Maryland Enacts Marketplace Nexus Legislation

Maryland has enacted legislation with marketplace nexus provisions, effective October 1, 2019. Per the legislation, “marketplace facilitator is defined as a person that:

  • Facilitates a retail sale by a marketplace seller by listing or advertising tangible personal property for sale in a marketplace, and
  • Directly or indirectly through agreements with third parties collects payment from a buyer and transmits the payment to the marketplace seller.

“Marketplace facilitator” does not include:

  • A platform or forum that exclusively provides internet advertising services, including listing products for sale, if the platform or forum does not also engage in collecting payment from a buyer and transmitting payment to the vendor;
  • A payment processor appointed by a vendor to handle payment transactions from clients whose only activity with respect to marketplace sales is to handle transactions between two parties;
  • A peer-to-peer car sharing program; and
  • Specified delivery services.

Marketplace facilitators are required to collect and remit sales tax on retail sales made by marketplace sellers. Marketplace sellers are not required to collect and remit sales and use tax to the extent that the marketplace facilitator collects the applicable sales and use tax.

A marketplace facilitator, or other appropriate party, will refund to a buyer the proportionate amount of sales and use tax the buyer has paid if a sale is rescinded or canceled or the property is returned to the marketplace facilitator or seller and the purchase price is wholly or partially repaid or credited.

A marketplace facilitator shall report the tax collected on behalf of marketplace sellers separately from the tax collected by the facilitator on sales made directly by the facilitator or an affiliate of the facilitator.

A class action lawsuit may not be brought against a marketplace facilitator in Maryland on behalf of buyers arising from overpayment of sales or use tax collected on sales facilitated by the facilitator, regardless of whether the claim is characterized as a tax refund claim.

A marketplace facilitator and marketplace seller may apply to the comptroller for a waiver of the collection requirement if:

  • The marketplace seller is a publicly traded communications company;
  • The marketplace facilitator and seller enter into an agreement that the seller will collect and remit the sales and use tax; and
  • The marketplace seller provides evidence to the facilitator that the seller is a licensed vendor in the state.

The comptroller may not audit a marketplace seller for sales facilitated by the marketplace facilitator for which the facilitator collected or should have collected sales and use tax.

Marketplace facilitators are required to file a sales and use tax return on or before the 20th day of the month that follows the month in which a marketplace seller makes a sale through the facilitator. (H.B. 1301, Laws 2019)

Posted on June 17, 2019