Sales and Use Tax Compliance in Maryland: What You Should Know

If you’re a small‑business owner in Maryland, keeping your sales and use tax (SUT) compliance on track is a core part of protecting your business from disruptive audits, unexpected tax bills, fines, and penalties. 

At S.H. Block Tax Services, we help business owners build a smart compliance posture so that they are audit‑ready, not audit‑reactive.  

Here are some tips on how to proactively manage SUT that covers Maryland‑specific rules, practical steps, and how we can support you every step of the way. 

Why Proactive SUT Compliance Matters

Imagine you’ve just launched or grown your business: you’re selling goods or services in Maryland. Maybe you sell online or offline.  

The day‑to‑day of running the business makes it easy to let SUT compliance fall to the bottom of the to‑do list. But the Comptroller of Maryland’s Compliance Division is active and purposeful. Compliance failures in SUT can cause cash‑flow shocks, unexpected assessments, and even threaten business continuity.  

Rather than wait for an audit letter, you should generally treat SUT compliance as a business resilience measure. You’ll sleep easier, keep your focus on growth, and avoid the scramble when the state knocks on your door. 

Know the Maryland SUT Landscape

Before diving into compliance tips, you must understand the terrain. 

What is “Sales Tax” vs. “Use Tax”?

• Sales tax: When you sell goods or services in Maryland, you typically collect sales tax (unless exempt). The tax is added to the transaction and remitted to the state.
• Use tax: When taxable goods or services are used, stored, or consumed in Maryland but the sales tax was not collected (for example, purchases from out‑of‑state vendors), you may owe use tax. Many Maryland businesses often overlook this.

Maryland’s SUT system requires registration, correct classification, and timely filings through the Maryland Tax Connect system.  

Recent Rule Changes You Should Watch

Maryland recently expanded its taxable categories. Effective July 1, 2025, certain data services, IT services, and software publishing services are subject to the 3.0% sales and use tax. If your business (or your clients) falls into those categories, you must align your compliance now. 

Filing, deadlines and incentives

Filing returns on time matters. SUT returns are generally due on the 20th day of the month following the period. Timely filers may also be eligible for small discounts (1.2% of first $6,000 collected, 0.9% above that). 

Build Your SUT Compliance Habit

Let’s walk through some consistent, practical steps toward maintaining compliance. 

1. Ensure you’ve got the right team

Whether in‑house or outsourced, your team needs to understand the shape of your business. 

• If you’re a high‑volume retailer, you should have operators fluent in item‑level taxation, POS mapping, exempt‑sales review and vendor use tax risk.

• If you’re in niche categories (e.g., vape, auto repair, hospitality), your team needs to keep those specific tax exposures front of mind.

At S.H. Block, we’ve seen how the business with the wrong tax‑staff mix finds itself scrambling when the Comptroller asks for records. 

2. Stay engaged and educated

Even if you delegate compliance responsibilities, you should remain involved: 

• Conduct quarterly reviews with your staff on where exposure points are (exempt vs. taxable, shipping rules, vendor practices).

• Join training: Many state agencies offer free webinars and bulletins. Maryland’s Comptroller has a dedicated “Tax Updates 2025” page.

• Ask questions: Are shipping rules being applied properly? Are marketplace sales classified correctly? What about exempt certificates?

3. Monitor changing laws

If you think “we’ve done this for years, nothing new,” think again. Rules shift. 

• Remote seller and marketplace facilitator rules typically continue to expand nationwide—Maryland included.

• The July 1, 2025 rule change (data/IT services now taxable) shows how even non‑traditional goods/services can attract SUT.

• New exempt categories may vanish or be revised (Maryland repealed certain exemptions as part of the 2025 session). Being current means you avoid surprises.

4. File and pay promptly

Late filings, missed payments, or a pattern of delay can signal risk. Here are some best practices: 

• Use automated reminders (via calendar or internal systems).

• File electronically via Maryland Tax Connect.

• If you’re unsure of the liability, make an estimated payment to avoid large penalties and undue interest. Promptness is among the easiest controls you put in place.

5. Maintain strong documentation

This is how compliance can go from routine to resilient: 

• Clearly document your tax‑ability positions (why you marked a sale taxable or exempt).

• Keep exemption certificates current and easily accessible. Maryland’s Tax Tip #22 explains how exempt certificates matter.

• Track vendor invoices for use tax risk, especially when you buy from out‑of‑state or from vendors not collecting tax.

• Maintain POS category mappings, item lists, and tax classification for every product and service. These records are your defense if you get audited, but can also keep you clear of audit in the first place.

6. Address brick‑and‑mortar vs. online sales differences

Your compliance model may need to differentiate: 

• Physical location retail: Group items taxed at the same rate, ensure staff understands taxable vs exempt, ensure your register or POS categories properly.

