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Maryland Digital Goods Sales Tax Proposal


UPDATE: March 16, 2012. According to Tax Analysts, Senate Bill 523 was approved by the Senate and sent to the House. SB 523 incorporated language from SB 152 regarding affiliates and nexus, but deleted the sales tax on digital downloads portion.

A provision in Maryland Governor Martin O'Malley's proposed 2013 budget would impose state sales and use tax on the sale of "digital products." The provision lists several digital products that would be taxed including e-books, e-cards, ring tones, and digital periodicals. 

This "digital products" provision is beginning to receive more attention from those who fear its wording is too general. The Maryland Chamber of Commerce's Vice President states that the language is "very expansive and would apply to a vast array of products that are downloaded electronically." He adds, "We will work to ensure that this does not . . . cripple Maryland's technology business."

According to the Baltimore Sun, O'Malley spokeswoman Raquel Guillory, said that the administration is open to clarifying the language in the bill, but that taxing digital products is not a new concept among states.

It remains to be seen whether the portion of the bill dealing with digital products will go the way of Maryland's so-called Tech Tax, a tax on "computer services" that was repealed in 2008 before it could go into effect later that year.

Read more about Governor O'Malley's 2013 Budget Proposal and its effect on sales tax.

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Avalara Author
Will Frei
Avalara Author Will Frei
Will Frei covers sales tax news including best practices, legislation and sales tax technology. He is the Social Media Manager at Avalara.