Maryland Passes Emergency Economic Nexus Rule

Effective Date: October 1, 2018

Threshold: Gross revenue that exceeds $100,000 or 200 or more separate transactions

Measurement Date: Previous calendar year or the current calendar year

Includable Transactions: Gross sales; Marketplace sales included towards the threshold for individual sellers

When You Need to Register Once You Exceed the Threshold: First day of the month following when threshold is met

In mid-July, the Maryland Comptroller issued a Tax Alert regarding the South Dakota v. Wayfair decision, stating the Comptroller’s office “shall impose sales tax collection requirements as broadly as is permitted under the United States Constitution.” In this rather ambiguous tax alert, taxpayers making sales or delivering tangible personal property or a taxable service for use in Maryland were encouraged to review and analyze the Wayfair decision to identify how it affects them. The Comptroller also stated, “If you will make sales in Maryland, you will need to obtain a sales and use tax license,” but did not pronounce any type of economic nexus rule taxpayers would need to follow at that time.

The Comptroller has since updated its position and approved an emergency action on a proposed economic nexus regulation, COMAR In a synopsis of the emergency regulation, it was written that “the Comptroller does not want a delayed response to have a negative impact on the Maryland’s sales and use tax receipts thus emergency regulations should be enacted to begin collection from sales tax from out of state sellers.” Effective October 1, 2018, the new regulation provides that an out-of-state vendor with no physical presence that sells tangible personal property or taxable services for delivery into Maryland during the previous or current calendar year must collect and remit sales tax if the vendor either:

  • has gross revenue from the sale of tangible personal property or taxable services delivered in the State that exceeds $100,000; or
  • sold tangible personal property or taxable services for delivery into the State in 200 or more separate transactions

The emergency economic nexus rule has emergency status beginning October 1, 2018 and expiring March 30, 2019. (Emergency Regulation DLS Control No. 18-214 Sales and Use Tax: COMAR, Comptroller of the Treasury, effective October 1, 2018)

UPDATE: The Maryland Comptroller released an updated version of the tax alert regarding the Wayfair decision and economic nexus that states registration with the Comptroller by out-of-state vendors is required by the first day of the following month in which either of the criteria was met.

Posted on September 11, 2018