What is Sales Tax Nexus Anyway?

Your business owes sales tax in any state where it has “sales tax nexus”. In short, if you have sales tax nexus you need to collect and remit sales tax. If you don’t have sales tax nexus, you generally don’t need to get a permit. 

Sales tax nexus is a legal term that means you have crossed a threshold and now have a sales tax collection responsibility in the state. Nexus can be created by having a physical presence, economic presence, or by other factors.  Nexus rules vary by state and retailers have specific nexus rules based on where they have people, property or inventory.  

What Should You Do Once You Determine You Have Sales Tax Nexus?

Once you determine that you have sales tax nexus in Maryland, your next step is to register for a sales tax permit in the state.  Check out our blog post on getting a sales tax permit in Maryland for more information about that process.  If you are not interested in doing the work of getting the permit yourself, TaxValet can handle the permit registration for you with our Sales Tax Permit Registration Service.

Common Ways to Have Sales Tax Nexus in Maryland

1. Economic nexus in Maryland

If you made $100,000 of sales in Maryland annually OR had 200 or more separate transactions in the previous or current calendar year, then you are required to register for, collect, and pay sales tax to the state. If you meet this threshold, it does not matter if you have a physical presence in Maryland.  Nexus has been created based on your volume of sales. 

For more information, please see Maryland Register 18-214E. 

If you need help determining which states you have crossed economic nexus thresholds, check out our Sales Tax Starter Kit service.

2. Physical presence nexus in Maryland

The following creates physical presence nexus in Maryland. If you have any of the following in Maryland, you will need to get a sales tax permit:

1. Permanently or temporarily maintain, occupy, or use any office, sales or sample room, or distribution, storage, warehouse, or other place for the sale of tangible personal property or a taxable service directly or indirectly through an agent or subsidiary;
2. An agent, canvasser, representative, salesperson, or solicitor operating in the state for the purpose of delivering, selling, or taking orders for tangible personal property or a taxable service;
3. Your business enters the state on a regular basis to provide service or repair for tangible personal property;
4. Regularly use the person’s vehicles to sell or deliver tangible personal property or a taxable service for use in the state;

For more information, see the Comptroller of Maryland’s Nexus Information for Sales and Use Tax.

If you need help determining which states you have a physical presence in, check out our Sales Tax Starter Kit service.

Do You Need a Sales Tax Permit in Maryland If You Only Sell on Marketplaces?

If you are an online retailer who ONLY sells on approved marketplaces (such as Amazon, eBay, etc), Maryland sales tax will be remitted by the marketplace, and you are NOT required to get a sales tax permit. 

For more information about Marketplace only sellers, see Tax Alert 09-19. 

If you are an e-commerce seller who is unsure of where you need to get a sales tax permit, check out our Sales Tax Starter Kit service.

Related Blog Content

How to Register for a Sales Tax Permit in Maryland

How to File and Pay Sales Tax in Maryland