Except as otherwise provided in this subtitle, an individual, a partnership, or a corporation that has Maryland taxable income in a taxable year shall pay the income tax on that income with the return that covers that year. Except as provided in § 10-820(a)(3) of this title, if an individual files a Maryland income tax return electronically no later than April 15 of the next taxable year, the income tax due with the return may be paid on or before April 30 of the next taxable year if the income tax is paid electronically.

Except as otherwise provided in this section, each individual, partnership, or corporation required to file quarterly estimated income tax returns shall pay: at least 25% of the estimated income tax shown on the declaration or amended declaration for a taxable year: with the declaration or amended declaration that covers that year; and with each quarterly return for that year; and any unpaid income tax for the year shown on the income tax return that covers that year, with the return. If an individual under subsection (a) of this section files a final income tax return on or before January 31 of a taxable year, as allowed under § 10-820(b)(3) of this title instead of paying 25% of the estimated income tax shown on the declaration or amended declaration for that year with the estimated tax return on January 15, the individual shall pay in full the unpaid income tax for that year with the final return. If an individual with estimated income from fishing or farming files the declaration or the return on the dates allowed under § 10-820(c) of this title, the individual shall pay in full the income tax shown on the return for that taxable year on or before March 1 of the next year. An individual who receives income from wagering not subject to withholding under § 10-906 of this subtitle shall pay in full the income tax on that income with the estimated tax return that covers the period in which the individual receives that income. Subject to paragraph (2) of this subsection, a fiduciary may use the annualization method as allowed for federal income tax purposes under § 6654(d)(2)(B) of the Internal Revenue Code to determine the amount of estimated tax required to be paid. For purposes of this subsection, § 6654(d)(2)(B)(i) of the Internal Revenue Code shall be applied by in each instance substituting “ending before the date one month before the due date for the installment” for “ending before the due date for the installment”.

In this Part II of this subtitle the following words have the meanings indicated. “Annuity, sick pay, or retirement distribution” means: an annuity or sick pay payment described in § 3402(o) of the Internal Revenue Code; or a designated distribution as defined in § 3405(e) of the Internal Revenue Code other than an eligible rollover distribution within the meaning of § 3405(c) of the Internal Revenue Code. “Employer” has the meaning stated in § 3401 of the Internal Revenue Code. “Employer” includes: the federal government; the State; a county, municipal corporation, political subdivision, or instrumentality of the State; another state to the extent that functions of its government are carried on or performed in this State; and if the employer is a corporation: any officer of the corporation who exercises direct control over its fiscal management; and any agent of the corporation who has a duty to withhold income tax from wages. “Payment subject to withholding” means: an annuity, sick pay, or retirement distribution; income that is subject to the income tax and is distributed by a fiduciary to a nonresident alien; a payment of winnings derived from wagering in the State if the payment is subject to withholding under § 3402 of the Internal Revenue Code; and a payment of a death benefit by the Board of Trustees of the State Retirement and Pension System. “Payor” means a person responsible to make a payment subject to withholding. “Payor” includes: the federal government; the State; a county, municipal corporation, political subdivision, or instrumentality of the State; another state to the extent that functions of its government are carried on or performed in this State; and if the payor is a corporation: any officer of the corporation who exercises direct control over its fiscal management; and any agent of the corporation who has a duty to withhold income tax from payments subject to withholding. “Wagering” includes: any lottery, including the State lottery; and any pari–mutuel wagering, including any pari–mutuel wagering conducted under Title 11 of the Business Regulation Article. Except as provided in paragraph (2) of this subsection, “wages” means salary, wages, or compensation for personal services of any kind as defined in §§ 3401 and 3402(o)(2)(A) of the Internal Revenue Code. “Wages” includes remuneration paid for services described in § 3401(a)(5) and (6) of the Internal Revenue Code. “Withhold” includes deducting income tax.

