Tax Legislation & How It Could Affect Businesses in Maryland

In our April newsletter, we caught up all the latest updates on tax legislation that’s stirring debate across Maryland. This month, all eyes are on HB1515, a bill proposing some major changes to the state’s sales and use tax. Let’s dive in and unravel what’s brewing!

So what’s in the Pot? HB1515: Sales and Use Tax – Rate Reduction and Services
HB1515 isn’t just your average tax bill; it’s a hot pot of proposals aiming to shake up Maryland’s tax landscape. Here’s a quick rundown of what’s on the menu:Purposeful Alterations: The bill suggests altering the definitions of “taxable price” and “taxable service” to cover various new services. This means that services like accounting, legal, real estate, pet grooming, funerals and more could be fair game for taxation. Additionally, it aims to tweak the rate of the sales and use tax, along with adjusting the percentage of gross receipts from vending machine sales and dyed diesel fuel subject to tax. Oh, and let’s not forget about the rate of tax applied to charges linked with sales of alcoholic beverages. Phew, that’s a mouthful!Not Everyone’s Cup of Tea

 Proponents’ Pour: Sponsor David Moon (D-20) argues that HB1515 is more than just a tax tweak – it’s a “modernization of the economy”! The bill proposes lowering the state sales tax rate from 6% à 5% but also opens previously untaxed services to said taxation. Supporters claim that while this may result in a net loss of $1 billion in sales tax revenue, it could rake in a whopping $4 billion from taxing services, leaving us with a sweet $3 billion surplus. Some say it’s the much needed fix our tax system needs especially given current budget shortfalls.

 Opponents’ Brew: On the flip side, opponents are brewing up a storm. Del. Bob Long (R-06) had some fiery words in disapproval, claiming it’s just another way to empty his pockets, even in the afterlife (given the bill introduces the potential for funeral taxes)! The Maryland Republican Party didn’t hold back either, labeling it as an “everything tax” and predicting it to be the largest single tax increase in the state’s history. Indicating the bill’s controversial nature, Senate President Ferguson (D-46) also stood firm, claiming the bill won’t make it past the Senate gates.

So Sip or Spill? The Debate Continues

While proponents and opponents go head-to-head, the Maryland Chamber of Commerce is making its stance clear: they’re not raising a toast to HB1515. They argue that while lowering the state sales tax rate sounds delightful, expanding it to a wider range of services could leave a bitter taste in everyone’s mouths. From mom-and-pop shops to emerging companies, everyone could feel the pinch. They fear it could lead to an exodus of businesses and burden low-income Marylanders.


Compass Law is here to help your business navigate changes like this – even if this specific bill does not pass, there may be others like it, and we are here to help your business through it!
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