Out of State Purchases

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. In addition, 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.

For self-manufactured good brought 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.

If your average tax liability for out-of-state purchases is more than $100 per month, you are required to report and remit the tax every month. If your tax liability is less than $100 per month, you may file on a quarterly basis.

If you have a sales tax license, you should report out-of-state purchases on line 10 of your sales and use tax return. If you are not licensed, you may download a use tax return to report taxes due on out-of-state purchases. If you make out-of-state purchases regularly, contact us and we will put you on our mailing list to receive reporting forms routinely.

Enforcement

The Comptroller's Office regularly audits sales and use tax licensees as well as service, construction and professional businesses to recover taxes on out-of-state purchases. The Comptroller's Office also collects the tax directly from individuals on more expensive items.

Our nexus unit is responsible for discovering unlicensed sellers doing business in the state. If you are concerned about an out-of-state vendor who is actively engaged in business in Maryland and does not collect the sales and use tax where applicable, you may contact the nexus unit at 410-767-1582.