What Services Are Subject To Sales Tax In Maryland
It often seems like everything has a sales tax on it, but in reality that’s not the case. A sales tax is what the state constitutes as tax collected by a merchant in-state, and so while they are prevalent, not every item qualifies.
With this said, it is essential to understand what purchases are subject to sales tax in Maryland to ensure that your business is complying with all rules and regulations.
The sale of goods (well, most of them) in the state of Maryland is subject to sales tax. These items include:
- Food & Alcohol
- Art & More
However, there are a few exceptions to this rule. For example, the state of Maryland will not tax the sale of agricultural goods by a farmer to another farmer for agricultural purposes. Medical supplies and medicines are also exempt, and certain organizations are exempt from collecting sales tax as well (non-profits, credit unions, cemeteries, etc.).
How Does Sales Tax Affect Business Owners?
Before filing for the first time, business owners must submit a Combined Registration Application (CRN) with the Comptroller to receive a sales and use tax license. To file, the business owner must provide gross sales for the period and sales tax due for each tax classification.
Once this is complete, any vendor who collects $15,000 or more in sales tax annually must file returns monthly, and taxes are due on the 20th of the month. If the sales tax collected is less than $15,000 annually, the vendor can file quarterly. Any individual who makes a tax-free purchase in another state is also required to file this form on the 20th of the month after the end of each quarter.
Finally, filing late should be avoided in Maryland because two penalties can occur; the first is a 10% penalty added to the taxes due, and the second is an interest penalty of 1.08% per month. Filing early or on time is best practice and earns you a discount on your sales tax due.
If you have any more questions about what services are subject to sales tax in Maryland, contact us today! We can also discuss the many ways Taurus CPA Solutions can benefit your business.
Visit our website here or give us a call at (410) 465-4600.