Except as provided in § 10–907 of this subtitle, each employer or payor shall: withhold the income tax required to be withheld under § 10–908 of this subtitle; and pay to the Comptroller the income tax withheld for a period with the withholding return that covers the period. Any income tax withheld is deemed to be held in trust for the State by the employer or payor who withholds the tax. An employer or payor who withholds income tax shall keep a separate ledger account for withholdings that indicates clearly: the amount of income tax withheld; and that the income tax withheld is the property of the State. If an employer or payor negligently fails to withhold or to pay income tax in accordance with subsection (a) of this section, personal liability for that income tax extends: to the employer or payor; if the employer or payor is a corporation, to: any officer of the corporation who exercises direct control over its fiscal management; or any agent of the corporation who is required to withhold and pay the income tax; and if the employer or payor is a limited liability company as defined under Title 4A of the Corporations and Associations Article or a limited liability partnership as defined under Title 9A of the Corporations and Associations Article, including a limited partnership registered as a limited liability limited partnership, to: any person who exercises direct control over its fiscal management; and any agent of the limited liability company or limited liability partnership who is required to withhold and pay the income tax.

Income tax is not required to be withheld at the time wages are paid to a nonresident: for State income tax withholding purposes, if the Comptroller and the state in which the nonresident resides have agreed in writing to allow a reciprocal exemption from tax and withholding for the wages of residents of each state that are earned in the other state; for county income tax withholding purposes, if: the nonresident derives wages from employment in a county; and the Comptroller determines that each locality in which the nonresident resides: imposes no tax on the income of a Maryland resident from wages from employment in that locality; exempts that income from its tax on income; or allows a credit for that income and exempts that income from the withholding requirement for its tax on income; for tips, to the extent that the amount required to be withheld on the tips causes the total withholdings for the period to exceed the available net wages other than tips after deductions are made for: the federal income and Social Security taxes and income tax required to be withheld on wages other than tips; and the federal income and Social Security taxes required to be withheld on the tips; or if the wages are paid to an individual rendering police, fire, rescue, or emergency services in an area covered under a state of emergency declared by the Governor under § 14–107 of the Public Safety Article by: a nonprofit organization not registered to do business in the State and not otherwise doing business in the State; or a state, county, or political subdivision of a state, other than the State of Maryland. Unless the payee specifically asks that income tax be withheld from an annuity, sick pay, or retirement distribution, income tax is not required to be withheld from that payment. Income tax is not required to be withheld on that portion of a death benefit to be excluded from federal adjusted gross income, including amounts to be transferred by the beneficiary or the Board of Trustees of the State Retirement and Pension System to an eligible retirement plan as defined in § 402(c)(8)(B) of the Internal Revenue Code in a nontaxable rollover. The State Retirement Agency is authorized to obtain such representation as it deems necessary to determine if the beneficiary will make a nontaxable rollover.

An employer shall withhold from the wages of an individual the amount indicated in the income tax withholding tables or income tax percentage withholding schedules that the Comptroller prepares. A payor that is a fiduciary shall withhold from each distribution the amount indicated in the income tax withholding tables or income tax percentage withholding schedules that the Comptroller prepares. A payor shall withhold the amount from an annuity, sick pay, or retirement distribution that the payee requests. A payor shall withhold from a payment subject to withholding of winnings derived from wagering: if the payee is a resident, a rate equal to the sum of 3.0% and the top marginal State income tax rate for individuals under § 10-105(a) of this title, applied to the payment; and if the payee is a nonresident, a rate equal to the sum of the rate of the tax imposed under § 10-106.1 of this title and the top marginal State income tax rate for individuals under § 10-105(a) of this title, applied to the payment. The Board of Trustees of the State Retirement and Pension System shall withhold from a payment of a death benefit to a resident payee the sum of: 75% of the payment; and the county income tax rate applied to the payment. If a payment to a resident payee is a designated distribution that is an eligible rollover distribution within the meaning of § 3405(c) of the Internal Revenue Code and the payment is subject to mandatory withholding of federal income tax, the payor shall withhold from the payment an amount equal to 7.75% of the payment.

