Sales And Use Tax List Of Tangible Personal Property And .

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LIST OF TANGIBLE PERSONALPROPERTY AND SERVICESSUBJECT TOSALES AND USE TAXPublished byTHE COMPTROLLER OF MARYLANDJANUARY 27, 20220

Table of ContentsA.Taxable Services . 4B.Nontaxable Services . 5A.Aircraft. 6B.Accommodations . 6C.Agricultural and Farming Supplies and Equipment . 7D.Baby and Children’s Supplies . 8E.Books, Magazines, Newspapers and Other Paper Products . 9F.Caterers . 11G.Clothing, Footwear and Accessory Items. 13H.Computer Hardware and Software . 14I.Construction Materials . 14J.Data Centers . 17K.Eyewear . 17L.Flags . 17M. Food and Beverages . 18N.Household Goods and Supplies. 24O.Medicine, Drugs, and Medical Supplies . 25P.Mobile Homes and Modular Buildings . 31Q.Motor Fuel . 31R.Office Supplies and Equipment . 31S.Pets . 32T.Personal Hygiene and Cosmetic Products . 32U.Photography and Videography . 35V.Precious Metal Bullion and Coins . 35W. Rental of Equipment. 35X.Restaurant Equipment and Supplies . 351

Y.Seafood Harvesting Equipment. 37Z.Tobacco Products and Electronic Smoking Devices . 37AA. Electricity, Fuel, Utilities and Equipment . 38BB. Vehicle Rentals and Sales . 40CC. Vending Machines Sales . 40A.Digital Products . 41B.Digital Code. 42C.Exemptions to the Sale of Digital Codes and Digital Products . 43A.Sales During a Tax-Free Period. 43B.Exempt Charitable or Nonprofit Sales . 44C.Sales to Federal, State, and Local Governments . 44D.Parent-Teacher Organization Fundraisers . 44E.Property Used Directly in Film Production Activity . 452

IntroductionThe following is a list of tangible personal property and services the sale of which is subject tosales and use tax. This is not a complete list but may be used as a guide in determining thetaxability of tangible personal property and services. This list is published pursuant toMaryland Tax-General Article §11-109.A rebuttable presumption exists that any sale in Maryland is subject to the sales and use tax.Whether a sale of a particular good or a service is taxable depends on many factors. You shouldconsult the applicable law, regulation, and the Comptroller’s tax publications for more detailedexplanations of property and services that are subject to sales and use tax.The Comptroller’s office is required to update and detail any additions, deletions, and revisionsto the publication pursuant to Maryland Tax-General Article §11-109(b). The Comptroller’soffice did not make any additions, deletions, and revisions on the last quarterly publicationdated January 1, 2022. In response to recent inquiries received from taxpayers, theComptroller’s office has published the following additions to the publication on January 27,2022:III. Tangible Personal Property, section O: Medicine, Drugs and Medical Supplies.The sales of respirators such as KN95 and N95 masks and infectious drug testsincluding covid tests are not subject to sales and use tax. The sale of a urine drugtest is subject to the sales and use tax.Comments about the content of this publication may be sent to sut@marylandtaxes.gov.Effective March 14, 2021, the sales and use tax applies to the sale of digital codes and digitalproducts. For more information about digital codes and digital products, please Business TaxTip #29.3

