Maryland 2024 Regular Session

Maryland House Bill HB1515 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1
2	2
3	3	EXPLANATION: CAPITALS INDICATE MATTER ADDED TO EXIS TING LAW.
4	4	[Brackets] indicate matter deleted from existing law.
5	5	hb1515
6	6
7	7	HOUSE BILL 1515
8	8	Q4 4lr3549
9	9	HB 1628/20 – W&M
10	10	By: Delegate Moon
11	11	Introduced and read first time: February 25, 2024
12	12	Assigned to: Rules and Executive Nominations
13	13
14	14	A BILL ENTITLED
15	15
16	16	AN ACT concerning 1
17	17
18	18	Sales and Use Tax – Rate Reduction and Services 2
19	19
20	20	FOR the purpose of altering the definitions of “taxable price” and “taxable service” for the 3
21	21	purposes of certain provisions of law governing the sales and use tax to impose the 4
22	22	tax on certain labors and services; altering the rate of the sales and use tax; altering 5
23	23	the percentage of gross receipts from vending machine sales and from certain sales 6
24	24	of dyed diesel fuel to which the sales and use tax is applied; altering the rate of the 7
25	25	sales and use tax applied to certain charges made in connection with sales of 8
26	26	alcoholic beverages; altering the rate of the sales and use tax applied to certain 9
27	27	gratuities and service charges; repealing certain exemptions from the sales and use 10
28	28	tax for certain services and contract sales; and generally relating to the sales and 11
29	29	use tax. 12
30	30
31	31	BY repealing and reenacting, without amendments, 13
32	32	Article – Tax – General 14
33	33	Section 11–101(a) and (l)(1) 15
34	34	Annotated Code of Maryland 16
35	35	(2022 Replacement Volume and 2023 Supplement) 17
36	36
37	37	BY adding to 18
38	38	Article – Tax – General 19
39	39	Section 11–101(c–8) and (m) 20
40	40	Annotated Code of Maryland 21
41	41	(2022 Replacement Volume and 2023 Supplement) 22
42	42
43	43	BY repealing and reenacting, with amendments, 23
44	44	Article – Tax – General 24
45	45	Section 11–101(c–8) and (l)(3), 11–104(a), (b), and (g) through (i), and 11–301 25
46	46	Annotated Code of Maryland 26
47	47	(2022 Replacement Volume and 2023 Supplement) 27
48	48	2 HOUSE BILL 1515
49	49
50	50
51	51	BY repealing 1
52	52	Article – Tax – General 2
53	53	Section 11–101(m) and 11–219 3
54	54	Annotated Code of Maryland 4
55	55	(2022 Replacement Volume and 2023 Supplement) 5
56	56
57	57	SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 6
58	58	That the Laws of Maryland read as follows: 7
59	59
60	60	Article – Tax – General 8
61	61
62	62	11–101. 9
63	63
64	64	(a) In this title the following words have the meanings indicated. 10
65	65
66	66	(C–8) “NAICS” MEANS THE NORTH AMERICAN INDUSTRIAL CLASSIFICATION 11
67	67	SYSTEM, UNITED STATES MANUAL, 2022 EDITION, PUBLISHED BY THE UNITED 12
68	68	STATES OFFICE OF MANAGEMENT AND BUDGET. 13
69	69
70	70	[(c–8)] (C–9) “Permanent” means perpetual or for an indefinite or unspecified 14
71	71	length of time. 15
72	72
73	73	(l) (1) “Taxable price” means the value, in money, of the consideration of any 16
74	74	kind that is paid, delivered, payable, or deliverable by a buyer to a vendor in the 17
75	75	consummation and complete performance of a sale without deduction for any expense or 18
76	76	cost, including the cost of: 19
77	77
78	78	(i) any labor or service rendered; 20
79	79
80	80	(ii) any material used; or 21
81	81
82	82	(iii) any property, digital code, or digital product sold. 22
83	83
84	84	(3) “Taxable price” does not include: 23
85	85
86	86	(i) a charge that is made in connection with a sale and is stated as 24
87	87	a separate item of the consideration for: 25
88	88
89	89	1. a delivery, freight, or other transportation service for 26
90	90	delivery directly to the buyer by the vendor or by another person acting for the vendor, 27
91	91	unless the transportation service is a taxable service; 28
