Maryland State Tax Updates

May 31, 2024

Authored by: Courtney Easterday, MSA and Katerine Velasquez

On May 16, 2024, Maryland Governor Wes Moore signed S.B. 677, which requires electronic filing for specified tax returns effective January 1, 2027. Additionally, the bill prohibits tax preparers and software companies from charging a separate fee for e-filing tax documents and will impose penalties for violations. S.B. 677 also prohibits software companies from selling tax software that charges a separate fee for e-filing returns if a different version of the software does not charge a fee for e-filing.

If you have questions about whether your business is subject to e-filing mandates, please reach out to a member of the Withum SALT Team.

February 27, 2024

Authored by: Brandon Mejia and Bonnie Susmano, JD, MBA

The state’s Office of the Comptroller has launched the Maryland Connect online self-service portal where taxpayers can file tax returns and manage tax account information, including but not limited to online payments, business registration(s), and sales and use tax exemption certificates. The system became available for specific taxpayers on February 6, 2024, and will be available for all Maryland taxpayers by 2026. For additional information, please refer to the Comptroller’s press release.

If you have questions about managing your state tax accounts, please reach out to a member of the Withum SALT Team.

September 5, 2023

Authored by: Breea Boylan, MSA, CPA and Bonnie Susmano, JD, MBA

This past July, The Maryland Comptroller’s Office published its annual “List of Tangible Personal Property and Services Subject to Sales Tax.” The list may be used as a guide in determining the taxability of tangible personal property and services. This year’s revised edition includes updates on the sale of electronic smoking devices, the exemption for medicinal hemp products, and the sale of cannabis.

For more information, you can find the Comptroller’s List of Tangible Personal Property and Services Subject to Sales tax here.

If you have questions about how sales/use tax affects your business, please reach out to a member of the Withum SALT Team.

August 11, 2023

Authored by: Courtney Easterday, MSA and Katerine Velasquez

Based on the Maryland Supreme Court’s ruling on the state’s Digital Advertising Gross Revenues Tax, the Comptroller of Maryland’s website for administering the tax is now live. Taxpayers with gross revenue over $100M are required to pay a gross receipts tax on digital advertising revenues derived from Maryland Sources. Taxpayers subject to the tax may file and pay the tax via the Comptroller’s website.

The Supreme Court’s decision on the legality of the Digital Advertising Gross Receipts Tax was purely on procedural grounds. The Court has not made any determination on whether the Digital Advertising Tax violates the First Amendment, Commerce Clause, or ITFA. As Comcast and Verizon are expected to file an appeal challenging the tax on these grounds, taxpayers subject to the tax may wish to file protective refund claims.

If you have questions about sales taxes, please reach out to a member of the Withum SALT Team.

June 30, 2023

Authored by: Katie Szymanski, CPA and Katerine Velasquez

The Comptroller of Maryland has provided a wide range of sales tax guidance on the sale of recreational cannabis products, including tax obligations, licensing, registration, and exemptions. The state’s sales tax on cannabis is effective beginning on July 1, 2023, for fiscal year 2024. Products containing cannabis are taxed at a 9% tax rate, while other related products that do not contain cannabis, such as pipes, hookahs, etc., are taxed at the regular 6% tax rate. Medicinal cannabis remains exempt from sales tax.

All entities conducting business in the state must apply for the sales and use tax license. However, cannabis businesses must register with the Maryland State Department of Assessments and Taxation before applying for a license. There are also additional rules regarding licensing depending on the type of sales the business is conducting, whether it is retail or trader. For filing purposes, businesses should use Form 202 to report sales tax figures and collections.

For additional detail, please refer to Maryland Tax Alert, Questions and Answers for Cannabis Businesses.

If you have questions about sales and use tax on cannabis products, please reach out to a member of the Withum SALT Team.