ServicesCharges for services are generally exempt from Maryland sales and use tax unlessthey are specifically taxable under Maryland law.A. Taxable ServicesMaryland law states that a charge for the following services is subject to sales and use tax:1 Fabrication, printing, or production of tangible personal property by special orderCommercial cleaning or laundering of textiles for a buyer who is engaged in a businessthat requires the recurring service of commercial cleaning or laundering of the textilesCleaning of a commercial or industrial buildingCellular telephone or other mobile telecommunications service“900”, “976”, “915”, and other “900”-type telecommunications serviceCustom calling service provided in connection with basic telephone serviceTelephone answering servicePay per view television serviceCredit reportingSecurity service, including a: Detective, Guard, or Armored Car Service; and Security Systems ServiceTransportation service for transmission, distribution, or delivery of electricity or naturalgas, if the sale or use of the electricity or natural gas is subject to the sales and use taxPrepaid telephone calling arrangement2Privilege given to an individual to consume wine that is not purchased from or by arestaurant, club, or hotelMaryland law also states that a charge for a mandatory gratuity or service charge in thenature of a tip for serving food or any type of beverage to a group of more than 10individuals is subject to sales and use tax.31Tax-General Article § 11-101(m).Please see Tax-General Article § 11-108 for additional information on the sale or recharge of a prepaid telephonecalling arrangement.3Tax-General Article § 11-104(i).24

B. Nontaxable ServicesMaryland law states that a charge for the following services is not part of taxable price andthus, is not subject to sales and use tax:4 A personal, professional, or insurance service, that is not a defined taxable service andinvolves a sale as an inconsequential element for which no separate charge is made.Custom computer servicesA delivery, freight, or other transportation service for delivery directly to the buyer bythe vendor or by another person acting for the vendor, unless the transportationservice is a taxable serviceA labor or service for application or installationA finance charge, interest, or similar charge for credit extended to the buyerA mandatory gratuity or service charge in the nature of a tip for serving food orbeverage to a group of 10 or fewer individuals for consumption on the premises of thevendorAny service for the operation of equipment used for the production of audio, video, orfilm recordingFabrication, processing, or service by a sawmill, of wood products for mine use in whichthe miner retains title5The charge for labor to repair or alter existing tangible personal property belonging toanother for the purpose of restoring the property to its original condition or usefulness isnot subject to sales and use tax.6Tangible Personal PropertySales of tangible personal property are subject to Maryland sales and use taxunless they are specifically exempt under Maryland law.74Tax-General Article § 11-101(l); see COMAR 03.06.01.08.Tax-General Article § 11-212(1).6COMAR 03.06.01.03.7Tangible personal property is defined as “corporeal personal property of any nature.” Tax-General Article § 11101(k)(1)55

Maryland law specifically states that the following items are tangible personal property.8Thus, the sale of these items is subject to sales and use tax: An accommodation.Farm equipment9Wall-to-wall carpeting installed into real estateCoalElectricityOilNuclear fuel assembliesSteamArtificial gasNatural gasA. AircraftThe sale of aircraft is subject to sales and use tax. However, there is an exemption for thesale of aircraft used primarily to cross state lines in interstate or foreign commerce, as wellas to the sale of a replacement part or other tangible personal property to be usedphysically in, on, or by that aircraft.10In addition, the sale of materials, parts, or equipment used to repair, maintain or upgradean aircraft or the avionics systems of an aircraft if installed on an aircraft that has amaximum gross takeoff weight of less than 12,500 pounds is exempt from sales and usetax.11 The exemption does not apply to the sale of equipment and tools used to performthe work. The sale of materials, parts, or equipment used to repair, maintain or upgradeaircraft that is installed on an aircraft that has a maximum weight of 12,500 pounds ormore is subject to sales and use tax unless that aircraft is used principally to cross statelines in interstate or foreign commerce.12B. AccommodationsThe sale of an accommodation is subject to sales and use tax. An accommodation is theright to occupy a room or lodgings as a transient guest. A sale of an accommodation is8Tax-General Article § 11-101(k).Please see Title III, C. of this document.10Tax-General Article 11-208(c); COMAR 03.06.01.26.11Chapter 638 of the Acts of 2020 is effective July 1, 2020.12Chapter 638 of the Acts of 2020.96