92	92
93	93	2. a finance charge, interest, or similar charge for credit 29
94	94	extended to the buyer; 30
95	95
96	96	3. [a labor or service for application or installation; 31 HOUSE BILL 1515 3
97	97
98	98
99	99
100	100	4.] a mandatory gratuity or service charge in the nature of a 1
101	101	tip for serving food or beverage to a group of 10 or fewer individuals for consumption on the 2
102	102	premises of the vendor; 3
103	103
104	104	[5. a professional service; 4
105	105
106	106	6.] 4. a tax: 5
107	107
108	108	A. imposed by a county on the sale of coal, electricity, oil, 6
109	109	nuclear fuel assemblies, steam, or artificial or natural gas; 7
110	110
111	111	B. imposed under § 3–302(a) of the Natural Resources 8
112	112	Article, as a surcharge on electricity, and added to an electric bill; 9
113	113
114	114	C. imposed under §§ 6–201 through 6–203 of the Tax – 10
115	115	Property Article, on tangible personal property subject to a lease that is for an initial period 11
116	116	that exceeds 1 year and is noncancellable except for cause; or 12
117	117
118	118	D. imposed under § 4–102 of this article on the gross receipts 13
119	119	derived from an admissions and amusement charge; OR 14
120	120
121	121	[7. any service for the operation of equipment used for the 15
122	122	production of audio, video, or film recordings; or 16
123	123
124	124	8.] 5. reimbursement of incidental expenses paid to a third party 17
125	125	and incurred in connection with providing a taxable detective service; 18
126	126
127	127	(ii) the value of a used component or part (core value) received from 19
128	128	a purchaser of the following remanufactured truck parts: 20
129	129
130	130	1. an air brake system; 21
131	131
132	132	2. an engine; 22
133	133
134	134	3. a rear axle carrier; or 23
135	135
136	136	4. a transmission; or 24
137	137
138	138	(iii) a charge for a nontaxable service that is made in connection with 25
139	139	a sale of a taxable communication service, even if the nontaxable charges are aggregated 26
140	140	with and not separately stated from the taxable charges for communications services, if the 27
141	141	vendor can reasonably identify charges not subject to tax from its books and records that 28
142	142	are kept in the regular course of business. 29
143	143
144	144	[(m) “Taxable service” means: 30 4 HOUSE BILL 1515
145	145
146	146
147	147
148	148	(1) fabrication, printing, or production of tangible personal property or a 1
149	149	digital product by special order; 2
150	150
151	151	(2) commercial cleaning or laundering of textiles for a buyer who is engaged 3
152	152	in a business that requires the recurring service of commercial cleaning or laundering of 4
153	153	the textiles; 5
154	154
155	155	(3) cleaning of a commercial or industrial building; 6
156	156
157	157	(4) cellular telephone or other mobile telecommunications service; 7
158	158
159	159	(5) “900”, “976”, “915”, and other “900”–type telecommunications service; 8
160	160
161	161	(6) custom calling service provided in connection with basic telephone 9
162	162	service; 10
163	163
164	164	(7) a telephone answering service; 11
165	165
166	166	(8) pay per view television service; 12
167	167
168	168	(9) credit reporting; 13
169	169
170	170	(10) a security service, including: 14
171	171
172	172	(i) a detective, guard, or armored car service; and 15
173	173
174	174	(ii) a security systems service; 16
175	175
176	176	(11) a transportation service for transmission, distribution, or delivery of 17
177	177	electricity or natural gas, if the sale or use of the electricity or natural gas is subject to the 18
178	178	sales and use tax; 19
179	179
180	180	(12) a prepaid telephone calling arrangement; or 20
181	181
182	182	(13) the privilege given to an individual under § 4–1102 of the Alcoholic 21