June 8, 2023

Authored by: Jessie Racioppi and Bonnie Susmano, JD, MBA

In 2021, Maryland became the first state to enact a gross receipts tax on digital advertising. The Code of Maryland Regulations 03.12.01.00 imposes a 2.5%-10% tax on gross revenues from digital advertising services in Maryland. Various parties have challenged the tax since its inception, claiming the tax is unconstitutional and violates the Internet Tax Freedom Act (“ITFA”). The Maryland high court’s May 9, 2023, decision overturned the Maryland trial court’s decision that the digital advertising tax violated the dormant commerce clause, First Amendment, and ITFA on procedural grounds – the Maryland Supreme Court did not address the Constitutional or ITFA claims. As such, Comcast and Verizon are set to pay the tax and sue for refund – virtually guaranteeing that the Constitutional and ITFA claims will return to the Maryland Supreme Court’s docket. A similar case is pending before the Fourth Circuit Court of Appeals.

If the Maryland Digital Advertising Tax is upheld by the Courts, expect additional states to impose similar taxes.

While the litigation plays out, the Maryland Comptroller’s Office has indicated that it intends to collect the tax. If you have questions about whether your business is required to collect or pay, the State’s Digital Advertising Tax, please reach out to a member of the Withum SALT Team.

May 12, 2023

Authored by: Katerine Velasquez and Bonnie Susmano, JD, MBA

The Maryland Supreme Court ruled that Verizon and Comcast were not able to challenge Maryland’s Digital Advertising Tax in court because they had not yet exhausted all of their administrative remedies. In October 2022, a Maryland trial court held that Maryland’s Digital Advertising Tax violated the First Amendment, the Dormant Commerce Clause, and the Internet Tax Freedom Act (“ITFA”). As such, the tax was invalidated by the trial court.The Maryland Supreme Court reversed the trial court’s decision, holding that there was no constitutional exception for taxpayers to exhaust all administrative remedies before exercising a legal challenge against the assessment of tax. As such, Comcast and Verizon likely need to pay Maryland’s digital advertising tax and sue for refund.However, once they file, pay, and sue for refund, it would appear that this litigation will be revived at a future date.

The Court did not rule on whether the tax does, in fact, violate the First Amendment, the Dormant Commerce Clause, and/or ITFA. The Court will almost certainly be faced with resolving these issues in future litigation.The Court could invalidate the tax at a future date by finding in favor of a taxpayer on any one of these three issues.

Many states paused their implementation of similar taxes after the Maryland Trial Court’s holding that the Maryland Digital Advertising tax violated the First Amendment, Dormant Commerce Clause, and ITFA.If the Maryland Digital Advertising Tax is ultimately upheld by the Maryland Supreme Court, expect several states to promptly enact similar taxes.

If you have questions about whether your business is subject to Maryland’s Digital Advertising Tax or protected from tax under ITFA, please reach out to a member of the Withum SALT Team.

May 12, 2023

Authored by: Katerine Velasquez and Bonnie Susmano, JD, MBA

On May 3, Maryland Governor Moore signed the State’s marijuana regulation bill into law. The law:

Check back for future developments on cannabis sales in Maryland.If you have questions about state tax treatment of cannabis sales, please reach out to a member of the Withum SALT Team.

April 28, 2023

Authored by: Katie Szymanski, CPA and Jessie Racioppi

Effective April 24, 2023, Gov. Moore signed SB41, which allows nonprofit and religious organizations to claim property tax exemptions retroactively in Baltimore City. Nonprofit and religious organizations can apply for the retroactive property tax exemption for up to three tax years ending with the year that the year the application is submitted. The city will pay refunds once applications are reviewed if the retroactive exemption is granted. Taxpayers requesting retroactive exemptions will be required to substantiate why the exemption application was not filed timely. The law is currently set to expire December 31, 2026.