taxable whether made by an accommodation provider,13 an accommodationsintermediary,14 or any other vendor. For more information on determining whether salesof accommodations are subject to sales and use tax, please Maryland Sales and Use TaxAlert 05-16.Dorchester CountyA hotel surcharge of 2.5% is imposed, in addition to sale and use tax, in Dorchester Countyon the sale of a right to occupy a room or lodgings as a transient guest in an establishmentthat offers at least 380 rooms.15Lodging at Corporate Training CenterAn exemption applies to sales of the right to occupy a room at corporate training center.16C. Agricultural and Farming Supplies and EquipmentThe sale of certain items is exempt from sales and use tax if used for agriculturalpurposes.17 Unless used for another purpose, the following items are exempt: LivestockFeed or bedding for livestockSeed, fertilizer, fungicide, herbicide, or insecticideBaler twine or wireFuel for use in farm equipment or a farm tractorSales of agricultural products by a farmerThe sale of the following items is exempt from sales and use tax if bought by a farmer andused for an agricultural purpose: Container to transport farm products that the farmer raises to marketFarm vehicle, as defined in § 13-911(c) of the Transportation Article, when used infarmingMilking machine, when used in farming13“Accommodations provider” means a person who owns, operates, or manages an accommodation and makesthe accommodation available for sale or use to a buyer.14“Accommodations intermediary” means a person, other than an accommodations provider, who facilitates thesale or use of an accommodation and charges a buyer the taxable price for the accommodation.15Tax-General Article §§ 11-102(b); 11-104(e).16Tax-General Article § 11-231.17Tax-General Article § 11-201. See Business Tax Tip #11 for additional information on agricultural products.7

Fabrication, processing, or service, by a sawmill, of wood products for farm use in whichthe farmer retains titleFarm equipment when used to: raise livestock prepare, irrigate, or tend the soil plant, service, harvest, store, clean, dry, or transport seeds or cropsFarm equipment that is used for traditional agricultural purposes is exempt from sales anduse tax even if attached to real property. Examples of farm equipment include: BalersForage harvestersBeekeeping equipmentGrain handling equipmentBindersHaybinesBlowersIrrigation equipmentChoppersLivestock/poultry fansConveyersMilk cansCorral Handling EquipmentMilking machinesCribsMilk coolersCrushersMowersCultipackersPoultry DryersSeed cleanersDustersSeedersEgg handling equipmentShellersElevatorsSortersFarm gradersSprayersFarm loadersStorage tanksFarrowing cratesSubsoilersFeed grindersVaccinating panelsFeedersSales of hand tools, carpentry, cleaning and maintenance supplies, materials to beincorporated into real property, and materials purchased for personal, rather thanagricultural use, are subject to the sales and use tax. The following are examples of nonexempt items:8

AntifreezeBarbed wirePailsBroomsPaintCementPaint brushesClothingPosthole diggersDetergentsPrunersElectric drillsRakesThree-wheeled vehiclesFencing materialRiding lawnmowersGeneral water systemsRoofing materialsHammersSandpaperHome appliancesSawsIncineratorsShovelsLight bulbsSnow blowersLubricantsD. Baby and Children’s SuppliesThe sale of clothing, equipment, furniture, and supplies for the care of babies and childrenis generally subject to sale and use tax. The following is a list of taxable items: Accessories, such as nursing bottles, liners, nipples, teething beads, teethers, etc.BibsCar seats, infantCrib blanketsDiaper bagsDiaper pinsDiapers, cloth and disposable, for babies and infantsDiaper serviceFurniture including cribs, high chairs and booster seatsBaby video monitorsReceiving blankets for infantsRubber pantsWipes, babyThe sale of items manufactured for initiating, supporting, or sustaining breast-feeding isexempt from sales and use tax.18 A sale of the following items is not subject to sales anduse tax:18Tax-General Article § 11-211(b)(19).8