183	183	Beverages and Cannabis Article to consume wine that is not purchased from or provided 22
184	184	by a restaurant, club, or hotel.] 23
185	185
186	186	(M) (1) “TAXABLE SERVICE ” MEANS ANY ACTIVITY E NGAGED IN FOR A 24
187	187	BUYER FOR CONSIDERAT ION. 25
188	188
189	189	(2) “TAXABLE SERVICE ” DOES NOT INCLUDE : 26
190	190
191	191	(I) AN EDUCATIONAL SERVI CE (NAICS SECTOR 61); 27
192	192	HOUSE BILL 1515 5
193	193
194	194
195	195	(II) A HEALTH CARE OR SOC IAL ASSISTANCE SERVI CE (NAICS 1
196	196	SECTOR 62); 2
197	197
198	198	(III) A SERVICE PROVIDED B Y A RELIGIOUS ORGANI ZATION 3
199	199	(NAICS SECTOR 8131); 4
200	200
201	201	(IV) A GRANTMAKING OR GIV ING SERVICE (NAICS SECTOR 5
202	202	8132); 6
203	203
204	204	(V) A SERVICE PROVIDED B Y A SOCIAL ADVOCACY 7
205	205	ORGANIZATION (NAICS SECTOR 8133); 8
206	206
207	207	(VI) A SERVICE PROVIDED B Y A CIVIC OR SOCIAL ORGANIZATION 9
208	208	(NAICS SECTOR 8134); OR 10
209	209
210	210	(VII) A SERVICE PROVIDED B Y A BUSINESS , PROFESSIONAL , 11
211	211	LABOR, OR POLITICAL ASSOCI ATION (NAICS SECTOR 8139). 12
212	212
213	213	11–104. 13
214	214
215	215	(a) Except as otherwise provided in this section, the sales and use tax rate is: 14
216	216
217	217	(1) for a taxable price of less than $1: 15
218	218
219	219	(i) 1 cent if the taxable price is 20 cents; AND 16
220	220
221	221	(ii) [2 cents if the taxable price is at least 21 cents but less than 34 17
222	222	cents; 18
223	223
224	224	(iii) 3 cents if the taxable price is at least 34 cents but less than 51 19
225	225	cents; 20
226	226
227	227	(iv) 4 cents if the taxable price is at least 51 cents but less than 67 21
228	228	cents; 22
229	229
230	230	(v) 5 cents if the taxable price is at least 67 cents but less than 84 23
231	231	cents; and 24
232	232
233	233	(vi) 6 cents if the taxable price is at least 84 cents] 1 CENT FOR EACH 25
234	234	ADDITIONAL 20 CENTS OR PART OF 20 CENTS; and 26
235	235
236	236	(2) for a taxable price of $1 or more: 27
237	237
238	238	(i) [6] 5 cents for each exact dollar; and 28
239	239	6 HOUSE BILL 1515
240	240
241	241
242	242	(ii) [for that part of a dollar in excess of an exact dollar: 1
243	243
244	244	1. 1 cent if the excess over an exact dollar is at least 1 cent 2
245	245	but less than 17 cents; 3
246	246
247	247	2. 2 cents if the excess over an exact dollar is at least 17 cents 4
248	248	but less than 34 cents; 5
249	249
250	250	3. 3 cents if the excess over an exact dollar is at least 34 cents 6
251	251	but less than 51 cents; 7
252	252
253	253	4. 4 cents if the excess over an exact dollar is at least 51 cents 8
254	254	but less than 67 cents; 9
255	255
256	256	5. 5 cents if the excess over an exact dollar is at least 67 cents 10
257	257	but less than 84 cents; and 11
258	258
259	259	6. 6 cents if the excess over an exact dollar is at least 84 12
260	260	cents] 1 CENT FOR EACH 20 CENTS OR PART OF 20 CENTS IN EXCESS OF A N EXACT 13
261	261	DOLLAR. 14
262	262
263	263	(b) If a retail sale of tangible personal property or a taxable service is made 15
264	264	through a vending or other self–service machine, the sales and use tax rate is [6%] 5%, 16
265	265	applied to [94.5%] 95.25% of the gross receipts from the vending machine sales. 17
266	266
267	267	(g) The sales and use tax rate for the sale of an alcoholic beverage, as defined in 18
268	268	§ 5–101 of this article, is: 19
269	269
270	270	(1) 9% of the charge for the alcoholic beverage; and 20
271	271
272	272	(2) [6%] 5% of a charge that is made in connection with the sale of an 21
273	273	alcoholic beverage and is stated as a separate item of the consideration and made known 22
274	274	to the buyer at the time of sale for: 23
275	275
276	276	(i) any labor or service rendered; 24
277	277
278	278	(ii) any material used; or 25
279	279
280	280	(iii) any property sold. 26
281	281
