How to Register for a Sales Tax License in Maryland
Most businesses starting in Maryland that are selling a product or offering certain services will need to register for a sales tax license. This is commonly referred to as a seller’s permit, sales tax permit, sales tax number, or sales and use tax license.
The sales tax license is obtained through the Comptroller of Maryland as a part of completing the Combined Registration Application.
Check out the rest of this guide to find out who needs a sales tax license, what products and services are taxable, how to register for a permit, and reporting requirements.
Also See: Guide to Starting a Business in Maryland
Who needs a sales tax license in Maryland?
A business must register for a sales tax license in Maryland when:
- A business has sales tax nexus. Nexus means having a physical presence in the state such as having a physical location like a retail store or office or using a warehouse or fulfillment center to store inventory.
- Businesses selling items from temporary locations, such as craft shows, fairs, seminars, trade shows, conventions, etc in Maryland
- Employees (including sales representatives or agents) are working in Maryland
- A business located in Maryland is selling taxable services and/or products to Maryland residents
- A remote seller meets one of the following scenarios:
- Making total sales of tangible personal property to Maryland residents of $100,000 or more; or
- Shipping 200 or more transactions to Maryland residents.
What products and services are taxable in Maryland?
There are a few exceptions, but almost all physical products are taxable when sold at retail in the state of Maryland. Common examples include:
- General merchandise like furniture, appliances, and clothing
- Titled or registered items like vehicles
Some foods, medicine and medical equipment, security services, and sales of machinery and equipment used in producing goods are tax-exempt.
Labor isn’t taxable most of the time in Maryland. For instance, let’s say you broke the screen of your cell phone and take it to a cell phone repair shop to have it fixed. Sales tax would be added to the selling price of the new screen and any additional parts to fix the phone. The labor to replace the screen isn’t taxable. However, a business that makes furniture will indirectly have a sales tax on labor. In this instance, let’s say this business is building a dining room table for a customer. Through labor, the pieces of wood are shaped, sanded, and painted to build this piece of furniture. While the labor isn’t directly taxable, sales tax is charged to the final selling price of the table.
Digital products are currently not taxable.
Most services aren’t taxable in Maryland, however, there are a few exceptions, some of which include:
- Short-term lodging
- Commercial janitorial and cleaning services
- Admissions such as movies, athletic events, shows, or exhibits
- Amusement devices such as bingo, coin-operated amusement devices, boat rides, golf fees, skating, bowling shoe rentals, etc.
How to register for a sales tax license in Maryland
A permanents sales tax license (what most businesses will register for) can be obtained by filing the Combined Registration Application online or mailing in the RAD-093 form.
Businesses participating in three or fewer events per year (fair, tradeshow, flea market, etc.) can instead register for a Temporary sales tax license which is good for 30 days.
Information needed to register includes:
- Federal Employer Identification Number (FEIN) from the IRS, or the owner’s Social Security Number if a sole proprietorship with no employees
- Legal name of the business
- Physical business address and phone number
- Type of business entity: Sole Proprietorship, Partnership, Corporation, Limited Liability Company (LLC)
- Date sales first started or are expected to begin
- Employee information
Sales tax reporting
How is sales tax collected?
When a business makes a sale of a taxable product or service, the business charges the appropriate sales tax rate to the customer. This tax is collected by the business which is then sent to the Comptroller of Maryland.
How much is sales tax in Maryland?
The sales tax rate that is charged varies depending on the address of the business if the purchase is made or shipped from a business located in the state or where the transaction took place such as a fair or tradeshow.
In addition to the statewide tax, there are additional sales taxes that may be added by cities and municipalities. To find the sales tax for your location, see the sales tax rate guide from the Comptroller of Maryland.
When are Maryland sales tax returns due?
The Comptroller of Maryland will determine a filing frequency based on the expected volume of annual sales, which will be monthly, quarterly, semiannually, or annually. Generally, a business collecting over $700 in sales tax monthly will file monthly.
Filings are due on the 20th day of the month following the reporting period, unless the 20th falls on a weekend or federal holiday, in which case would move to the next business day.
Even if the business had no sales during the reporting period, a filing is still required indicating no sales occurred.
How much does a sales tax license cost in Maryland?
There is no fee to get a sales tax license in Maryland.
How long does it take to get a Maryland sales tax license?
Expect up to 2 weeks to receive your Maryland sales tax license.
Do you have to renew a Maryland sales tax license?
The sales tax license is a one-time registration and no renewals are needed. Be mindful that if any information about the business changes such as the mailing address, additional locations, or change in ownership, those changes need to be updated with the Comptroller of Maryland.
How do I get a wholesale license in Maryland?
A business is able to purchase items to resell without paying state sales tax. The tax liability is passed from the wholesaler or distributor to the retailer who will then charge sales tax to the end-user of the item.
Wholesalers and distributors will require a sales tax number, and in many cases require the reseller to fill out the Maryland Resale Certificate (also referred to as a wholesale license, reseller’s permit, or sales tax exemption certificate) to document the items being purchased are for resale.
Is a business license the same thing as a sales tax license?
In addition to registering for a sales tax permit, there may be other business licenses needed before starting a business in Maryland
If you have questions about the sales tax license, the Comptroller of Maryland has a guide on State and Use Taxes in Maryland or can be contacted by calling 800-638-2937 or 410-260-7980 or by emailing email@example.com.