The income tax required to be withheld under § 10–908 of this subtitle shall be withheld: by a payor other than a fiduciary or S corporation and by an employer: on the basis of each weekly, 2–week, semimonthly, or monthly regular period of payment; or if there is no regular period of payment as specified in item (i) of this item, on a daily basis; and by a payor who is a fiduciary, on a quarterly basis.

At the time of employment, an employee shall sign and file with the employer an exemption certificate that states the number of exemptions to which the employee is entitled under this title. Except as provided in paragraph (2) of this subsection, an employer shall base withholding for an employee: on the number of exemptions stated in the exemption certificate that the employee files; or if the employee fails to file an exemption certificate or files an invalid certificate under subsection (c) of this section, on 1 exemption. If the Comptroller notifies an employer that an employee has an unpaid tax liability, that the employee failed to file a required Maryland income tax return, or that an employee is subject to a tax refund interception request, the employer shall base withholding for the employee: on a number of exemptions not exceeding the actual number of exemptions allowed on the employee’s prior year’s income tax return, as specified by the Comptroller; or if the employee failed to file a required Maryland income tax return, on 1 exemption. An exemption certificate is invalid if it: does not contain the information required; or contains false or fraudulent information. An exemption certificate is not invalid if it states: a number of exemptions that is less than the number of exemptions to which the individual is entitled under § 10–211 of this title; or a number of additional exemptions less than or equal to the fraction, rounded down to the nearest whole number: the numerator of which equals the excess of the total of estimated itemized deductions, alimony payments, allowable child care expenses, qualified retirement contributions, business losses, and employer business expenses over the standard deduction allowance; and the denominator of which equals the amount allowed for each exemption under § 10–211(b)(1) of this title for the applicable taxable year. A person who is entitled to receive a payment subject to withholding of winnings derived from wagering shall complete, under oath, and give to the payor a withholding certificate that contains the name, address, state of residence, and taxpayer identification number of: the person who is to receive the payment; and each person entitled to any portion of the payment.

Each employer or payor required under § 10–906 of this subtitle to withhold income tax for an employee or a person who receives a payment subject to withholding shall prepare a statement that shows for the previous calendar year: the name of the employer or payor; the name of the employee or person who receives the payment subject to withholding; the total amount that the employer paid to the employee as wages or the total amount that the payor has paid to the person; the total amount of tips that the employee reported; the total amount of income tax that has been withheld under this subtitle; any amount by which income tax required to be withheld on tips exceeds the other net wages paid to the employee; and any other information that the Comptroller requires by regulation. On or before January 31 of each year an employer or payor of a payment subject to withholding shall: provide 2 copies of the statement required under subsection (a) of this section to the employee or person who receives a payment subject to withholding; and submit 1 copy of the statement to the Comptroller. Except as provided in paragraph (2) of this subsection, an employer or payor shall submit statements required under subsection (a) of this section in an electronic format that the Comptroller requires by regulation. The Comptroller: shall adopt regulations to provide a process for an employer or payor that is required to submit statements in an electronic format under paragraph (1) of this subsection to request a waiver from the requirement; and may waive the requirement that an employer or payor submit statements in an electronic format under paragraph (1) of this subsection if the Comptroller determines that the requirement will result in undue hardship to the employer or payor.

