COVID-19 sales tax relief in Maryland

Update January 2021: Maryland is providing additional tax relief for 2021.

After Governor Larry Hogan proclaimed a state of emergency due to the new coronavirus (COVID-19) pandemic, the Comptroller of Maryland was quick to provide tax relief to affected businesses. The Comptroller’s Office continues to monitor the situation and amend the relief as necessary. 

Sales tax filing and payment extension

The sales tax filing and payment due dates for February, April, May, and June have been pushed back to July 15, 2020.

This extension also applies to the following taxes and fees:

  • Admissions and amusement tax
  • Alcohol tax
  • Employer withholding tax
  • Motor carrier tax and motor fuel tax
  • Tire recycling and bay restoration fees
  • Tobacco excise taxes
  • Unclaimed property reporting for insurance companies

Once ready to file and pay, taxpayers should file a separate return for each reporting period (as if they had been filed according to their original due dates).

Penalties and interest will be waived for taxpayers who file and pay the taxes due by the extended due date. The tax alert from the Comptroller reminds that taxpayers still owe these taxes — the relief “is only a postponement” — and further explains, “It is NOT an extinguishment or cancellation of that tax debt.” That’s worth remembering, since sales tax is a debt that will transfer from a business to the owner should a business fold.

See the Comptroller of Maryland COVID-19 Tax Relief Frequently Asked Questions for more details.

Other tax relief

The state has also extended the deadline for income tax returns to July 15, 2020, along with quarterly estimated tax payments for the first and second quarters of 2020. See the Comptroller’s COVID-19 Agency Response for additional information.

Moving forward

It’s unclear whether Maryland will be able to provide any additional tax relief if the pandemic forces businesses to remain closed into the summer.

Bureau of Revenue Estimates (BRE) Director Andrew Schaufele predicts Fiscal Year 2020 will have a shortfall of approximately $2.8 billion. Monthly sales tax collections are down an average of 59%, or $250 million. While some of this will likely be recaptured once stay-at-home orders are lifted and people unleash their “pent-up demand for products,” some won’t be. 

Sales tax accounts for 25% of the state’s general fund, but that doesn’t include tax from remote online sales, which are earmarked for the Blueprint Fund for Education.

See our COVID-19 tax news and resources hub for more information about tax relief in other parts of the country and world.

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