April 10, 2023

Authored by: Brandon Spinella and George Gonzales, MST

Maryland has changed the due date for making Pass-Through Entity Tax (“PTET”) elections.Starting with the 2023 tax year, the election must be made with the first estimated payment for the tax year.As such, the deadline for making a PTET election for the 2023 tax year is April 17, 2023. Once made, the election is irrevocable.

Previously, the due date for making an election was made by timely filing the PTET return along with the pass-through entity’s return. For more information on the deadline for making the election, please see the instructions to the 2023 Form 510/511D.

If you have questions about PTET elections, please reach out to a member of the Withum SALT Team.

March 7, 2023

Authored by: Breea Boylan, MSA, CPA and Katie Szymanski, CPA

On February 23, 2023, the Maryland Attorney General filed its brief with the U.S. Court of Appeals related to the Chamber of Commerce’s challenge to the Maryland Digital Ad Tax. In the brief, the Attorney General, Anthony Brown, argued that the Court should uphold the lower court’s dismissal of the case under the Tax Injunction Act. Specifically, the Attorney General asserted, “The TIA (Tax Injunction Act) bars this entire suit, because the TIA deprives federal courts of jurisdiction over any action to enjoin, suspend, or restrain the assessment, levy, or collection of any state tax where the state’s laws provide a ‘plain, speedy and efficient remedy…This court has held that Maryland law provides such a remedy.”

This past October, Anne Arundel Circuit Court has already ruled the tax violates:

The Comptroller of Maryland has appealed the Circuit Court’s decision to the Maryland Supreme Court which has agreed to hear the case in May. If you have questions about whether your business is obligated to collect and remit sales tax, please reach out to a member of the Withum SALT Team.

December 2, 2022

Authored by: Brandon Spinella and Bonnie Susmano, JD, MBA

Attorney General Brian Frosh officially filed a notice of appeal with Maryland’s Court of Special Appeals to challenge the October 17, 2022, ruling by the Anne Arundel County Circuit Court, which held the Digital Advertising Gross Revenues Tax violates the Internet Tax Freedom Act as a discriminatory tax on digital commerce. Furthermore, the Circuit Court held the tax was unconstitutional because it violates the Commerce Clause and the First Amendment. In Maryland, legal appeals are the sole purview of the Attorney General’s office. However, Comptroller Peter Franchot previously and publicly expressed doubts about the constitutionality of the State’s Digital Advertising Gross Receipts Tax, exposing a schism between the Attorney General’s and State Comptroller’s offices.

Several other states were on the verge of passing sales taxes similar to the Maryland Digital Advertising Tax.It appears that these other states will wait for a final determination with regards to the Maryland Digital Advertising Tax before proceeding to enact their own Digital Advertising taxes.

October 28, 2022

Authored by: Brandon Spinella and Zhoudi Tang, CPA, MST

A year after being enacted, Maryland’s controversial digital ad tax has been quashed by State Circuit Court Judge Alison Asti. Judge Asti ruled the tax violates the First Amendment, the Commerce Clause, and the federal Internet Tax Freedom Act by discriminating against e-commerce. Maryland AG Brian Frosh has indicated he plans to appeal the Judge’s decision. The AG’s appeal does not appear to have the backing of Maryland Comptroller Peter Franchot, as he has doubts about the constitutionality of the law and believes it may negatively affect small businesses in the state. While several states have proposed similar taxes, Maryland was the first and only state to implement a digital ad tax. It appears the enactment of similar taxes in other states are now on hold pending the outcome of the litigation in Maryland. If you have questions about how the Internet Tax Freedom Act may affect your business, please contact a member of the Withum SALT Team.

September 2, 2022

Authored by: Brandon Vance and Bonnie Susmano, JD, MBA

On July 1, 2022, Maryland Comptroller released updates to the taxability of digital products and codes. The original digital products and codes sales tax were effective March 14, 2021. The tax rate has been unchanged and will stay at 6 percent. However, H.B.791 and S.B. 723 changed the definition of digital products to exclude particular property interests and certain types of computer software. Maryland Comptroller released Business Tax Tip #29, which provides an in-depth analysis of the taxability of digital products and services in Maryland. If you have questions about the taxability of your Company’s digital products and services in Maryland, please reach out to the Withum SALT Team.

