Home Individual Taxes Sales and Use Tax Sales and Use Tax Information Frequently Asked Questions Frequently Asked Questions Sales and Use Tax FAQs Below you will find frequently asked questions concerning the Sales and Use tax. I recently bought a sofa in Delaware where there is no sales tax and arranged to have the sofa delivered to my home in Maryland. Do I have to pay Maryland sales tax on the purchase? Yes. Every time you purchase taxable tangible goods, whether in person, over the phone, or on the Internet, the purchase is subject to Maryland's 6 percent sales and use tax if you use the merchandise in Maryland. If you make a tax-free purchase out of state and need to pay Maryland's 6 percent use tax, you should file the Consumer Use Tax Return. When you purchase goods from out-of-state businesses, they are not required to collect Maryland's sales and use tax unless they have a physical location, or deliver services, in Maryland. For more information, see Maryland's Sales and Use Tax Are store discount coupons included in the taxable price? No. A store coupon is not included in the taxable price unless the vendor can get reimbursement from another source. Manufacturers' coupons are included in the taxable price since a store can obtain a reimbursement from the manufacturer. For example, if you had a Mars grocery store coupon that was redeemable only at a Mars store - and not Food Lion, Giant or any other food store - the coupon would not be included in the taxable price. On the other hand, if you had a Welch's Grape Juice coupon that you could use in any store, then that coupon would be included in the taxable price. Are sales of Energy Star appliances exempt from the sales tax? No. Energy Star-rated clothes washers, refrigerators and air conditioners sold in Maryland are not exempt from the Maryland sales and use tax. There is a tax-free three-day weekend during which the state sales tax will not apply to the sale of any Energy Star Product listed below, or solar water heater. The tax-free weekend for 2013 will occur the weekend of February 16, 2013, through February 18, 2013. Energy Star Product means an air conditioner, clothes washer or dryer, furnace, heat pump, standard size refrigerator, compact fluorescent light bulb, dehumidifier, or programmable thermostat that has been designated as meeting or exceeding the applicable Energy Star Efficiency requirements developed by the U.S. Environmental Protection Agency and the U.S. Department of Energy. How is food taxed in Maryland? In general, food sales are subject to Maryland's 6 percent sales and use tax unless a person operating a substantial grocery or market business sells the food for consumption off the premises and the food is not a taxable prepared food. A grocery or market business is considered to be "substantial" if the sales of grocery or market food items total at least 10 percent of all food sales. For more information, see Sales of Food Does the sales tax apply to sales of cars and boats? No. The Maryland sales and use tax does not apply to the sales of cars or boats since those items are already subject to titling taxes. Sales of motor vehicles are subject to the Maryland motor vehicle titling tax which is administered by the Maryland Motor Vehicle Administration. Boat sales are subject to a boat titling tax which is administered by the Maryland Department of Natural Resources. On the other hand, the sales and use tax does apply to car and boat rentals, under different tax rates. An 11.5 percent tax is imposed on short-term passenger car and recreational vehicle rentals. Certain short-term truck rentals are subject to an 8 percent tax. Are warranty charges taxable? It depends. Charges for warranties, maintenance, service agreements and insurance are taxable if the buyer is required to purchase them or they are already included in the price of the merchandise. However, if the sale could be completed without paying these charges, then the charges are not taxable. Are purchases made on military bases subject to the sales tax? Private vendors or franchisees selling on military bases, or other United States Government properties, must charge the sales tax on all sales of tangible personal property and taxable services statutorily subject to the tax. The tax must be charged on sales to military and other Government personnel as well as civilians. There is an exemption from the tax for sales made at a vending machine facility operated under the Maryland Vending Program for the Blind that is located on property on military bases. Sales made by the United States Government, or any of its agencies, on Government property are exempt from the sales and use tax, regardless of whether the purchasers are military and Government personnel or civilians. For example, sales of food by a fast food vendor on a military base are subject to the tax if the vendor or franchisee is ABC Company. The same sales made on a military base where the vendor or franchisee is the United States Government, or an agency of the Government, are not subject to the tax. Out of State Purchases FAQs Below you will find frequently asked tax questions concerning out of state purchases. Is the tax on out-of-state purchases computed the same way as the