As a business owner in Maryland, you have an obligation to collect sales tax on any goods that you sell. Every week, bi-weekly or monthly, you're required to send those taxes to the State of Maryland. Failure to collect and/or send in these taxes can have significant consequences. The state has the authority to impose penalties and interest which can become incredibly costly. If you have received a notice from the IRS regarding delinquent sales and use taxes, do not hesitate to contact the tax attorneys at Gabaie & Associates, LLC.
Businesses Required to Collect & Report Taxes
Taxes are assessed whenever goods are sold or purchased. When goods are sold and purchased within the state of Maryland, a sales tax will apply. When goods are sold and purchased outside of the state of Maryland, a use tax will apply.
Sales Tax: Businesses that operate in the state of Maryland and sell goods within the state have a legal obligation to collect sales tax. Most goods are subject to a six percent (6%) tax. The primary exception is for sales of alcohol, which are subject to a nine percent (9%) tax. Any taxes that are collected must be recorded and then sent to the state.
Use Tax: If, as a business owner, you purchase materials or goods from outside of the state of Maryland, you may not be required to pay sales tax. In order to ensure that a tax is assessed on your purchase, you must pay a use tax. Underreporting and/or failing to report use tax can have significant legal consequences.
Responsibility for Sales & Use Tax
When the Comptroller's Office learns that a business has failed to remit sales and use taxes, it has the authority to impose penalties and interest. The state will investigate the business by reviewing bank signature cards to determine who in the business has the authority and obligation to pay the bills. The state can penalize anyone within the business who has the authority to write checks and send in the taxes that were due.
This responsibility can be held by almost anyone in the company. If you have the ability to write checks you can be held responsible. This is true even if you are a secretary or clerk. The state of Maryland only cares that you had the authority to send in a check and failed to do so.
Penalties for Sales & Use Tax Violations
The state of Maryland will impose penalties and interest on any sales and use taxes that are not filed and/or are underreported. Since the state can attempt to collect unpaid taxes indefinitely, added interest and fees can increase your tax liability to an amount much higher than the initial tax amount. Continued failure to pay your taxes can also result in state-issued levies and liens. In some situations, the state may also decide to revoke your sales and use license, which can be a significant blow to your business operation.
Consult a Maryland Sales & Use Tax Attorney
If you have received a notice from the state of Maryland about delinquent sales and use tax filings, it is important to get the help of an experienced tax attorney. At Gabaie & Associates, LLC, our Maryland tax attorneys will thoroughly review your tax situation to determine the best strategy moving forward. We can help to contest the state's decision and/or negotiate an alternative payment method that works for you. It may even be possible that you can settle your tax liability. Your unpaid tax liability will accrue interest and fees until you have resolved the issue, so it is important to act quickly. Call us today to request a free consultation.