Maryland Sales Tax Guide
Chapter 2: How to determine if you have sales tax nexus in Maryland
The need to collect sales tax in Maryland is predicated upon having a physical connection with the state. This is a concept known as nexus. Nexus is a latin word that means "to bind or tie" and it stands as the deciding factor for whether the Comptroller of Maryland has the legal authority to require your business to collect, file, and remit sales tax. The two main principles most closely linked to nexus and taxes (especially multistate sales tax) are the Due Process Clause of the 14th Amendment to the U.S. Constitution and the Commerce Clause, Article 1, Section 8 of the U.S. Constitution.What activities or situations may trigger nexus in Maryland?
Sales tax nexus in Maryland can be triggered by a number of factors. The most common include having a physical location (office, warehouse, plant, etc.) within the state, having employees within the state, or conducting marketing activities within the state.
More recently, internet commerce has sparked debate over what activities can trigger nexus and where sales tax should be collected. For example, Fulfillment by Amazon merchants may find their products stored in Amazon warehouses across the country. This presence of physical goods in a state may trigger nexus and expands the complexity of managing sales tax compliance.Does Amazon have Fulfillment Centers in Maryland?
Yes, Amazon has active warehouses in Maryland at this time. If you are an active Amazon seller and are subscribed to Fulfillment by Amazon (FBA), you should download your Inventory Event Detail report from Amazon Seller Central to identify if any of your inventory is being stored in Maryland and possibly triggering nexus therein.I have Amazon FBA inventory stored in Maryland. Does the Comptroller of Maryland consider this a nexus triggering event?
Although this is still considered by most FBA sellers to be a grey area, it's clear that states (including Maryland) are more aggresively defining nexus based on in-state FBA inventory. Our recommendation is to consider inventory stored in any Amazon warehouses in Maryland as a nexus triggering event and evaluate accordingly based on your situation and your tolerance for risk. Every FBA seller is different so the best advice we can offer here is to be conservative and assume the Comptroller of Maryland will increasingly target all sellers (not just FBA sellers) with inventory stored in the state.Does Maryland have click-through nexus?
Click-through nexus in Maryland constitutes a situation in which a seller outside Maryland makes a sale to a resident of the state that is initiated through online contact with a 3rd party. Working with an affiliate marketer is a common example of a way in which click-through nexus may be triggered.
At this time, the Comptroller of Maryland has not enacted a click-through nexus law.