tax on sales inside Maryland? Basically, yes. Maryland does, however, grant a credit for the sales tax paid to another state up to the amount of the Maryland tax. In addition, a 10 percent depreciation allowance may be taken for each full year the property is used by the purchaser before being brought to Maryland. What if I pay sales tax to another state? Maryland grants a credit for sales tax paid to another state up to the amount of Maryland's six (6%) percent sales and use tax liability. For example, if you paid a four (4%) percent sales tax to another state, you would be liable only for the difference, or two (2%) percent Maryland sales and use tax when you brought the property into Maryland. If you paid a six (6) or higher percent sales tax to another state, you would not be liable for Maryland sales and use tax when you brought the property into Maryland. Do I have to pay tax on used property I bring into Maryland? Yes. However, you may claim a ten (10%) percent depreciation allowance for each full year you used the property before you brought it to Maryland. Only the depreciated value is subject to tax. Does the tax apply to self-manufactured goods I bring into Maryland? The tax applies only to the cost of materials and purchased fabrication services, not to the full market value of the goods. The value of your labor is not taxed. Flea Markets FAQs Below you will find frequently asked tax questions concerning flea markets. Do I have to display my license at a flea market? Yes. Maryland law requires that vendors display their licenses at any location where sales are made. This will save you valuable selling time because representatives of the Comptroller's Office do not have to ask for your registration number. Why do I have to collect the tax on used goods if they were probably taxed when new? The tax is on the transaction or sale and not on the property sold. The same item will generate tax each time it is sold unless it is specifically sold for resale. Do nonprofit organizations have to collect tax? Yes. Nonprofit organizations must collect tax on merchandise they sell, even if the goods are donated to them. Private individuals must also collect tax even if they plan to donate the proceeds to a nonprofit organization. Private individuals are not eligible for a sales and use tax exemption certificate. Sales by religious organizations and sales of food by volunteer fire companies and veterans' organizations are exempt. Are sales to other dealers exempt? Always collect tax on sales to other dealers unless they present you with a resale certificate bearing their Maryland sales tax registration number. However, out-of-state dealers who are not required to collect the Maryland tax may use their out-of-state sales tax registration number on a resale certificate to purchase antiques and used collectibles. Dealers from states that do not impose a sales tax may provide a valid trader's license or comparable document. Resale certificates are not valid for cash, check or credit card sales of less than $200 unless the product is delivered to the customer's place of business. Can I make sales on a "tax-included" basis? Yes. Effective January 3, 2008, a vendor may assume and absorb all or any part of the sales and use tax on a retail sale and pay that tax on behalf of the buyer. The vendor must, however, continue to separately state the tax from the sales price at the time of sale to the purchaser. If the vendor absorbs all or any part of the tax on the sale, the vendor shall pay the tax with the return that covers the period in which the vendor makes the sale. Food and Beverages FAQs Below you will find frequently asked tax questions concerning food and beverages. Are sales at a bakery considered grocery or market food items? Yes. However, when calculating if a business meets the 10 percent threshold for a substantial grocery or market business, you may not include sales of single servings, heated or prepared food or sales to be consumed on the premises. Are caterers required to collect the tax? Yes. A caterer serving food at a customer's premises must collect the tax on the food sold. A caterer must collect the tax in this situation even if the caterer also conducts a substantial grocery or market business. Are there any other exemptions? Yes. Sales of food to patients in a hospital when the food charges are included in the regular room rate are exempt. Sales of food and beverages on vehicles operating in interstate commerce are exempt. In addition, the tax does not apply to a sale of crabs for consumption off the premises where sold. Sales of seafood to be consumed off the premises where sold are also exempt if the seafood is not prepared for immediate consumption. Does "food" include everything that is edible? No. For sales and use tax purposes, soft drinks, bottled water, alcoholic beverages, candy and confectionery are not "food." The sale of any of these items is, therefore, not entitled to any of the exemptions for sales of food, including the exemptions for sales of food by volunteer fire companies and veterans organizations. Neither water nor ice is food, although they may be treated as food when sold as components of food. How are federal food stamps treated? The tax does not