What You Need to Know About the New Online Sales Tax Laws in Maryland
Maryland shoppers have moved out of the malls and into cyberland with the increased reliance on ecommerce business that so many of us have discovered. It’s a simple matter of convenience. Shopping from home is easier than dealing with crowds, check-out lines, and high-pressure salespeople. Browsing products on our laptops or smartphones has taken over the routine of meandering through boutiques and department stores, unsure of which outfit looks the best or which gift your family member will appreciate more.
Instead of bouncing back and forth between stores, we can line up every option right on one screen, and then make our decision. The collection of sales taxes on items sold online has always been a bone of contention for state governments, as they were missing out on crucial state revenue. However, on June 21, 2018, the Supreme Court made a decision in the case of South Dakota v. Wayfair, Inc. that has affected buyers and sellers alike ever since.
Understanding the Remote Seller Nexus
Some states began trying to solve their issues with internet sales tax as far back as 2008. Some took it upon themselves to enact legislation that requires online retailers to collect sales tax and pay their due. This relationship between online stores and the states they sell merchandise to is the Remote Seller Nexus. The process is easier for brick and mortar stores, as they have physical locations in the states they need to pay sales tax to, but it becomes complicated when translated to online sales. Under new laws that states are passing, any business selling products within a particular state has an economic nexus with the state and may need to collect and remit the taxes. Whether they must do so or not is usually determined by sales volume in the state.
Online Sellers, Sales Tax, and the Supreme Court Ruling
Of the forty-five states that collect sales tax, a large majority are now looking to the South Dakota v. Wayfair, Inc. ruling as a benchmark in regulating ecommerce sales tax collection. As of October 1, 2019, when the Economic Nexus went online, some states are already enforcing laws on internet sales tax. If you have an online business that sells goods to consumers in various states, you have undoubtedly encountered the issue of charging and remitting sales tax to some of those states.
How These Rules Affect Online Sales in Maryland
Maryland first notified online sellers of new sales tax legislation in their Tax Alert regarding the United States Supreme Court Decision South Dakota V. Wayfair, on September 14, 2018. This indicated that sellers can be required to collect sales tax from buyers even if they do not have a physical presence in the state. This alert stated that vendors must retain records to determine whether they need to remit sales tax based on the threshold of $100,000 in sales or 200 separate transactions in the state. Maryland adopted further provisions on February 1, 2019, requiring vendors to collect and remit sales tax on all taxable sales for use in the state. On October 1, 2019, the state extended the economic nexus to include certain tobacco taxes.
In addition to this, H.B. 1301, signed into effect by the governor on May 25, 2019, requires marketplace facilitators to collect sales tax. These providers aid businesses with their retail sales by advertising items in a marketplace and collecting payment from consumers via third parties.
Simplifying Online Sales Tax for Your Company
It may seem a bit overwhelming to consider how your online business will approach the collection and remittance of sales tax on your goods in Maryland and in other states around the country. You may already be dealing with the stress involved with this additional accounting work. Knowing the laws in all the various states is not enough to keep in compliance with them. You may find confusion and accounting errors lead to fines and further costs which affect your business’ bottom line. Forix takes the stress and worry out of this undertaking by partnering with online tax services to do the grunt work for you.
The companies we work with collect sales data, fill out tax forms, and remit internet sales tax to the states you sell to with ease. If your business provides goods or taxable services in the state of Maryland, you want to be certain you are in compliance with the specifics of the state’s laws. Contact Forix today to find out how our tax professionals can keep your books clear, your profits up, and your mind at ease.
Disclaimer: The information in this blog post is provided for general informational purposes only and should not be construed as legal advice from Forix.