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The Maryland Court of Special Appeals affirmed the tax court’s decision that a Macy’s captive insurance company is exempt from Maryland corporate income taxes on interest payments received from a Macy’s affiliate. Maryland imposes a premium receipts tax on unauthorized insurance companies, which includes the taxpayer captive insurer in this case. The taxpayer captive insurer…

On July 1, 2022, the Maryland Comptroller of the Treasury revised its Business Tax Tip #29, to acknowledge the exclusion of certain business purchases of digital products. In addition, the revised guidance clarifies the taxability of data processing, information, web hosting, and digital advertising services. This is the Comptroller’s third set of revisions to…

Maryland H.B. 791 clarifies that the definition of “digital product” for sales and use tax purposes does not include certain digital inputs or enterprise software. Specifically, H.B. 791 excludes from taxable digital products the following: (i) products having electrical, digital, magnetic, wireless, optical, electromagnetic, or similar capabilities where the purchaser has a copyright or similar…

The Maryland Court of Appeals held that a for-profit company’s purchases for non-profit hospitals were subject to Maryland’s sales and use tax because there was no agency relationship between the company and the hospitals, and even if an agency relationship existed, that alone would not entitle the for-profit company to an exemption.

Johns Hopkins Health…

The Comptroller has informed us that the due date for the first quarterly estimated digital advertising tax payment is extended to Monday, April 18th. The deadline for taxpayers to make this first payment would otherwise have been April 15, 2022. We are not aware of the Maryland Comptroller’s office otherwise publicizing this extension. Taxpayers…

On March 4, 2022, the United States District Court for the District of Maryland partially dismissed a challenge to the Maryland Digital Advertising Gross Revenues Tax.

  • The plaintiffs asserted that the Tax violates the Internet Tax Freedom Act and the Commerce and Due Process Clauses of the United States Constitution.
  • The federal court held that

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In the December 3, 2021 issue of the Maryland Register, the Comptroller confirmed that it adopted regulations to the Digital Advertising Gross Revenues Tax on November 24, 2021. Despite robust comments provided to the proposed regulations (including those provided by Eversheds Sutherland), the Comptroller made almost no changes in the final version.  The Comptroller’s…

On August 31, 2021, the Maryland Comptroller filed proposed regulations on the controversial digital advertising gross revenues tax (the DAT) with the Joint Committee on Administrative, Executive, and Legislative Review. Of primary interest to potential DAT taxpayers, and described in this Legal Alert, the regulations adopt a device-based apportionment fraction. The comment period for the…