July 22, 2022

On July 18, Maryland Comptroller Peter Franchot announced that the Comptroller agency processed over three million personal tax returns for the 2021 tax year. The processed returns comprised more than $2.34 billion in refunds for approximately 2.14 million Maryland taxpayers. The average refund check is roughly $1,100.00. The Comptroller’s office aims to refund Maryland taxpayers in less than three business days.

April 8, 2022

On April 1, 2022, Maryland Governor Hogan signed two bills that exempt certain baby products, medical devices and face masks from sales tax effective July 1, 2022. Exempt baby products include baby bottles and bottle nipples, and infant car seats. Exempt medical devices include certain thermometers, pulse oximeters, blood pressure monitors and respirators. Qualified respirators for exemption are N95, China KN95, Japan DS, Korea 1st Class, AS/NZS 15 P2 or European FFP2 filtering facepiece respirators.

January 31, 2022

On January 19, 2022, The Comptroller of Maryland released a tax alert stating that the state will extend the deadline for resident and nonresident individual income tax filings and payments for 2021. Individual income tax returns originally due between January 24, 2022 and April 18, 2022 will now be due on July 15, 2022. The Comptroller also waived interest and penalties for late payment if the tax is paid by July 15, 2022. This extension is automatic; hence no separate extension request or filing is necessary. Taxpayers who wish to file an extension can do so by July 15, 2022 and the extended due date will be October 17, 2022.

September 16, 2021

Peter Franchot, of the Maryland Comptroller of Taxation, has granted relief through tax extensions to all businesses and emergency responders impacted by the remnants of Hurricane Ida. Included in the granted extensions are Sales and Use Tax Returns and Tax due September 20^th, 2021, which the due date is extended to October 20^th, 2021, Admission and Amusement Tax due September 10^th, which the due date is extended to October 10^th, 2021, and Alcohol Taxes due in September, which the due date is extended exactly one month from the original due date. All interest and penalties will be waived so long as the returns are filed and paid by the extended due date.

June 25, 2021

Guidance has been issued by the Maryland Comptroller’s Office regarding the taxation of pass-through entities. If the income PTE election is made, the amount of the credit for taxes paid by the entity attributable to the member’s share of the entity’s taxable income must be added back to the income. A pass-through entity’s taxable income is defined as “the portion of a pass–through entity’s income under the federal Internal Revenue Code, calculated without regard to any deduction for taxes based on net income that are imposed by any state or political subdivision of a state, that is derived from or reasonably attributable to the trade or business of the pass–through entity in this State.” A Maryland electing pass-through entity must file a Maryland Form 511 and is not allowed to file a composite return on behalf of any members while a Maryland non-electing pass-through must file a Maryland Form 510 and can file a composite return for qualified non-resident individual members.

June 9, 2021

Effective June 1, 2021, and retroactively applicable to all taxable years beginning after June 30, 2018, Maryland will provide a refund of the disabled active duty service members and disabled veterans property tax exemption under certain circumstances. A disabled active duty service member, disabled veteran, or surviving spouse can apply for a refund of Maryland state, county, and municipal corporation property tax paid on the dwelling house while the exemption was available, only if the individual applies for the exemption during the three-year period beginning with the calendar year in which the individual initially became eligible for the exemption. In the taxable years in which the exemption was authorized but not granted, the state, county, or municipal corporation must pay the refund to such individual who receives the exemption for any property tax paid, and interest on the amount of the refund if the individual applied for the refund and the refund is not made within 60 days after the individual applied for the refund. For more information, please visit the Maryland Department of Veterans Affairs website.