In this section the following words have the meanings indicated. Except as provided in subparagraph (ii) of this paragraph, “net proceeds” means the total sales price paid to the transferor less: debts of the transferor secured by a mortgage or other lien on the property being transferred that are being paid upon the sale or exchange of the property; and other expenses of the transferor arising out of the sale or exchange of the property and disclosed on a settlement statement prepared in connection with the sale or exchange of the property, not including adjustments in favor of the transferee. “Net proceeds” does not include adjustments in favor of the transferor that are disclosed on a settlement statement prepared in connection with the sale or exchange of the property. “Nonresident entity” means an entity that: is not formed under the laws of the State; and is not qualified by or registered with the Department of Assessments and Taxation to do business in the State. “Resident entity” means an entity that: is formed under the laws of the State; or is formed under the laws of another state and is qualified by or registered with the Department of Assessments and Taxation to do business in the State. “Total payment” means the net proceeds of a sale actually paid to a transferor, including the fair market value of any property transferred to the transferor. “Transfer pursuant to a deed in lieu of foreclosure” includes: a transfer by the owner of the property to: with respect to a deed in lieu of foreclosure of a mortgage, the mortgagee, the assignee of the mortgage, or any designee or nominee of the mortgagee or assignee of the mortgage; with respect to a deed in lieu of foreclosure of a deed of trust, the holder of the debt or other obligation secured by the deed of trust or any designee, nominee, or assignee of the holder of the debt or other obligation secured by the deed of trust; and with respect to a deed in lieu of foreclosure of any other lien instrument, the holder of the debt or other obligation secured by the lien instrument or any designee, nominee, or assignee of the holder of the debt secured by the lien instrument; and a transfer by any of the persons described in item (i) of this paragraph to a subsequent purchaser for value. “Transfer pursuant to a foreclosure of a mortgage, deed of trust, or other lien instrument” includes: with respect to the foreclosure of a mortgage: a transfer by the mortgagee, the assignee of the mortgage, the attorney named in the mortgage, or the attorney or trustee conducting a foreclosure sale pursuant to the mortgage to: the mortgagee or the assignee of the mortgage; any designee, nominee, or assignee of the mortgagee or assignee of the mortgage; or any purchaser, substituted purchaser, or assignee of any purchaser or substituted purchaser of the foreclosed property; and a transfer by any of the persons described in item 1 of this item to a subsequent purchaser for value; with respect to the foreclosure of a deed of trust: a transfer by the trustees, successor trustees, substituted trustees under the deed of trust, or trustees conducting a foreclosure sale pursuant to the deed of trust to: the holder of the debt or other obligation secured by the deed of trust; any designee, nominee, or assignee of the holder of the debt secured by the deed of trust; or any purchaser, substituted purchaser, or assignee of any purchaser or substituted purchaser of the foreclosed property; and a transfer by any of the persons described in item 1 of this item to a subsequent purchaser for value; and with respect to the foreclosure of any other lien instrument: a transfer by the party authorized to make the sale to: the holder of the debt or other obligation secured by the lien instrument; any designee, nominee, or assignee of the holder of the debt secured by the lien instrument; or any purchaser, substituted purchaser, or assignee of any purchaser or substituted purchaser of the foreclosed property; and a transfer by any of the persons described in item 1 of this item to a subsequent purchaser for value. For every deed or other instrument of writing that effects a change of ownership on the assessment books under the Tax – Property Article and for which a payment is required under subsection (c) of this section, the total payment shall be described on the form that the Comptroller specifies by regulation. The form required under paragraph (1) of this subsection shall be signed under oath by: the transferor of the property; an agent of the transferor; or the real property reporting person, as defined under § 6045 of the Internal Revenue Code. Except as otherwise provided in this section, in a sale or exchange of real property and associated tangible personal property owned by a nonresident or nonresident entity, the deed or other instrument of writing that effects a change of ownership on the assessment books under the Tax – Property Article may not be recorded with the clerk of the circuit court for a county or filed with the Department of Assessments and Taxation unless payment is made to the clerk of the circuit court for a county or the Department of Assessments and Taxation in an amount equal to: the sum of the rate of the tax imposed under § 10–106.1 of this title and the top marginal State income tax rate for individuals under § 10–105(a) of this title, applied to the total payment to a nonresident; or the rate of