If you sell products or services that reach Maryland customers, you may have a legal duty to collect Maryland sales tax—even if your business is based out of state. In Maryland, this sales and use nexus is what determines if your business is required to collect and remit tax.
If you’re unsure whether you have economic nexus in Maryland, you can run three simple tests.
Test #1: Do You Have a Physical Presence in Maryland?
If your business has a real tie to Maryland, nexus is usually automatic. That includes:
- A warehouse, office, or storage facility in Maryland
- Inventory held in Maryland (even at third-party or fulfillment centers)
- Employees, agents, or contractors operating in Maryland
If you pass this test, you’ll want to register with the Maryland Comptroller and begin collecting taxes.
Test #2: Revenue or Transactions Thresholds
Even with no physical footprint, remote sellers may still trigger nexus if they cross certain thresholds. In Maryland, you must collect tax if, during the current or prior calendar year, you have:
- More than $100,000 in gross sales delivered into Maryland; or
- At least 200 separate transactions into Maryland
Once you hit either threshold, register and begin collection.
Test #3: Marketplace Facilitator Rules
If you sell through marketplaces like Amazon or Etsy:
- Since October 1, 2019, Maryland requires marketplace facilitators to collect and remit sales tax on behalf of third-party sellers for Maryland deliveries.
- Even sales made through those platforms still count toward your nexus thresholds (so they can push you over the $100K or 200 transaction barrier).
- If the marketplace handles all tax collection for a sale, you may not need to report that particular transaction, but not all your sales may be covered this way.
What You Should Do (If You Have Nexus)
- Register with Maryland’s Comptroller for a sales and use tax permit.
- Collect sales tax on taxable goods or services delivered to Maryland customers.
- File and remit on schedule, according to your permit frequency.
- Monitor your activity. If your business grows, you may hit nexus thresholds mid-year.
The nexus rules can be confusing, but ignoring them risks penalties, back taxes, and audits. Gabaie & Associates, LLC., operating in Baltimore, Columbia, Frederick, and Rockville, MD, helps businesses determine their obligations and stay compliant. Call (410) 358-1500 today to discuss your situation, or schedule a consultation online.