Effective October 1, 2021, Maryland will institute a Whistleblower Reward Program. Under the program, a whistleblower who voluntarily provides original information to the Maryland Comptroller in a sworn affidavit that, because of the original information, results in a final assessment in a covered enforcement action, or a successful outcome against a taxpayer in a related action, is entitled to receive a monetary award of at least 15%, but not exceeding 30%, of the taxes, penalties, and interest collected through the enforcement action or related action. The covered enforcement action must relate to an enforcement action brought by the comptroller concerning: (1) the state and county income tax liability of a taxpayer whose federal adjusted gross income is at least $250,000, or the state and county tax liability of a business whose annual gross receipts or sales are at least $2 million; and (2) taxes in dispute exceeding $250,000. Also, as a separate matter, the legislation alters the statute of limitations for tax collections by increasing the amount of time from when a tax is due until when it can be collected from 7 to 10 years, and the amount of time from when a tax is assessed until when the assessment can be collected from 7 to 10 years. More information on the program will be posted as it becomes available.

June 3, 2021

Effective June 1, 2021, the purpose of Maryland’s Regional Institution Strategic Enterprise (RISE) zone program is expanded to incentivize the location of innovative start-up businesses based on technology developed, licensed, or poised for commercialization at or in collaboration with qualified Maryland institutions. Existing income and property tax credits under the program are limited to businesses that locate in a RISE zone before January 1, 2023. The program credits and benefits terminate on January 1, 2028. Additionally, effective July 1, 2021 and applicable to all taxable years beginning after December 31, 2020, the biotechnology investment incentive credit of 75% of the investment in a qualified Maryland biotechnology company is available if the company is located in a RISE zone. The cybersecurity investment incentive credit of 50% of the investment in a qualified Maryland cybersecurity company is available if the company is located in a RISE zone.

Effective July 1, 2021,Maryland will provide a vendor collection sales and use tax credit for qualified job training organizations who timely file sales and use tax returns. The credit is equal to 100% of the gross amount of sales and use tax that the vendor is to pay to the Maryland Comptroller. For any calendar year, the total amount of credits that a vendor can claim cannot exceed $100,000. A vendor must apply to the Maryland Secretary of Labor for certification. To qualify, the organization must: (1) be located in Maryland; (2) be exempt from taxation underInternal Revenue Code Section 501(c)(3); (3) conduct retail sales of donated items; (4) provide job training and employment services to individuals with workplace disadvantages or disabilities; and (5) use a majority of its revenue for job training and job placement programs that assist individuals with growth in employment hours, for individuals with low income, workplace disadvantages, disabilities, or barriers to employment, or for veterans. A vendor who claims this credit cannot claim other vendor credits.

May 26, 2021

Effective October 1, 2021,Maryland State Department of Assessments and Taxation (SDAT) will provide an additional year for domestic corporations, limited liability companies (LLCs), limited liability partnerships, limited partnerships, and statutory trusts, to file annual reports with the State before being placed on a list whereby their charter will be forfeited. This 1-year grace period applies only to these specifically stated Maryland (i.e., domestic) legal entities. For specific text of the bill, please see L. 2021, H839 (c. 335).

Further, effective July 1, 2021 and pursuant to L. 2021, H647 (c. 142),Maryland SDAT has repealed required fees for certain business filings. The $100 nonrefundable processing fees for filing articles of dissolution and certificates of cancellation are repealed, and there is no processing fee for documents filed to dissolve, cancel, or terminate an entity (i.e., previously, the fee was $25 for these documents).

May 21, 2021

The Maryland RELIEF Act of 2021 provides for a Sales and Use Tax Discount for small businesses in lieu of the standard vendor discount. This discount is available for the filing periods of March, April, and May of 2021. The relief is a credit on the sales and use tax returns in the amount of the lesser of $3,000 or the sales and use tax collected during the filing period and may not exceed $9,000 for the total three-month period.

