Maryland Combined Registration Online Application

You must have a federal employer identification number (FEIN) before you can register your business, unless you are a sole proprietorship and applying for a sales and use tax license only and do not have a FEIN.

What is sales and use tax?

Sales tax is a state tax on the purchase of most tangible personal property and on some services in Maryland. Tangible personal property is property that can be physically touched, manufactured, and moved. In Maryland, it also includes electricity, natural gas, and the right to stay/rent a room (such as a hotel room). Read the Law:  Md. Code, Tax-General §11-101(k)

Use tax applies when a purchase of tangible personal property is made outside the state of Maryland. If the individual makes an out-of-state, tax-free purchase, then the individual must file a Consumer Use Tax Return within three months of the purchase.

Throughout this article, we will use the term “goods” to mean tangible personal property.

What do Sales and Use Taxes Apply To?

Goods - All goods are subject to sales and use tax. This includes food, clothing, jewelry, vehicles, furniture, and art. However, there are exceptions, including:

• Agricultural Products – Items sold/bought are not taxed if they are bought by a farmer and are being used for an agricultural purpose. Read the Law: Md. Code, Tax-General § 11-201
• Food Sales – Food items that are sold by a substantial grocery or market business for consumption off the premises are not considered taxable prepared food. However, food items that are prepared for consumption on the grocer’s premises or are packaged for carry out are considered prepared food and are subject to a 6% sales tax. Read the Law: Md. Code, Tax-General § 11-206
• There are additional exemptions. Read the Law: Md. Code, Tax-General Title 11, Subtitle 2

Services - Only services listed in the law are subject to sales and use taxes in Maryland. These services include, but are not limited to:

• Manufacturing or producing personal property;
• Transportation of electricity or natural gas;
• Commercial cleaning and janitorial services;
• Certain telecommunications services;
• Credit reporting;
• Security services; and
• The privilege to drink wine that has not been bought from a restaurant, club or hotel.

Read the Law: Md. Code, Tax-General § 11-101(m)