Do I Tax Shipping Charges to Maryland?
- Sales Tax
- Jul 16, 2016 | Suzanne Kearns
Are you an ecommerce seller who is confused about whether or not you should charge tax when shipping products to customers in Maryland? Don’t worry, you’re not alone.
The taxability of shipping and handling charges for online sellers is a complicated issue, and to make matters worse, every state handles things differently.
Luckily, Maryland makes it easy to understand its laws. Here’s what you need to know.
Many sellers group shipping and handling charges together when creating an invoice, but if you do that in Maryland, you’ll miss out on an important sales tax exemption. Because one of the fees is subject to tax and the other one isn’t, you should list these two fees as separate charges on your invoice. Here’s how Maryland treats each of them.
- Handling charges. Handling charges are taxable in the state of Maryland because they are considered part of the purchase price. It doesn’t matter if the charges are listed as a part of the total sale or separately, you should charge sales tax on these fees.
- Shipping charges. On the other hand, according to the Comptroller of Maryland, shipping charges are exempt from sales tax as long as they are billed separately on the invoice. But if you group them together on the invoice with handling charges or the total sales price, you will have to charge your customers sales tax on the sale. This is true whether you are mailing the product to the customer, having it delivered, or using another professional service to get the product in the customer’s hands. Keep in mind that Maryland requires sellers to itemize the shipping charges on the invoice after the purchase price with sales tax has been listed.
The taxability of shipping charges doesn’t have to be difficult, even if you sell in multiple states. Simply check out our State Sales Tax Guides for each state you do business in to help you stay in compliance.