apply to eligible food purchased with federal food stamps. Food stamp eligible food encompasses everything that is considered food for sales and use tax purposes, plus soft drinks, candy, confectionery, water, ice and otherwise taxable and prepared foods. If a customer purchases both taxable and nontaxable food stamp eligible food with a combination of food stamps and cash, credit card or debit card, the vendor must apply the food stamps to the eligible taxable items first, and then any remaining food stamps to the eligible nontaxable items. After application of the food stamps, the balance of the eligible taxable items paid for with cash, credit card, or debit card is subject to tax. Alcoholic Beverages FAQs What is the sales and use tax rate on sales of alcoholic beverages in Maryland? Unlike sales of other types of tangible personal property and taxable services that are taxed at a 6% rate, the sales and use tax is imposed at a 9% rate on the taxable price of alcoholic beverages. The 9% rate on sales of alcoholic beverages replaces the 6% rate and is not in addition to that rate. Can I sell wine at a farmer's market? Licensed retailers can apply for a special Retail Off-Site Permit from the Comptroller's Office to sell wine produced by a Class 4 limited winery at a Farmer's Market listed with the Maryland Department of Agriculture. The permit must be issued to a licensed retailer authorized to sell alcoholic beverages for consumption off-premises, and whose license was issued by the local licensing board in the jurisdiction in which the Farmer's Market will be held. Should retailers maintain a log of product received and shipped? Yes, retail receipts should be kept for two years or until audited. See Alcoholic Beverages Article 1-408. How long should Catered Event Certificates be kept on file? State regulations do not require Catered Event Certificates to be kept for a certain length of time. A revolving calendar year should suffice. Check the regulations issued by your county liquor board. Do I need a catering license if I plan to serve just food at the catering event? Yes. Catering food requires a license from the county. Do I need a catering license if I plan to serve alcohol at the catering event? Yes. An alcohol catering license is needed if you plan to furnish alcoholic beverages. It is known as a Statewide Caterer (SCAT) License. See COMAR 03.02.01.18. How do I obtain a One-Day Liquor License? They are issued by the County Liquor Boards. Is a permit required to make confectionary food products containing alcohol? Yes, you must obtain a $50 Non-Beverage Class C Permit. See Tax General TG 2-101(c). Is a permit required to purchase alcohol for hospitals and schools? Yes, a Non-Beverage Class E Permit is required. However, there is no fee. Who regulates "happy hour?" "Happy hour" is regulated by each county's liquor board. Is price filing or brand registration required for wine, distilled spirits or beer? Price filing is no longer required for any form of alcohol. Brand registration is required for beer only. Who pays the beer excise tax? A wholesaler pays the tax if the beer is imported from another country. An out-of-state non-resident dealer (a.k.a. supplier) pays the tax if the beer is purchased by a Maryland wholesaler. See Tax General TG 5-102 and TG 5-105. Can a beer manufacturer require a wholesaler to pay extra on a product ordered for advertising funds? Beer: A beer manufacturer cannot require participation, but participation by the wholesaler is legal for beer. A manufacturer can charge the wholesaler extra for advertising their product, but they cannot make them pay it. See Alcoholic Beverages Article 5-104. Wine and Distilled Spirits: These manufacturers cannot charge extra for advertising. What is meant by the three-tiered system? It is a system whereby alcohol is sold from the supplier to the wholesaler, from the wholesaler to the retailer, and from the retailer to the consumer. What is the difference between a regulation and a statute? The legislature enacts statutes. The Comptroller adopts, amends and repeals regulations under the authority granted by statutes, following the procedures in the Administrative Procedure Act. I need a letter stating that all state taxes have been paid. Who do I contact? Contact the General Accounting Division at 410-260-7813. I cannot renew my license due to tax liabilities with the Comptroller's Office. Who do I contact? Business liability: 410-767-1908 Personal liability: 410-649-0633 (usually an income tax issue) Personal property tax: Clerk of the Circuit Court (in the respective county) Who do I contact at IRS with federal tax questions? IRS individual tax questions: 1-800-829-1040 IRS business tax questions: 1-800-829-4933 Web site: www.irs.gov Is the 9% rate calculated in the same way as the 6% sales and use tax on sales of other types of products? No. By statute, the 6% sales and use tax is imposed on a bracketed basis. The amount of tax due is determined by the sale price in relation to the statutorily imposed brackets. The amount of tax increases one cent from one bracket to the next with 6 cents due on each exact dollar. The 9% sales and use tax is a flat rate. This means that when the tax calculation results in