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Md. comptroller proposes online sales tax rules

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Maryland Comptroller Peter Franchot has proposed sales tax rules for online transactions.

Some online retailers could soon pay state sales taxes under new regulations proposed by Comptroller Peter Franchot.

The new sales tax regulations — less than a full page — would impose a 6 percent sales tax on online retailers who either have a minimum of 200 transactions in Maryland or sales on taxable goods and services in the state exceeding $100,000 annually.

The proposed changes follow a June 21 decision by the U.S. Supreme Court  that ruled that changes driven by the internet economy created a need for states to be able to capture sales taxes on goods and services sold in each state.

The 5-4 ruling in South Dakota v. Wayfair Inc. overturned a lower court ruling striking down a  law imposing sales taxes on online retailers who have no physical presence in the state but make 200 separate sales transactions or deliver a minimum of $100,000 in goods to the state annually.

A spokesman for the comptroller’s office said South Dakota regulations upheld by the nation’s highest court were “looked at very carefully” as Maryland’s rules were drafted.

The new regulations, which would affect larger online retail operations, could go into effect as soon as Oct. 1.

A 2014 report on the issue of sales tax and e-commerce estimated that Maryland could lose as much as $176 million in calendar year 2018 from online sales.

At the time of the June Supreme Court ruling, a spokesperson for the comptroller’s office said $100 million annually might be more reasonable.

Del. Anne R. Kaiser, D-Montgomery and chairwoman of the House Ways and Means Committee, has said that potential revenues are estimated to be anywhere between $20 million and $100 million annually.


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