282	282	(h) (1) (i) In this subsection the following words have the meanings 27
283	283	indicated. 28
284	284
285	285	(ii) “Dyed diesel fuel” means diesel fuel that is dyed under U.S. 29
286	286	Environmental Protection Agency rules for high sulfur diesel fuel or is dyed under Internal 30
287	287	Revenue Service rules for nontaxable use. 31 HOUSE BILL 1515 7
288	288
289	289
290	290
291	291	(iii) “Marina” means a person who maintains a place of business 1
292	292	where motor fuel is sold primarily to vessels. 2
293	293
294	294	(2) If a retail sale of dyed diesel fuel is made by a marina, the sales and use 3
295	295	tax rate is [6%] 5%, applied to [94.5%] 95.25% of the gross receipts from the dyed diesel 4
296	296	fuel sales. 5
297	297
298	298	(i) The sales and use tax rate for a mandatory gratuity or service charge in the 6
299	299	nature of a tip for serving food or any type of beverage to a group of more than 10 individuals 7
300	300	is [6%] 5%. 8
301	301
302	302	[11–219. 9
303	303
304	304	(a) The sales and use tax does not apply to a personal, professional, or insurance 10
305	305	service that: 11
306	306
307	307	(1) is not a taxable service; and 12
308	308
309	309	(2) involves a sale as an inconsequential element for which no separate 13
310	310	charge is made. 14
311	311
312	312	(b) The sales and use tax does not apply to a sale of custom computer software, 15
313	313	regardless of the method transferred or accessed, or a service relating to custom computer 16
314	314	software that: 17
315	315
316	316	(1) would otherwise be taxable under this title; 18
317	317
318	318	(2) is to be used by a specific person; 19
319	319
320	320	(3) (i) is created for that person; or 20
321	321
322	322	(ii) contains standard or proprietary routines requiring significant 21
323	323	creative input to customize, configure, or modify the procedures and programs that are 22
324	324	necessary to perform the functions required for the software to operate as intended; and 23
325	325
326	326	(4) do not constitute a program, procedure, or documentation that is mass 24
327	327	produced and sold to: 25
328	328
329	329	(i) the general public; or 26
330	330
331	331	(ii) persons engaged in a trade, profession, or industry, except as 27
332	332	provided in item (3) of this subsection. 28
333	333
334	334	(c) The sales and use tax does not apply to the sale of an optional computer 29
335	335	software maintenance contract if the buyer does not have a right, as part of the contract, to 30
336	336	receive at no additional cost software products that are separately priced and marketed by 31 8 HOUSE BILL 1515
337	337
338	338
339	339	the vendor. 1
340	340
341	341	(d) The sales and use tax does not apply to the use of a taxable service obtained 2
342	342	by using a prepaid telephone calling arrangement.] 3
343	343
344	344	11–301. 4
345	345
346	346	The sales and use tax is computed on: 5
347	347
348	348	(1) the taxable price of each separate sale; 6
349	349
350	350	(2) if a combined sale is made, the combined taxable price of all retail sales 7
351	351	on the same occasion by the same vendor to the same buyer; or 8
352	352
353	353	(3) if retail sales of tangible personal property or a taxable service are made 9
354	354	through vending or other self–service machines, [94.5%] 95.25% of the gross receipts from 10
355	355	the retail sales. 11
356	356
357	357	SECTION 2. AND BE IT FURTHER ENACTED, That it is the intent of the General 12
358	358	Assembly that the Governor’s proposed budget for fiscal year 2026, and for each fiscal year 13
359	359	thereafter, shall include funding that is necessary to meet the needs of the Office of the 14
360	360	Comptroller to ensure compliance with and enforcement of this Act. 15
361	361
362	362	SECTION 3. AND BE IT FURTHER ENACTED, That this Act shall take effect 16
363	363	January 1, 2025. 17
364	364