an amount between two whole pennies, the tax is rounded off. The tax computation must be carried to the third decimal place, and the tax then must be rounded to a whole cent using a method that rounds up to the next cent whenever the third decimal place is greater than four, and rounds down whenever the third decimal place is less than or equal to four. For example, if the taxable price of the alcoholic beverage is $8.24 the tax would be $0.74 ($8.24 times 9% = $0.742). If the taxable price of the alcoholic beverage is $8.29 the tax would be $0.75 ($8.29 times 9% = $0.746). How do I report the 9% tax on my sales and use tax return? You must report the tax you charged on sales of alcoholic beverages separately from the tax imposed on sales of other items. Effective July 2011, the sales and use tax return will include separate lines for tax imposed on sales at the 6% rate and tax imposed on sales at the 9% rate. The revised sales and use tax return will also have separate lines for reporting tax on purchases at each rate as well. I currently file my sales and use tax returns and remit via EFT ACH (Electronic Funds Transfer Automated Clearinghouse). Will I still be able to file and pay my sales and use tax via ACH? No. As of August 1, 2013, EFT ACH is no longer an option for reporting or submitting sales and use tax payments. Taxpayers required to pay with immediately available funds can pay using direct debit by electronically filing for free via bFile; or can pay using a credit card by going online or by calling 1-800-2PAY-TAX (1-800-272-9829). If you are new to bFile, please verify that your financial institution will accept debit transactions. What products are subject to the 9% tax rate? The 9% rate applies to sales of alcoholic beverages as defined in Tax-General Article ยง5-101(b). This includes sales of beer, distilled spirits, and wine, as well as any beverage or cocktail that may contain a mixture of both alcoholic and non-alcoholic components, including an alcoholic mixed drink, a frozen alcoholic cocktail, an alcoholic coffee drink, and a gelatin shot containing an alcoholic beverage. Are there products that contain alcohol that are not subject to the 9% rate? Yes. Only products that are fit for beverage purposes and contain one-half of 1% or more of alcohol by volume are subject to the 9% rate. Other products, such as cooking wine and cooking sherry, as well as vanilla and rum extracts and similar items, are not subject to the 9% tax as they are not intended for beverage purposes. There are many personal care products and cleaning products that contain alcohol as well; however, these items are not included in the definition of alcoholic beverage and therefore are not subject to tax at the 9% rate. What about the sale of mixers, such as grenadine, lime juice, or other flavoring, that are used as a component in an alcoholic cocktail? If you buy a mixed drink that contains both alcoholic and non-alcoholic components, the sale of that beverage will be subject to tax at the 9% rate. However, the 9% tax does not apply to the sale of a bottle of grenadine or similar flavoring or mixer on its own that does not contain one-half of 1% or more of alcohol by volume. Those sales are taxed at the 6% rate unless otherwise exempt. How are sales and/or purchases by a tax exempt organization affected? Effect on sales by exempt organizations: Sales of alcoholic beverages made by specific types of organizations listed in Tax General Article §11-204(b) are also exempt from the 9% tax on alcoholic beverages. Effect on purchases by exempt organizations: Maryland sales and use tax exemptions apply to all purchases for use by the exempt organization, regardless of the applicable tax rate. Therefore, your organization's purchases of alcoholic beverages made to carry on the organization's work are exempt from the 9% tax on alcoholic beverages. * You can access the Maryland Code, including Tax-General Article, online. I own a restaurant and have an alcoholic beverage license. How do I charge tax on sales that include both alcoholic beverages and other taxable items? The tax must be separately calculated on sales of alcoholic beverages at the 9% rate and on sales of food, non-alcoholic beverages, and other merchandise at the 6% rate. The 9% tax amount must be listed separately from the 6% tax amount on the bill of sale. If I sell food and beverages to groups of more than 10 persons at my restaurant and I impose a mandatory gratuity charge, how should I charge the tax? For sales made between July 1, 2011 and June 30, 2012, if your sales include alcoholic beverages as well as other items, you must apportion the charge for the mandatory gratuity between the two categories. For example, if the total charge amounts to $300, and of that amount $200 is for sale of food and non-alcoholic beverages and $100 is for the sale of alcoholic beverages, then 2/3 of the amount of the gratuity is subject to the 6% tax rate and 1/3 is subject to the 9% tax rate. In this example, if the gratuity charged is $45, the 6% rate on the gratuity would be $1.80 (2/3 times $45 times 6% = $1.80) and the 9% rate on the gratuity would be $1.35 (1/3 times $45 times 9% = $1.35). The bill, therefore, would reflect total tax at 6% of $13.80 ($230 at 6%) and total tax at 9% of $10.35 ($115 at 9%). Due to a 2012 law change, for sales made on and after July 1, 2012, charges for alcoholic beverages are subject to tax at the 9% rate and charges for mandatory gratuities are subject to the 6% rate regardless of whether the gratuities relate to sales of alcoholic beverages or sales of food and non-alcoholic beverages. I heard that Maryland allows direct shipment of wine from certain vendors. How will the 9% tax on the sale of alcoholic beverages apply to this situation? To make direct wine shipments to Maryland residents, the law requires that a wine manufacturer be issued a direct wine shipper permit and the manufacturer comply with existing tax laws, including the requirement to collect sales and use tax. Therefore, the manufacturer will be required to charge sales and use tax at the rate of 9% on sales of wine to Maryland residents. If the manufacturer imposes a separately stated shipping charge, that amount will not be subject to tax. However, if the shipping charge is not separately stated, or if the shipping charge includes a handling charge, whether that shipping and handling charge is separately stated or not, then the 9% rate will apply to the charge for the wine, and the 6% rate will apply to any other separately stated taxable charge made in connection that the sale of the wine. I sometimes have my local liquor store special order an alcoholic beverage for me that they normally do not carry in inventory. The store charges me for the amount that it costs to have the item delivered to the store (inbound freight charge) and includes that amount in the taxable price of the product. Is this correct? Yes. An inbound freight charge is part of taxable price. If the inbound freight charge is imposed on the sale of an alcoholic beverage, then the vendor must collect tax on the price that includes the inbound freight charge, whether separately stated or not. For separately stated inbound freight charges on sales made prior to July 1, 2012, the 9% rate applies to all charges, and for sales made on and after that date, the 9% rate will apply to the charge for the alcoholic beverage, and the 6% rate will apply to the charge for inbound freight. How will the sales and use tax apply to sales of gift baskets that include alcoholic beverages as well as other items? You may apportion the sales price between the alcoholic beverages and the other merchandise and charge the 9% sales and use tax on the taxable price of the alcoholic beverages and the 6% sales and use tax on the price of the other items. If the basket includes non-taxable merchandise as well, and you allocate the sales price among the three categories of merchandise (alcoholic beverages, taxable merchandise, non-taxable merchandise), then you may exclude the non-taxable items from the taxable price. However, if you charge a lump-sum price for the gift basket, and you do not apportion the sales price among the categories of items, you must collect the sales and use tax at the higher 9% rate on the entire price of the basket. I am a caterer and I provide a detailed listing of all of the items that I use in catering an event for my customer. Included in my itemized bill are charges for the food and beverages that I provide, as well as charges for the equipment and supplies that I use and the charges for the servers and the bartenders. How do I apply the different tax rates to my operation? For sales made prior to July 1, 2012, itemized charges for equipment, supplies and labor that are directly and predominantly related to the sales of alcoholic beverages should be taxed at the 9% rate. Itemized charges for equipment, supplies and labor that are directly and predominantly related to the sales of food and non-alcoholic beverages should be taxed at the 6% rate. For sales made on and after July 1, 2012, itemized charges for alcoholic beverages are subject to tax at the 9% rate and all other charges are subject to tax at the 6% rate. I am a caterer and I either charge a per-person amount or just issue a lump-sum bill. If I am including alcoholic beverages in my sales, how do I apply the tax? If you do not itemize your bill in the manner discussed in Question 15 and instead elect to bill a lump-sum price for the entire bill or per-person charge, you must charge the higher 9% tax rate on the entire bill. I have a signed contract for a catered event. What tax rate applies to the alcoholic beverages that will be sold with this event? Alcoholic beverage sales for specific events are subject to the 9% sales and use tax. I have contracted for the right to provide all catering services at a venue from January 1, 2011 through December 31, 2011. The price, amounts of food and beverages, and other catering specifics are determined on an event-by-event basis and are not included in the contract to provide catering services for the year. What sales and use tax rate will apply to my sales of alcoholic beverages beginning on July 1, 2011? If the contract for the specific event is fully executed before July 1, 2011 and contains all material terms such as price, quantities, selections of food and beverages (alcoholic and non-alcoholic), and the names of the parties to the contract, the