Maryland recently enacted a new law that makes the sale or use of a digital product subject to a 6% sales and use tax. The new law (HB 932) is effective as of March 14, 2021. HB 932 had been previously vetoed by Governor Larry Hogan but on February 12, 2021, the Maryland General Assembly voted to override his veto.
The Comptroller of Maryland has now released guidance on what types of digital products will be subject to sales and use tax. Included in this list are the following digital products:
- A book or e-book
- Magazines, periodicals, or any other publication
- A digital download or stream of a motion picture, music video, news and entertainment program, live event, sporting event, tutorial, etc.
- A digitized sound file that may be downloaded onto a device and may be used to alert the user to a communication or information
- A sale, subscription or license to access content online
- A sale, subscription or license to use a software application
- Access to a chat room, discussion, weblog, or any other venue that permits users to communicate electronically in real time
- An online class, instruction, or similar product
- Access to or use of video or online games
- Access to or use of virtual items, such as skins, renders and in-app purchases, purchased for use in a video or online game
- Audio or video greeting cards sent by email, text or any other electronic means
- Customer lists, mailing lists, medical records, and similar products
- Design files, models, and templates, such as 3D design files, 3D models, CNC templates, and virtual/alternate reality templates
- Photographs, artwork, illustrations, graphics and similar products
- Prerecorded or live music
- Prerecorded or live performances
- Prerecorded or live audio books or other written materials
- Prerecorded or live speeches including commentaries, dissertations, and lectures
In addition, the Business Tax Tip #29 provides guidance on the sale and use of digital code, subscriptions, services performed electronically, continuing education classes, seminars or conferences that are delivered electronically, and software as a service (SAAS).