MARYLAND ADOPTS SALES TAX ON DIGITAL GOODS & SERVICES March 10, 2021BACKGROUNDIn February the Maryland legislature overrode the Governor’s veto, of law HB 932, which applies Maryland’s existing 6% sales and use tax on electronically delivered and remotely accessible software, digital products, and cloud-based data and information services. As a result, Maryland will begin imposing the sales tax on the sale of digital products, starting March 14, 2021.Examples of digital products include digital code, streaming services (Netflix, etc.), Satellite radio (Sirius XM), ring tones, e-books and audio books, online newspapers and pay-per-view television programming. Retail sales of digital code or digital projects are presumed to be made in the state in which the customer’s tax address is located. These changes may be found primarily in Maryland Tax Code Sections 11-101(h) and 11-101(n). Additionally, The Comptroller’s office has published guidance and it can be found by clicking here.Maryland’s tax reflects the collision of two economic trends during the pandemic: The largest tech companies have had milestone financial performances as social distancing moved work, play and commerce further online. But cities and states saw their tax revenues plummet as the need for their social services grew.The enactment of this provision aligns Maryland’s sales tax law with more than 30 state-level jurisdictions that also impose their sales and use tax on such goods. WHAT THIS MEANS FOR YOUThese changes impact all providers and consumers of software, electronic information, data processing, gaming and audio-visual services, advertising agencies and education providers.Please reach out to your KatzAbosch representative for further guidance on how to meet your Maryland tax obligations relative to these changes. Visit our state and local tax accountant services to learn more.About KatzAbosch: Founded in 1969, KatzAbosch is one of the largest CPA and business consulting services in the Mid-Atlantic region. As an accounting firm, our mission is to provide the highest quality accounting, tax, financial and management consulting services to our regional clients. We understand the needs and challenges of our clients and we have made it our obligation to create, grow and protect asset value. KatzAbosch is consistently named a Best Accounting Firm to Work For in Accounting Today and has been named a Top 200 Accounting Firms in the Nation by Inside Public Accounting. Our firm is also ranked among the Top 15 Largest Accounting Firms in the Baltimore Area by the Baltimore Business Journal and a Top Workplace four times by The Baltimore Sun.