For monthly filers, the credit for the March, April, and May filing periods will be taken on the respective monthly return normally filed the following month. For quarterly filers, the credit for March can be applied to the return for the quarter ending March 2021. For April and May, the credit can be applied to the return quarter ending June 2021 up to $3,000.

In order to qualify for the RELIEF Credit, the business must:

The RELIEF credit is automatic on the bFile site for eligible taxpayers starting May 17^th, 2021. If a return for the periods eligible has already been filed by an eligible business, the return can be amended to take the RELIEF credit. In order to amend the sales and use tax return for the credit, the taxpayer must email [email protected] and must include the following information:

For monthly and quarterly filers, return periods ending March, April, and May 2021 have an extended deadline of July 15th, 2021. You may take advantage of the relief credit and the extended deadline.

Please see the bulletin for more information.

May 5, 2021

The Maryland Comptroller’s Office issued guidance for small businesses who may qualify for a Sales and Use Tax Credit under the Maryland Recovery for the Economy, Livelihoods, Industries, Entrepreneurs, and Families (RELIEF) Act of 2021. Eligible vendors can claim an increased tax credit for March, April, and May 2021, usually filed in April, May, and June. The filing deadlines for that period were extended to July 15, 2021.

Eligibility

Vendors must file their sales and use tax return or consolidated return using the Comptroller’s bFile system. Note that the gross amount of sales and use tax collected during the monthly reporting period may not exceed $6,000, and the vendor must not take the standard vendor credit to claim the RELIEF Act credit. In addition, the credit cannot apply to sales and use taxes collected by a marketplace facilitator.

Vendors reporting $6,000 or less in gross collected sales tax for the reporting period may elect to take up to $3,000 as a tax credit. If the gross sales tax collected is $3,000 or less, then the vendor may claim the sales tax reported as a credit.However, vendors not eligible for the RELIEF Act credit may still claim the vendor tax credit, even when filing by the extended July 15thdeadline.

Filing

Once the bFile system is updated, vendors can claim the RELIEF Act vendor credit by filing their sales and use tax return. Businesses that filed their monthly SUT return for the period ending March 31, 2021, but did not claim the RELIEF Act credit can amend their March return.

If you would like to discuss this credit and how it may apply to your business, please contact a member of the State and Local tax team.

April 28, 2021

The Maryland Comptroller’s Office has updated its guidance on the Maryland RELIEF Act, which was enacted as a result of the federal American Rescue Plan Act’s unemployment compensation exclusion of up to $10,200 for qualifying individuals. For Maryland purposes, any amount of unemployment compensation in excess of $10,200 that is included at the federal level is eligible for a subtraction modification at the Maryland level, subject to Maryland’s income caps for the subtraction. Taxpayers who qualify for the federal exclusion, but do not qualify for the Maryland subtraction, need not add back the amount excluded from federal AGI as the exclusion flows to the Maryland return. Under the Maryland RELIEF Act, the subtraction for unemployment benefits received is only available to taxpayers with a filing status of single, married filing separate, or dependent with a federal AGI that does not exceed $75,000, and filers with married filing joint, head of household, or surviving spouse status with a federal AGI that does not exceed $100,000. For specific details, please see the Maryland Tax Alert on this subject.

April 23, 2021

Effective July 1, 2021, and applicable to all Maryland research and development tax credits certified after February 15, 2021, the 3% basic research and development tax credit is eliminated, but the 10% growth credit continues to be available. For each calendar year, the maximum amount of the credit that can be approved by the Maryland Department of Commerce is increased to $12 million, but $3.5 million of that amount will be reserved for small business applicants. The Department will not be permitted to approve a tax credit for any single applicant in an amount exceeding $250,000. In determining small business eligibility, “net book value assets” means the total of a business’s net value of assets, including intangibles but not including liabilities, minus depreciation and amortization. For specific details, please consult the bill enacting such changes (L. 2021, S196 (c. 114)).