Breast pumpsBreast pump kitsNipple enhancersBreast shieldsBreast shellsSupplemental nursing systemsSoftcup feedersFeeding tubesBreast milk storage bagsPeriodontal syringesFinger feedersHaberman feedersPurified lanolinThe sale of the following items is also not subject to sales and use tax: Baby oilBaby powderDiaper creamInfant breathing monitorsFormulaE. Books, Magazines, Newspapers and Other Paper ProductsSales and use tax is imposed on the sale of books, magazines, newspapers, stationery andpaper office supplies. Tax is imposed if the item is printed on tangible personal property orif transferred by other physical means. However, sales and use tax does not apply to thesale of these items if they are electronically, or digitally delivered, streamed or accessed.A sale of the following items is subject to sales and use tax: BiblesBooksComic booksCrossword and game booksDictionariesGreeting CardsInvitationsMagazinesDirect mail advertising distributedin-State 9Mail order catalogues distributedin-StateNewspapers distributed by thepublisher at a chargeOffice paperPeriodicalsPhotographsSchool suppliesSubscription ListsTextbooksYearbooks

The sale of the following items is exempt from sales and use tax even if transferred byphysical means: Newspapers that are distributed by the publisher at no charge on at least a monthlybasisDirect mail advertising literature and mail order catalogues that will be distributedoutside the StateComputerized mailing lists to the extent used for providing addresses to which directmail advertising literature and mail order catalogues will be distributed outside theStateGovernment documents, publications, records, or copies by the federal or State or alocal government or an instrumentality of the federal or State or a local governmentF. CaterersIn general, a licensed caterer's charges for food, beverages, and any services provided fora customer's specific event are subject to sales tax.19 However, there is exemption fromsales and use tax for certain purchases made by licensed caterers.Exemption for CaterersSales and use tax does not apply to purchases of materials, equipment, or supplies madeby a licensed caterer if the materials, equipment or supplies meet all the followingconditions:1)2)3)are to be used by the caterer to perform a contract for catering services; andare intended for resale by the caterer; andare to be used directly and predominantly by the caterer performing a cateringcontract that includes the provision of food and beverages.20The exemption only applies to licensed caterers. A licensed caterer is: any business or individual that offers catering services in connection with a specificevent;is not primarily engaged in the preparation and service of food to the general publicat the facility; and19Please see Tax Tip – Sales and Use Tax Exemption for Caterers available at the following link:https://marylandtaxes.gov/forms/Business Tax Tips/bustip27.pdf20Chapter 644 of the Acts of 2020, took effect on July 1, 2020.11

holds a food service facility license issued by the Department of Health and HumanServices.Qualifying Items Tents, temporary carpeting and flooringGenerators, HVAC Systems, portable restroomsLightingAudio or visual equipmentPipe and drapeFresh flower arrangements and live plants acquired by the caterer under acontract with its customers that provides the customer with the right to take thefresh flower arrangements and live plants with them at the conclusion of the eventDecorations and balloonsIce sculpturesGames and other children’s activities, photo booths, casino tables andservicesCostumes (but not standard uniforms for staff)Security servicesItems That Do Not Qualify for the Exemption Linens, tablecloths, chair covers, napkins, and other coveringsTables, chairs, portable bars, tray tablesChina, silverware, utensils, tabletop and glass rentals;Items used in preparing and serving the meal, such as chafing dishes, trays, sterno,pots, pans, containers, serving utensils, food heating and chilling devices, and iceItems used to deliver the food and supplies, including any vehicles, boxes, andcontainersItems used in the clean-up of the party, event or function, including cleaningagents, trash bags, trash cans, and other waste receptacles, mops, brooms,vacuums, buckets, sponges, and clothsUniforms for servers and other employeesFountains, slides, luges, fondue equipment and other items that are used toprovide or serve any food or drinkAny purchases that are returned to the caterer’s inventory for use at other parties,events, or functions.12

