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S.A.L.T. Select Developments: Maryland

Baker Donelson's S.A.L.T. Select Developments will identify important state and local tax developments from Maryland.


State and local taxes impact almost every taxpayer. S.A.L.T developments in any one jurisdiction can be frequent and sometimes confusing. Where multiple jurisdictions are involved, staying current with state and local tax developments can be overwhelming for any taxpayer.

To assist you with staying current on a periodic basis, Baker Donelson's S.A.L.T. Select Developments will identify one or more recent state and local tax developments from Maryland.

October 2019

Sales Tax: Wayfair has hit Maryland! The General Assembly passed a law during their 2019 legislative session which requires a marketplace facilitator to collect Maryland sales and use tax on a retail sale by a marketplace seller to a buyer in Maryland. The Comptroller of Maryland has finally issued its much anticipated guidance regarding the new law, which went into effect October 1, 2019. The law, much like "Wayfair" laws passed in other states after the Supreme Court decision in Wayfair v. South Dakota, sets minimum thresholds which trigger the requirement to collect sales tax. Under the new guidance, marketplace facilitators and out-of-state vendors who make direct sales are required to register to collect Maryland sales and use tax if they sell tangible personal property or taxable services for delivery in Maryland and satisfy, during the previous calendar year or current calendar year, either of the following criteria: (a) gross revenue from the sale of tangible personal property or taxable services delivered in Maryland exceeds $100,000; or (b) tangible personal property or taxable services were sold for delivery into Maryland in 200 or more separate transactions. For more information, see Maryland Income Tax – Tax Alert 09-19

September 2019

Sales Tax: The gig economy and peer-to-peer transactions are a growing part of our economy, and states are taking notice. Maryland has enacted legislation to specifically subject peer-to-peer car sharing arrangements to sales tax. The Maryland legislature expanded the definition of "short-term vehicle rental" to include a shared motor vehicle used for peer-to-peer care sharing and made available on a peer-to-peer car sharing program. The legislation set the sales tax rate for these transactions at eight percent (as opposed to the standard six percent for most sales tax transactions). The taxable amount includes the sales price and all related charges, including delivery fees, cleaning fees, booking fees, protection packages, etc. With the rapidly growing world of peer-to-peer transactions, expect to see other states enact similar legislation to maximize sales tax revenue. More details about the legislation can be found here.

August 2019

Tax Crimes: The Comptroller of Maryland, the Maryland Attorney General's Office, continues to pursue criminal prosecutions for unscrupulous tax return preparers. Most recently, on July 25, a tax preparer pled guilty in Circuit Court to two counts of filing a false income tax return. It was determined that many of the Maryland tax returns he filed on behalf of his clients included false information. He included the false information to fraudulently minimize the taxpayers' Maryland tax liabilities and increase the tax refunds the taxpayers received from the State of Maryland. Based on the false and fraudulent tax returns he prepared and filed, his clients received tax refunds totaling approximately $90,000. While the preparer faced imprisonment for up to ten years on each count, the judge ultimately sentenced him to five years' incarceration, suspended, five years of supervised probation, and ordered him to pay restitution of approximately $90,000 to the State of Maryland. He is also prohibited from acting as a tax preparer.

July 2019

Apportionment: On June 27, 2019, the Maryland Court of Special Appeals concluded that the Comptroller of Maryland had the discretion to use a "blended apportionment factor", instead of its standard apportionment formula, since the standard apportionment factor would have resulted in a factor of zero. This ruling dealt with an out-of-state wholly owned subsidiary which arguably did not have real economic substance as a separate business entity apart from its parent corporation that did business in Maryland. In finding that nexus exists, the court considered (1) the out-of-state subsidiary's dependence on its parent for its income, (2) the circular flow of money between the out-of-state subsidiary and its parent, (3) the out-of-state subsidiary's reliance on its parent for core functions and services, and (4) the general absence of substantive activity from the out-of-state subsidiary that was in any meaningful way separate from its parent. See court's finding here.

June 2019

Sales Tax: Effective June 1, 2019, short-term rentals made by short-term rental platforms are now subject to the Maryland sales and use tax. The short-term rental platforms must collect and remit the tax to the Comptroller. The legislation broadly defines short-term rentals as "the temporary use of a short-term rental unit to provide accommodation to transient guests for lodging purposes in exchange for consideration." A short-term rental platform is an internet-based entity that (1) advertises available short-term rental units and (2) receives compensation for booking transactions on behalf of the owner. See Senate Bill 533.

For more information about state and local tax developments in Maryland, please contact:

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