Maryland Tax Alert: Comptroller Submits Draft Emergency Regulations in Response to Wayfair

August 10, 2018

On August 2, 2018, the Maryland Comptroller submitted a proposed emergency regulation to the General Assembly that would permit the Comptroller to require remote sellers with no physical presence in the state to collect Maryland sales tax on in-state sales. The proposed emergency regulations come in response to the U.S. Supreme Court’s recent ruling in South Dakota v. Wayfair.

The Wayfair decision, in overturning the “physical presence” sales tax nexus standard established in Quill Corp. v. North Dakota, upheld the constitutionality a South Dakota’s law that established a sales tax collection requirement if a seller’s annual in-state sales exceed $100,000 or if a seller engages in 200 or more transactions involving in-state deliveries of goods or services. The decision sees the longstanding “physical presence” nexus replaced with an “economic nexus” standard, which states across the country are quickly adopting.

Maryland’s regulation mirrors the South Dakota statute that was upheld by the Court.  The emergency regulation amends the state’s definition of an “out-of-state vendor” required to collect Maryland sales tax to include any business that sells tangible personal property or taxable services for delivery in the State, if during the previous calendar year or the current calendar year, the business either has gross revenue from such sales that exceed $100,000 or has 200 or more separate in-state transactions for such sales.

The proposed regulation requires remote sellers meeting the criteria above to being collecting Maryland sales tax on October 1, 2018. The General Assembly’s Joint Committee on Administrative, Executive, and Legislative Review have not yet scheduled a hearing on the proposed regulation. However, it is anticipated the regulation will be easily approved.

If you have any questions about the impact of the Wayfair decision on your business, please contact Michael Colavito or one of our tax advisors at 301.231.6298.