Not-for-profits including trade and membership associations that charge for digital product sales should take note of the new sales and use tax on digital products passed by the Maryland General Assembly on March 14, 2021. The new law extends the existing 6% sales and use tax to digital goods.
A tax tip published by the State of Maryland addresses the impact on not-for-profit organizations in this manner:
There is no general exemption for all sales made by exempt organizations under Maryland law. Therefore, unless a specific exemption exists, exempt organizations must charge sales tax on a sale of a digital product. An exempt organization may purchase a digital product tax-free if the exempt organization has a valid exemption certificate issued by the Maryland Comptroller’s office.
CBM recommends this write-up from Whiteford, Taylor, Preston LLP (March 18, 2021), Maryland’s Digital Products Tax Will Impact Everyone, to learn more about the new law.
CBM invites tax-exempt clients and others in the industry to reach out to Holly Caporale or Julia Lafferty via our online contact form for details about how the tax on digital products could affect Maryland not-for-profit organizations.
Councilor, Buchanan & Mitchell (CBM) is a professional services firm delivering tax, accounting and business advisory expertise throughout the Mid-Atlantic region from offices in Bethesda, MD and Washington, DC.