the tax for a corporation under § 10–105(b) of this title of the total payment to a nonresident entity. Subsection (c) of this section does not apply when: a certification under penalties of perjury that the transferor is a resident of the State or is a resident entity is provided by each transferor in: the recitals or the acknowledgment of the deed or other instrument of writing transferring the property to the transferee; or an affidavit signed by the transferor or by an agent of the transferor that accompanies and is recorded with the deed or other instrument of writing transferring the property; the transferor presents to the clerk of the circuit court for a county or the Department of Assessments and Taxation a certificate issued by the Comptroller stating that: no tax is due from that transferor in connection with that sale or exchange of property; a reduced amount of tax is due from that transferor in connection with that sale or exchange of property and stating the reduced amount that should be collected by the clerk of the circuit court for a county or the Department of Assessments and Taxation before recordation or filing; or the transferor has satisfied the transferor’s tax liability described in subsection (c) of this section or has provided adequate security to cover such liability; the property transfer is: a transfer pursuant to a foreclosure of a mortgage, deed of trust, or other lien instrument; or a transfer pursuant to a deed in lieu of foreclosure; the property is transferred by the United States, the State, or a unit or political subdivision of the State; a certification under penalties of perjury that the property being transferred is the transferor’s principal residence is provided by each transferor in: the recitals or the acknowledgment of the deed or other instrument of writing transferring the property to the transferee; or an affidavit signed by the transferor or by an agent of the transferor that accompanies and is recorded with the deed or other instrument of writing transferring the property; or the property is transferred pursuant to a deed or other instrument of writing that includes a statement of consideration required by § 12–104 of the Tax – Property Article indicating that the consideration payable is zero. Except as provided in this section, the amounts described in subsection (c) of this section shall be collected by the clerk of the circuit court for a county or the Department of Assessments and Taxation when the deed or other instrument of writing is presented for recordation or filing. Within 30 business days after the date the amount payable under subsection (c) of this section is paid, the clerk of the circuit court for the county or the Department of Assessments and Taxation shall pay over to the Comptroller the amount collected under subsection (c) of this section as prescribed by the Comptroller. Amounts collected under subsection (c) of this section and paid over to the Comptroller under subsection (e) of this section shall be deemed to have been paid to the Comptroller on behalf of the transferor from whom the amounts were withheld. The transferor shall be credited with having paid the amounts for the taxable year in which the transaction that is the subject of the tax occurred. The transferee, title insurance producer, title insurer, settlement agent, closing attorney, lending institution, and real estate agent or broker in any transaction subject to this section are not liable for any amounts required to be collected and paid over to the Comptroller under this section. This section does not: impose any tax on a transferor or affect any liability of the transferor for any tax; or prohibit the Comptroller from collecting any taxes due from a transferor in any other manner authorized by law. The Comptroller shall adopt regulations to administer this section. The Comptroller’s regulations shall establish procedures for the issuance of the certificate referred to in subsection (d)(2) of this section. The Comptroller’s regulations shall establish a procedure by which a transferor may apply for an early refund of the tax collected under this section if the transferor establishes that no tax will be owed or less tax than collected will be owed.

On or before January 1 of each calendar year, the Comptroller shall publish the maximum income eligibility for the earned income tax credit under § 10–704 of this title for the calendar year. The Comptroller shall prepare a notice that meets the requirements of subsection (b) of this section and provide the notice, by mail or electronic means, to all employers in the State. On or before December 31 of each calendar year, an employer shall provide electronic or written notice to an employee who may be eligible for the earned income tax credit under § 10–704 of this title that: the employee may be eligible for the federal earned income tax credit under § 32 of the Internal Revenue Code; and the employee may be eligible for the earned income tax credit under § 10–704 of this title. An employer may provide the notice required under this subsection to: all employees; or employees with wages that are less than or equal to the maximum income eligibility published under subsection (a) of this section. An employee may not pursue a private cause of action against an employer for the employer’s failure to provide the notice required under subsection (b) of this section.