Effective June 1, 2021, and applicable to all initial credit certificates issued after June 30, 2021, Maryland’s biotechnology investment incentive tax credit permits an initial tax credit for 33% (previously, 50%) of an investment in a qualified Maryland biotechnology company, not to exceed $250,000. However, if the company is located in Allegany, Dorchester, Garrett, or Somerset Counties, the credit is 50% (previously, 75%) of the investment in the company, not to exceed $500,000. A“qualified investor” does not include a founder or current employee of the company if the company has been in active business for more than five years. In addition to existing requirements, a “qualified Maryland biotechnology company” means a biotechnology company that the qualified investors in the company have not received more than $7 million in tax credits in the aggregate.

Effective June 1, 2021, and applicableto all initial credit certificates issued after June 30, 2021, Maryland’s cybersecurity investment incentive tax credit will be known as the “Innovation Investment Incentive Tax Credit” in order to reflect the expansion of the credit to technology companies rather than only cybersecurity companies. Per the amended law, “Technology company” means a company organized for profit that is engaged in the research, development, or commercialization of innovative and proprietary technology. However, a “qualified Maryland technology company” does not include a technology company that is or has been certified as a qualified Maryland biotechnology company. A “qualified investor” does not include a founder or current employee of the company if the company has been in active business for more than five years.

April 14, 2021

Maryland’s legislature passed a bill this week (SB0787/255361/1) that will push the effective date of the tax on gross revenues from digital advertising services to tax years beginning after December 31, 2021 (previously was set to take effect for tax years beginning after December 31, 2020). The first estimated payment for companies subject to such tax would have been due April 15, 2021. Among the amendments to Senate Bill 787, taxpayer subject to the digital advertising tax will be prohibited from directly passing the cost of the tax on to their customers by means of a separate fee, surcharge, or line-item. For specific details of the new tax, please see Senate Bill 787 or reach out to Withum’s SALT team with questions.

April 7, 2021

The Maryland Tax Court had previously held a taxpayer was entitled to a refund for sales taxes it paid when, as part of housekeeping supervisory services it provided to three non-profit hospital clients, it purchased cleaning supplies used at each of the hospitals. The taxpayer’s original refund request was based on the argument the purchased supplies were resold to the hospitals; while the reseller theory was rejected, but the Tax Court nevertheless granted the refund on the basis that the taxpayer purchased the supplies as an agent for tax-exempt/non-profit hospitals. Reversing and remanding the decision, the Maryland Court of Special Appeals found the taxpayer had no agency relationship with the hospitals due to the fact that, among other things, the contracts between the taxpayer and hospitals were at arm’s length, and the taxpayer had no duty to act primarily for the benefit of the hospitals.

March 23, 2021

Maryland Comptroller Peter Franchot alerts taxpayers that the state 2020 income tax filing deadline has been extended to July 15, 2021. No interest or penalties will be assessed if returns are filed and taxes owed are paid by the new deadline. The extension applies to individual, pass-through, fiduciary, and corporate income tax returns, including first and second quarter estimated payments. The extension is due to recently enacted and pending state and federal legislation that impact 2020 tax filings and provide economic relief related to the coronavirus (COVID-19) pandemic. The comptroller must make extensive revisions to previously released forms and software programs used by tax filers and tax software vendors. ( News Release, Maryland Comptroller’s Office, 03/11/2021 ; Tax Alert: Extension of Time to File and Waiver of Interest and Penalty for Certain Filers, Maryland Comptroller’s Office, 03/11/2021 ; News Release, Maryland Comptroller’s Office, 03/18/2021 .)

March 17, 2021

As a result of recent and pending state and federal COVID-19 relief legislation, Maryland State Comptroller Peter Franchot announced extension of the tax filing deadline to July 15, 2021 for individual taxpayers, passthrough entities, fiduciaries, and corporate income tax returns. No interest or penalties will be assessed if returns are filed and taxes owed are paid by the new deadline. The due date of the Tobacco Floor Tax payment (originally due June 13, 2021), as well as any sales and use tax returns that would have been due in March, April and May of 2021, will also now be due on July 15, 2021.

