How do I collect sales tax legally?

How to Collect Sales Tax Legally in Maryland

Collecting sales tax correctly is essential for any business operating in Maryland. Follow these practical steps to ensure compliance and smooth operations.

Register for a Sales Tax License

• Register with the Maryland Comptroller’s Office: Before collecting sales tax, obtain a sales and use tax license by registering your business online through the Maryland Business Express portal.
• Provide accurate business details: Include your federal EIN, business structure, and contact information to complete registration.

Understand Taxable Sales

• Identify taxable goods and services: Most retail sales of tangible personal property are taxable. Certain services may also be taxable, so review Maryland’s tax guidelines to classify your products correctly.
• Apply correct tax rates: Maryland has a statewide sales tax rate of 6%. Some local jurisdictions do not add additional sales tax, but verify if any special district taxes apply.

Collect and Record Sales Tax

• Include sales tax in customer invoices: Clearly show the sales tax amount separately to maintain transparency.
• Use accounting or POS systems: Automate sales tax calculations and recordkeeping to reduce errors and streamline compliance.

Remit Sales Tax to the State

• File sales tax returns regularly: Maryland requires filing monthly, quarterly, or annually based on your sales volume. Check your filing frequency upon registration.
• Make timely payments: Submit collected sales tax by the due dates to avoid penalties and interest.

Maintain Records

• Keep detailed sales and tax records: Retain invoices, receipts, and tax filings for at least three years to support audits and compliance reviews.
• Track exemptions and resale certificates: Document any exempt sales properly to avoid tax liabilities.

As of 2026, always verify current rates and filing requirements on the official Maryland Comptroller website to stay up to date with any changes.