Earlier this month, Clearview Group's Director of State and Local Tax, Mike Ginski, issued a notice regarding House Bill 932 and the implications that it posed around the taxability of Digital Products, Software, SaaS and Online Entertainment.
Initially, during the 2020 Regular Session on February 12, 2021, The Maryland General Assembly voted to override Governor Larry Hogan's veto of House Bill 932. As a result, the sale of digital products and digital codes as defined by the Maryland General Assembly, became subject to Maryland's 6% sales and use tax effective March 14, 2021. Collection of the sales and use tax began on that date.
Based on concerns raised during a legislative hearing held on March 25th around the taxability of online classes and other digital products, the Maryland General Assembly is now contemplating corrective legislation to clarify the scope of the tax on digital products. If a corrective bill is enacted, Clearview Group's State and Local Tax team will promptly issue guidance on any alterations to the law.
Additionally, if an updated statute and/or regulations are enacted, our State and Local Tax team will publish information around those changes as well.In addition, the State of Maryland has also announced that sales and use tax returns for March, April and May will not be due until July 15, 2021. This will also give businesses time to file returns that include this new tax. If changes are made to the taxing statute before July 15th, you may be able to issue refunds or credits related to the sales tax collected, if not remitted to the State at that time.
For any questions regarding House Bill 932 or the taxability of Digital Products, Software, SaaS and Online Entertainment, contact Mike Ginski.
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