Maryland: Sales Tax Handbook
What constitutes sales tax nexus in Maryland?
One of the more complicated aspects of Maryland sales tax law is sales tax nexus, the determination of whether a particular sale took place within the taxation jurisdiction of Maryland, and is thus subject to state (and possibly local) sales taxes.
If a vendor's transactions are determined to have nexus in Maryland, the vendor must register for a Maryland sales tax license and collect appropriate sales taxes from the buyer for all transactions with nexus in the state. On this page, we have compiled some of the most commonly needed facts about what constitutes sales tax nexus in Maryland.
Sales Tax Nexus in Maryland
According to Maryland law,"vendors", those who have tax nexus, can be defined in several different ways. If your business, within the state's boundaries, stores merchandise in a warehouse, has an employee or any other representative working in state, has an office, warehouse or any other place of business, makes multiple entries into the state for the purpose of repairing or servicing tangible personal properties, or has ownership or personal or real property, you have sales nexus in the state of Maryland.
For additional details on sales tax nexus law in Maryland, see the nexus information page from the Comptroller at http://taxes.marylandtaxes.com/Business_Taxes/Business_Tax_Types/Sales_and_Use_Tax/Tax_Information/Tax_Regulations/Nexus_Information.shtml
Taxation of Internet-Based Sales in Maryland
NOTE: 2018 Supreme Court Ruling Regarding Online Sales Taxes
In the 2018 Supreme Court case South Dakota vs. Wayfair Inc, Et Al., the court overturned a previous ruling that required a merchant to have physical nexus in order for a state to collect sales tax. This means that any state is now free to enforce collection of sales taxes on out-of-state online merchants. The information provided here may be subject to change, and many states are expected to begin collecting online sales taxes following this ruling.
Generally, Maryland does not charge sales tax on Internet-based transactions determined to have nexus within the state. This means that purchases from Amazon.com and other Internet-based retailers may be sales-tax-free.
The nexus status and taxability of Internet-based sales, by vendors and/or consumers within Maryland, have been the subject of hot debate in recent years. You can learn more on our introduction to Internet-based sales taxes.
Does my business have tax nexus in Maryland?
The folks at the sales tax compliance company Avalara are an approved Maryland sales tax partner, and you can use their free Maryland nexus wizard tool to determine whether or not your business has nexus, and is therefore required to pay Maryland sales taxes. If you're interested in automating your sales tax collection and filing process, click here to get more information.
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