G. Clothing, Footwear and Accessory ItemsGenerally, the sale of all clothing, footwear and accessory items is subject to sales and usetax. There is a limited exemption for sales of clothing and footwear during Tax-Free Weekfor Back-to-School Shopping.21 The sale of clothing that qualifies as a medical supply wouldalso be exempt from sales and use tax.The following is a non-exhaustive list of clothing, footwear, and accessory items the sale ofwhich is subject to sales and use tax:Clothing, Footwear, and Accessories ApronsAthletic wearBeltsBelt bucklesBriefcasesBridal apparel and accessoriesCoatsCorsages and boutonnieresHalloween CostumesDress shirtsFur real or imitationGlovesGraduation caps and yhoseHunting clothingLeotards and tightsLeather wearing apparelLingerieLuggageNightgowns 21PajamasPantsPocket squaresProm dressesPursesRaincoatsSafety clothingScarvesScout uniformsScrubsShoes, all typesShoe lacesShoe dye and polishShoe treesShoe soles and heels for shoerepairSuspendersStockingsSupport-hoseSwimming SuitsTiesT-shirtsTuxedosUnderwearWallets and billfoldsPlease see Section IV, A. of this document and Tax-General Article § 11-228 for more information on thisexemption.13

Watches and watchbandsWork clothesUmbrellasUniformsH. Computer Hardware and SoftwareComputer HardwareGenerally, tax is imposed upon the sale or use of computer hardware. The following is alist of computer hardware the sale of which is subject to sales and use tax: Cellular telephones, smartphones, and accessoriesComputer tablets, e-readers, and accessoriesDesktop computer hardware and accessories such as monitors, keyboards, and mousedevicesGPS navigation equipment servicesLaptop computersSatellite radio equipmentVideo and Audio EquipmentVideo Game EquipmentComputer SoftwareThe sale of canned software products accessed by physical medium such as a CD-ROM,load-and-leave software, etc. is subject to sales and use tax. Canned software is softwarethat is not designed, created and developed for and to the specifications of an originalpurchaser.Sales and use tax does not apply to a sale of custom computer software services relatingto procedures and programs.22 Sales and use tax also does not apply to the sale of certaincomputer programs.23Digital Products and Digital CodeEffective March 14, 2021, the sales and use tax applies to the sale of a digital product ordigital code. Please see Title IV. Digital Products and Digital Codes for more information.I. Construction MaterialsThe sale of tangible personal property to a person who will use or resell it in the form ofreal property is taxable. Therefore, a person who constructs, improves, alters, or repairs2223See Tax-General Article § 11-219.See Tax-General Article § 11-225.14

real property shall pay sales and use tax on all materials purchased that will beincorporated into real property.The retail sale or use of all equipment, tools, expendable supplies, and other items whichare used to improve real property and are not incorporated into the realty, is subject totax in all instances.SignsSigns are tangible personal property. Thus, the sale of a sign is generally subject to salesand use tax.24 The following are examples of signs which, when installed, are subject tosales and use tax: Billboard signs Freestanding signs Signs affixed to a building Hanging signs Portable signs Posters BannersThe following signs are considered to be improvements to real property: Signs or plaques embedded into a wall or floor of a building with the intent to bepermanent and which cannot be removedStreet or traffic signs installed for governmental entities25Wall-to-Wall CarpetingThe sales and use tax applies to the sale of wall-to-wall carpeting that is installed into realestate, regardless of the purpose, method, or permanency of its installation.26Exemption for Certain OrganizationsA person who, because of a contractual obligation, purchases material that will beincorporated into the real property of a private, nonprofit charitable, educational, orreligious organization, or volunteer fire, ambulance, or rescue company or squad, located24See COMAR 03.06.01.36 for additional information on the sale of signs.COMAR 03.06.01.36(E).26Tax-General Article § 11-101(k)(2)(ii).2515