tax rate on the taxable price of alcoholic beverages is 6%. If the contract for the specific event is fully executed on or after July 1, 2011, but prior to July 1, 2012, and it contains all material terms, such as price, quantities, selections of food and beverages (alcoholic and non-alcoholic), and the names of the parties to the contract, then the tax rate on the taxable price of alcoholic beverages is 9%. If the contract for the specific event is fully executed on or after July 1, 2012, and contains all material terms such as price, quantities, selections of food and beverages (alcoholic and non-alcoholic), and the names of the parties to the contract, then the tax rate on the charge for the alcoholic beverages is 9% and the tax rate on all other charges is 6%. When must the caterer report and pay to the Comptroller the tax due on an executed catering contract? The tax, whether at the rate of 6% or 9%, must be charged by the caterer at the time the contract is executed. The caterer must then report and pay the tax to the Comptroller by the required due date. I offer a Champagne Brunch at my restaurant on weekends. The customers are charged a fixed amount that allows them a buffet-type all-you-can-eat event and one or more alcoholic beverages. How do I apply the tax to this situation? You must apportion your sales price between the taxable price of the alcoholic beverages and the taxable price of the food and non-alcoholic beverages and charge the tax accordingly. If you do not separately state the charges subject to the different rates, you must charge the higher 9% rate on the entire charge to the customer. I offer a meal with a complimentary alcoholic beverage at my restaurant on Sunday mornings. How do I apply the tax to this situation? The cost of the meal and any other related taxable charges will be taxed at the 6% rate. You must pay the 9% sales and use tax rate on your purchase of any alcoholic beverages that are provided to customers at no charge. If I buy a bottle of wine or other alcoholic beverage while visiting another state, will I owe the 9% tax when I bring that bottle into Maryland? That depends. If you pay a sales tax to the vendor in the state where you made the purchase and the rate of that tax is equal to or greater than the 9% rate, then you will not owe any additional tax when you bring the item into Maryland. However, if you are not charged a sales tax on your purchase, or if the amount of tax you pay is less than 9%, you will owe Maryland tax on the difference between the rate you paid to the other state and the 9% Maryland rate. You should also be aware that if you bring alcohol in excess of the quantity limitations specified in Tax-General Article §5-104(c) you will also owe the alcoholic beverage tax in addition to the sales and use tax. I own a liquor store and in addition to sales of alcoholic beverages and other merchandise I rent beer kegs and taps. I charge an amount for the beer contained in the keg and then I charge a deposit to ensure that the equipment is returned. When the equipment is returned, the deposit is refunded in full to the customer. However, sometimes the customer does not return the equipment and I retain the deposit as compensation. How will the 9% tax on the sale of alcoholic beverages apply to my situation? Only the charge for the beer is subject to the 9% rate. Separately stated charges for rental of equipment are taxed at the 6% rate. If the equipment is not returned and you retain the deposit as payment for the equipment, the deposit will be considered to be the charge for the equipment and will be subject to tax at the 6% rate. I operate a night club that provides live music and I make sales of food and beverages in connection with the entertainment. How do I apply the admissions and amusement tax on sales of alcoholic beverages that are subject to the 9% sales and use tax rate? Because a sale that is subject to both sales and use tax and admissions and amusement tax is capped at 11%, you must charge the 9% sales and use tax on the sale of the alcoholic beverages, and apply the admissions and amusement tax to the gross receipts from the sale of alcoholic beverages at a rate no higher than 2%, even if the jurisdiction normally imposes a higher rate. Your gross receipts from sales of food and non-alcoholic beverages that are taxed at a 6% sales and use tax rate are subject to admissions and amusement tax at a rate no higher than 5% due to the cap. How will the 9% tax apply to events such as wine-tasting or wine festivals, where I am charged a fixed admission that allows samples at no extra charge? This will depend on whether the charge for entry is truly an "admission" charge as opposed to being a charge for the sale of the wine. If you are allowed entry to the venue without payment of any charge, and the only payment collected is from those who participate in the tastings, then the charge will be considered to be a sale of an alcoholic beverage and the 9% sales and use tax will apply. On the other hand, if everyone has to pay the admission in order to gain entry into the venue, regardless of whether they participate in the tastings or not, then the sales and use tax does not apply to the sale of admission