, you would not be required to remit any funds to the state, since you have taken that $2,500 as your credit.
Who is eligible for Maryland’s sales and use tax credit?
According to an FAQ from the Comptroller of Maryland,vendors are eligible if they:
- File a timely sales and use tax return
- The gross amount of sales and use tax remitted with the return does not exceed $6,000
- The vendor foregoes the standard vendor credit (Read more about sales tax credits here)
On which tax returns can Maryland vendors claim this sales and use tax credit?
Both monthly and quarterly sales tax return due dates fall during the designated three month period, and so both monthly and quarterly Maryland sales tax filers are eligible to claim Maryland’s tax credit.
Monthly filers can claim the credit on their sales tax filings for the months of March, April and May 2021. (The Maryland sales tax return for the month of March 2021 is due on April 20, 2021. See all Maryland sales tax due dates here.)
Quarterly filers can claim the March credit on their Q1 return (due April 20, 2021) and the April and May credits on their Q2 return (due July 20, 2021). Quarterly filers should keep in mind that the credit must not exceed $3000 per month.
Further, the total credit taxpayers can claim is $9000 for all three months (March, April and May.)
I’m taking advantage of Maryland’s sales tax extension. Can I still claim the credit?
Due to the Relief Act, Maryland has also announced that sales tax filings for the months of March, April and May will not be considered late if filed by July 15, 2021. This means sales taxpayers both do not have to file their sales tax returns for those periods until July 15, 2021 and do not have to pay sales tax due until the July 15, 2021 deadline.
According to the Maryland Comptroller, Maryland taxpayers who choose to take the Maryland sales tax filing extension are still eligible for the $3000/month credit. Just keep in mind that the credit is not to exceed $3000 per month or $9000 total.
How to Claim the Maryland Sales and Use Tax Credit
There are no special instructions for vendors to take this credit. Simply file your sales tax return using Maryland’s bFile system for business taxpayers.
Will TaxJar AutoFile handle the Maryland sales and use tax credit?
Yes. If you use TaxJar to AutoFile your Maryland sales tax returns we will take your credit into account. Feel free to reach out to us if you have any questions about your returns before we AutoFile on your behalf.
Ready to automate sales tax? To learn more about TaxJar and get started, visit TaxJar.com/how-it-works.