in Maryland, may use the exemption certificate issued to the organization to purchase thematerial tax-free.Exemption for the Sale of Geothermal Equipment or Solar Energy EquipmentSales and use tax does not apply to the sale of the following:27 Geothermal equipmentResidential wind energy equipmentSolar energy equipmentExemption for Redevelopment AreasThe sales and use tax does not apply to a sale of construction material or warehousingequipment if the material or equipment is purchased by a person solely for use in aspecified redevelopment area and the buyer provides the vendor with evidence ofeligibility for the exemption issued by the Comptroller. The following is a list of specifiedredevelopment areas: a “target redevelopment area” in Baltimore County; 28a “qualified opportunity zone” in Baltimore County;29the Laurel Park Racing Facility Site or Pimlico Site;30a “target redevelopment area” in Washington County31; anda “federal facilities redevelopment area” in Cecil County.32Exemption for Public School FacilitiesThe sales and use tax does not apply to the sale of construction material is purchased by aperson solely for use in furtherance of the provisions of Title 10, Subtitle 6 of the EconomicDevelopment Article for the construction or redevelopment of a public school facility thatis managed by the Maryland Stadium Authority.3327See Tax-General Article § 11-230 and COMAR 03.06.01.43 for the definition of these items and additionalguidance.28Tax-General Article § 11-232.29Tax-General Article § 11-238.30Tax-General Article § 11-236.31Tax-Genera Article § 11-238.32Chapters 281 and 282 of the Acts of 2021.33Tax-General Article § 11-241.16

J. Data CentersSales and use tax does not apply to a sale of qualified data center personal property for ause at a qualified data center if certain conditions and requirements are met. 34 Foradditional information on the sales and use tax exemption for data centers, please seeTax Tip 28 - Sales and Use Tax Exemption for Personal Property Used to Establish or Operate DataCenters available at https://marylandtaxes.gov/forms/Business Tax Tips/bustip28.pdfK. EyewearGenerally, the sale of eyewear is subject to sales and use tax. Sales of the following itemsis subject to sales and use tax: BinocularsContact lenses cleaning solutionsMagnifying glassesOpera glasses and field glassesNon-prescription or plano sunglassesA sale of the following items is exempt from sales and use tax: Corrective contact lensesEye drops or wetting solutions placed into the eyeCorrective eyeglassesCorrective or prescription sunglassesL. FlagsMaryland law provides an exemption from sales and use tax the sale of certain flagsregardless of their size.35 A sale of the following flags is exempt from sales and use tax: Maryland State flagsUnited States flagsPrison of war flags or missing in action flags honoring and remembering militarypersonnel who have served in the armed forces of the United StatesSales and use tax applies to the sale of the following items: Other state flags34Tax-General Article § 11-239.35Tax-General Article § 11-205.17

Other country flagsNovelty flagsAny flag not specifically exempted by statuteOther tangible personal property that has a Maryland, United States, POW, or MIA flagplaced on the itemM. Food and BeveragesSales and use tax is generally not imposed on food and beverages sold by a substantialgrocery or market business unless it falls within the definition of food for immediateconsumption or consumption on the premises of the buyer or a third party.36 Sales of foodand beverages made by other entities are subject to tax.What Sales of Food are Exempt under Maryland Law?Sales of food for consumption off the premises by a food vendor who operates asubstantial grocery or market business at the same location where the food is sold. Asubstantial grocery or market business is one in which at least 10% of food sales are salesof grocery or market items.Grocery or market food items include the following:36 Beverages, but not including alcoholic beverages, bottled water, carbonatedbeverages, and soft drinks, including drinks that contain less than 10% fruit orvegetable juices Condiments, herbs, jams, jellies, spices, syrups, and other flavorings Dairy products, including frozen dairy products such as ice cream and frozen yogurtsold in quantities of one pint or larger, but not including items packaged or sold asready-to-eat single servings Dietary and nutritional supplemen

Jan 01, 2022 · Maryland law states that a charge for the following services is subject to sales and use tax:1 Fabrication, printing, or production of tangible personal property by special order Commercial cleaning or laundering of textiles