Maryland Income Tax Alert - Guidance for Sales and Use Tax Collection Requirements

Maryland Income Tax Alert - Guidance for Sales and Use Tax Collection Requirements

The Comptroller of Maryland has provided a Tax Alert regarding the sales and use tax collection requirements applicable to marketplace facilitators and sellers.  Under the new law effective October 1, 2019, marketplace facilitators must collect Maryland sales and use tax on a retail sale or sale for use by a marketplace seller to a buyer in Maryland. A marketplace seller is not required to collect sales and use tax if the marketplace facilitator collects the sales and use tax.

Marketplace Facilitator:  A marketplace facilitator is an entity or individual that facilitates a retail sale by: (1) listing or advertising for sale in a marketplace tangible personal property; and (2) collects payment from a buyer and transmits the payment to a marketplace seller. Marketplace facilitators, whether in-state or out-of-state, are now considered vendors under Maryland law. Marketplace facilitators include, but are not limited to, online marketplaces, consignment stores, and auction houses.

Marketplace seller:  A marketplace seller is a person that makes retail sales or sales for use through a physical or electronic marketplace operated by a marketplace facilitator. Marketplace sellers, whether in-state or out-of-state, are now considered vendors under Maryland law.

Marketplace:  A marketplace may be physical or electronic. A marketplace includes, but is not limited to, any space, store, booth, catalog, website, application, or television or radio broadcast.

Collection requirements:  Marketplace facilitators must collect Maryland sales and use tax on each facilitated retail sale or sale for use by a marketplace seller to a buyer in Maryland. If a marketplace facilitator collects the applicable sales and use tax, a marketplace seller is not required to collect sales tax on a facilitated sale. The sales and use tax is due at the time of sale. The buyer is required to pay the sales tax directly to the marketplace facilitator and the marketplace facilitator remits tax collected directly to Maryland.

For more details regarding waivers, registration requirements, safe harbor, reporting, refunds, and records, please refer to the link to the Tax Alert below.  If you would like to discuss these rules further, please contact our office: 410-792-7259.

https://taxes.marylandtaxes.gov/Resource_Library/Tax_Publications/Tax_Alerts/SUT_Tax_Alert_Sept2019.pdf

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