What it is

The RELIEF Act of 2021, as enacted by the Maryland General Assembly and signed into law by the Governor earlier this week, provides direct stimulus payments to qualifying Marylanders, unemployment insurance grants to qualifying Marylanders, and grants and loans to qualifying small businesses.

This emergency legislation will immediately provide more than $1 billion in tax relief and economic stimulus to Maryland families and businesses struggling due to the coronavirus pandemic.

For small businesses the legislation defines:

• An immediate sales tax credit
• A new unemployment tax relief calculation
• COVID-19 Loan and Grant Forgiveness and Additional relief funds

Is your small business eligible for the sales tax credit?

The RELIEF Act makes a nearly $200 million commitment to supporting small businesses with sales tax credits of up to $3,000 per month for three months—for a total of up to $9,000. This relief will directly help more than 55,000 Maryland small businesses.

This relief is automatic and based on a sliding scale up to $3,000. For example, if you are a business with $100,000 in monthly revenue and you collect $6,000 in sales taxes, you only remit $3,000. If you have $50,000 in monthly revenue and you collect $3,000 in sales taxes, you keep all $3,000.

It is important to note a business must file a timely sales and use tax return or consolidated return and gross amount must be $6,000 per month or less. That means a business would have maximum monthly sales of $100,000. Businesses must also forgo a separate vendor credit currently available outside of the RELIEF Act.

When can I take advantage of the sales tax credit?

The credit can be claimed in March, April and May. If you file returns quarterly, claim the March credit on the April return and claim the April and May credits on the July return.

Next Steps

The sales tax credit will allow small businesses to essentially be able to keep their sales tax for the next three months. We encourage you to read the Governor’s release around the Act which details the additional small business provisions and outlines the direct stimulus payments for low-to-moderate-income Marylanders. Click here. Additional information can be found on the Maryland Comptroller’s website, click here.

If you have questions about what tax strategies apply to your organization’s situation, please reach out to your KatzAbosch representative, or contact us. We are happy to discuss your unique situation.