tickets. However, depending on the jurisdiction, the gross receipts from the sale of the tickets may be subject to the admissions and amusements tax. In this case, the entities that are providing the wine tastings are considered to be the consumer of the products, and must pay the 9% tax on the cost of the wine. I've obtained a license to sell refillable containers (growlers) of draft beer. Are these subject to sales tax? When a customer returns to have a growler refilled, is the growler subject to sales tax again? The refillable containers (growlers) are tangible personal property and are subject to the 6% sales tax rate. The contents of the growler are subject to the 9% tax rate. If the customer is not purchasing the growler, there is no sales tax on a previously purchased refillable container. However, the 9% tax rate applies to the purchase of each refill of an alcoholic beverage. I operate a dinner theater where I charge an admission that allows entry to the show along with a meal and two free alcoholic drinks. How do I apply the tax to my business? You are considered to be the consumer of the food and drinks that you provide and you must pay any applicable sales and use tax on your cost of the food and beverage. You must pay the 9% sales and use tax on your purchase of any alcoholic beverages that are provided to customers at no charge. The gross receipts on your ticket sales may be subject to the admissions and amusement tax depending on where you are located. Purchases for Resale FAQs What is my sales and use tax registration number? Your sales and use tax registration number is an eight-digit number that has been assigned to your business. You'll find your registration number on each sales and use tax return we send you and on your sales and use tax license. How can I protect myself from unnecessary tax liabilities? You must clearly document the reason for all tax-exempt sales. Otherwise you will be held responsible for uncollected tax, plus penalty and interest. You should establish procedures to obtain valid resale certificates at the point of sale, and review your files periodically for accuracy and completeness. Make certain that you do not allow resale exclusions on cash, check or credit card sales of less than $200 when you do not deliver the goods sold directly to the buyer's retail place of business. What should I do with resale certificates my customers give me? You should keep resale certificates on file as part of your business records. You must be able to match your sales records with the appropriate resale certificates for audit purposes. May I accept resale certificates from unlicensed out-of-state customers? No. Retailers licensed and remitting taxes in other states may apply to the Maryland Comptroller's Office for a refund. However, an out-of-state vendor who has been issued a temporary permit to collect the Maryland tax may use the number on that permit to make tax-free purchases for resale at the show for which the permit was issued. Temporary permits bear six-digit numbers and are issued by the comptroller's Special Events Section. Must I fill out a new resale certificate every time I make an eligible purchase? No. If you frequently deal with the same supplier, you may provide that supplier with a blanket resale certificate stating that all purchases are for resale. Then all you have to do is give the supplier your sales and use tax registration number. Is a resale certificate the same thing as an exemption certificate? No. Exemption certificates are issued by the Comptroller of Maryland to qualifying nonprofit organizations and government agencies to make purchases for their own use. The exemption certificate is a wallet-sized card bearing the holder's eight-digit exemption number. Certificates issued to nonprofit organizations have a specific expiration date, presently September 30, 2017 for religious, educational and charitable organizations, cemeteries, credit unions, and volunteer fire companies or rescue squads and September 30, 2017 for certain veterans organizations and their auxiliaries and units. Certificates issued to government agencies have no expiration date. Organizations and government agencies presenting exemption certificates are exempt from the sales and use tax on purchases of materials and supplies to carry out their work. On the other hand, a resale certificate allows a person to make tax-free purchases for resale, not for use. What information should be included on a resale certificate? Although there is no specific form for a resale certificate, it must include a signed statement that the purchase is intended for resale, the purchaser's name and address, and the purchaser's Maryland sales and use tax registration number. What about third-party drop shipments? In a typical transaction, you would sell merchandise to a vendor who is not registered to collect Maryland sales and use tax. The unregistered vendor asks you to deliver the merchandise to a customer in Maryland. In this case, you must: Require the vendor to obtain a Maryland sales and use tax license and provide a valid resale certificate; OR Charge the vendor the tax based on the amount of the sale. You are responsible for collecting or documenting the tax on your sale to the vendor.