• Online and e‑commerce: Shipping transactions may trigger different rates, and marketplace facilitator rules may affect who collects. Maryland’s portal offers guidance for businesses making online sales. Mapping and training become especially critical as more sales move online.

7. Use free education and agency resources

The Comptroller’s office makes available: 

• Webinars

• Industry‑specific checklists

• Tax bulletins (e.g., Technical Bulletin No. 54 on multiple points of use certificates)

Take advantage of these opportunities. Ongoing learning helps you stay ahead, stand out of the “risky business” category and give your team confidence. 

8. Recognize when it’s time to bring in a professional

Even strong businesses encounter complex issues. If any of these rings true, bring in help: 

• You’re unsure about taxability of a particular good/service.

• You have multiple out‑of‑state vendors and you’re unclear on use tax.

• You’ve received a notice or auditor letter and you’re not sure about the next step.

That’s where S.H. Block can step in for a compliance review, exposure assessment, and proactive clean‑up strategy. 

9. Understand “nexus” issues

You may collect correctly in‑state but still have obligations due to nexus: 

• Physical nexus: store, employees, warehouse, fleet operating in Maryland.

• Economic nexus: state sales volume or transaction count thresholds trigger SUT obligations even without physical presence. Maryland and many states follow “Wayfair‑style” thresholds.

• Marketplace facilitator nexus: In sales through platforms like Amazon and Etsy, the platform may collect tax but you must still monitor your broader exposure (especially for use tax or additional state jurisdictions).

Understanding nexus means you’re not caught unaware when cross‑state sales or remote operations grow. 

Compliance Prevention in Action: A Practical Checklist

Here’s are important steps you can begin to implement now: 

1. Review your last three SUT filings. Look for anomalies such as large swings in exempt sales, late submissions, and sudden jumps in out‑of‑state vendor purchases.
2. Organize your records.
   Ensure you have:
   1. Item‑level lists with tax classification
   2. Exemption certificates filed and current
   3. Vendor invoices from out‑of‑state showing tax paid or use tax owed
   4. POS mapping logs and change‑history of tax settings
3. Conduct staff training.
   Schedule a quarterly session that answers these questions:
   1. What’s taxable vs. exempt in your business?
   2. What should you do when shipping out‑of‑state?
   3. How do you log vendor invoices that could create use tax obligations?
4. Audit your POS and e‑commerce set‑up.
   1. Verify the correct tax category for each product and service.
   2. Verify shipping tax handling and marketplace rules.
   3. Ensure changes in your business model (e.g., adding online sales) trigger a review.
5. Track law and lease changes.
   1. For Maryland, ensure you are aware of the July 1, 2025 rule changes.
   2. Subscribe to the Maryland Comptroller’s updates for future changes.
   3. Review Technical Bulletins (e.g., MPU certificate rules) and ensure you’re compliant.
6. Perform an out‑of‑state vendor/use‑tax audit. Do you buy goods or services from vendors that didn’t collect Maryland sales tax? Track whether you owe use tax and ensure you’ve either self‑assessed or logged a process.
7. Set monthly internal SUT review.
   1. Monitor exempt sales percentage (a large deviation from prior period or industry norms can signal risk).
   2. Flag potential use tax for large one-off purchases from outside Maryland.
   3. Flag late filings or new vendor types for review.
8. If a notice or audit letter arrives, engage early.
   Don’t wait. The sooner you prepare, the less disruptive the audit and the more favorable your outcome.

How S.H. Block Can Support Your Compliance Posture

At S.H. Block Tax Services, we help you build compliance infrastructure so you’re ready before the state raises its hand. Here’s how we partner with you: 

• Compliance assessment: We review your operations, POS mapping, exempt‑sales handling, use‑tax exposure, and out‑of‑state vendor purchasing.
• Risk‑spotting: We identify hidden exposure points in vendor use tax, online marketplace flows, and evolving categories of taxable services.
• Policies and documentation: We help you craft taxability positions, exemption certificate tracking systems, and vendor invoice review protocols.
• Training and system review: We work with your team to train staff, review POS setups, and test shipping tax rules and marketplace impacts.
• Monitoring and updates: We keep you alerted to Maryland rule changes, distribute bulletins, and ensure you adjust before guidelines become enforcement.
• Audit prevention mindset: We help you build a mindset and protocols that can reduce your odds of being flagged, improve your negotiating power if audited, and protect your cash‑flow.

Sales and use tax compliance is essential to business integrity and resilience. By treating it proactively, you turn SUT from a risk to a routine, manageable part of your business operations.  

When you partner with S.H. Block, you gain both experience and foresight. 

If you’d like to schedule a risk‑review or discuss how we can help strengthen your SUT posture, call (410) 872‑8376 or fill out our contact form. Let’s make sure your business is prepared, compliant, and ready for whatever comes next. 

The content provided here is for informational purposes only and should not be construed as legal advice on any subject.