March 16, 2021

Beginning March 14, 2021, Maryland imposes a 6% sales/use tax on digital products received or used by purchasers in the state. The Maryland tax authority has issued guidance on the new law explaining that digital products include the following, among other items, when delivered electronically:

Unlike Maryland, most states do not characterize SaaS or downloaded software as digital products, so this expansive characterization by the Maryland tax authority could come as a surprise SaaS providers.

The new law will impact many technology companies’ Maryland sales tax obligations. We recommend that businesses review their Maryland sales tax nexus and compliance activity under the new law to determine if they are now required to collect and remit sales tax. Please call a member of Withum’s State and Local Tax team with any questions.

November 16, 2020

On November 9, 2020, the IRS (Notice 2020-75) informed it intends to issue proposed regulations supporting the use of Pass-Through Entity (PTE) SALT Workarounds. This taxpayer-friendly development would affirm that a pass-through entity’s owners or shareholders would not be limited in the amount deducted for state and local tax. Please review the article below regarding Notice 2020-75.

Learn more in our recent insight here.

May 2, 2020

The Maryland Department of Assessments and Taxation extended the 2020 deadline to submit Annual Reports, and Personal Property Tax Returns to July 15, 2020, as part of the Governor Hogan’s response to COVID-19.

Source: https://dat.maryland.gov/newsroom/Pages/2020-03-30-SDAT-COVID-19-Update.aspx

March 21, 2020

The Maryland Comptroller’s Office will conform with the Internal Revenue Service’s 90-day extension of federal income tax payments from April 15 to July 15, 2020. Individual and Corporate Income taxpayers will be afforded the same relief for state Income Tax payments. No interest or penalty for late payments will be applied if 2019 tax payments are made by July 15, 2020. Taxpayers must file for an extension for the filing of Federal taxes by April 15.

Fiscal year filers with tax years ending January 1, 2020, through March 31, 2020, are also eligible for the July 15, 2020 payment extension. The due date for March quarterly estimated payments are extended to July 15, 2020.

Business-related tax filing deadlines are also extended. The June 1 extension applies to certain business returns with due dates during March, April and May 2020 for businesses filing sales and use, withholding, admissions & amusement, alcohol, tobacco, and motor fuel taxes, as well as tire recycling fee and bay restoration fee returns.

Business taxpayers who file and pay by June 1, 2020 will receive an automatic waiver of interest and penalties. Learn more here.

March 2020

The Maryland Controller has implemented provisions to extend business-related tax filing deadlines. For certain business returns with due dates during March, April and May 2020, taxpayers have been provided an extension through June 1st. The extension applies to those businesses filing sales and use tax, withholding tax, and admissions & amusement tax, as well as alcohol, tobacco and motor fuel excise taxes, tire recycling fee and bay restoration fee returns. Furthermore, business taxpayers who file and pay by the extended due date will be granted a waiver of interest and penalties.

The Internal Revenue Service advised that high-deductible health plans (HDHPs) can pay for 2019 Novel Coronavirus-related testing and treatment, without jeopardizing their status. This also means that an individual with an HDHP that covers these costs may continue to contribute to a health savings account (HSA).

In Notice 2020-15 (PDF), posted on IRS.gov, the IRS said that health plans that otherwise qualify as HDHPs will not lose that status merely because they cover the cost of testing for or treatment of COVID-19 before plan deductibles have been met. The IRS also noted that, as in the past, any vaccination costs continue to count as preventive care and can be paid for by an HDHP.

This notice applies only to HSA-eligible HDHPs. Employees and other taxpayers in any other type of health plan with specific questions about their own plan and what it covers should contact their plan.

More on Taxes and the Coronavirus Pandemic.

Disclaimer: Please note this is the information that is readily available at this time, it is subject to change so please consult your Withum tax advisor.