<subtitle num="01" heading="Office of the Comptroller"> <chapter num="01" heading="General Regulations"> <regulation prefix="Regulation" num=".01" heading="Inspection of Public Records."> <paragraph num="A."> <text>In this regulation, “sociological information” means:</text> <paragraph num="(1)"> <text>Social Security number;</text> </paragraph> <paragraph num="(2)"> <text>Individual taxpayer identification number;</text> </paragraph> <paragraph num="(3)"> <text>Federal employer identification number;</text> </paragraph> <paragraph num="(4)"> <text>Personal street address;</text> </paragraph> <paragraph num="(5)"> <text>Personal phone number;</text> </paragraph> <paragraph num="(6)"> <text>Personal e-mail address;</text> </paragraph> <paragraph num="(7)"> <text>Date of birth;</text> </paragraph> <paragraph num="(8)"> <text>Information regarding marital status, dependents, or relatives;</text> </paragraph> <paragraph num="(9)"> <text>Information regarding employment status, including employment application;</text> </paragraph> <paragraph num="(10)"> <text>Medical or psychiatric history;</text> </paragraph> <paragraph num="(11)"> <text>Medical assistance;</text> </paragraph> <paragraph num="(12)"> <text>Educational history; and</text> </paragraph> <paragraph num="(13)"> <text>Driver’s license number.</text> </paragraph> </paragraph> <paragraph num="B."> <text>All public records maintained by the Comptroller, other than those which the Comptroller is authorized or required to hold confidential under the Public Information Act, the Tax-General Article, or other law, shall be open for inspection at any time during regular business hours. A person seeking the right to inspect a public record maintained by the Comptroller, other than by means of written request, who is advised by the custodian that the Comptroller is authorized or required to hold the record confidential under the Public Information Act, may pursue the request by making written application to the Comptroller of the Treasury, State Treasury Building, Annapolis, Maryland.</text> </paragraph> <paragraph num="C."> <text>A person who makes a written request for a public record maintained by the Comptroller shall include in the request:</text> <paragraph num="(1)"> <text>A statement that the request is made pursuant to the Public Information Act;</text> </paragraph> <paragraph num="(2)"> <text>A description of the public record sought to be inspected.</text> </paragraph> </paragraph> <paragraph num="D."> <text>As soon as practicable, but not later than 30 days after receipt of the written request for access to any public record, the Comptroller shall either:</text> <paragraph num="(1)"> <text>Grant the request by written notice and produce the record for inspection;</text> </paragraph> <paragraph num="(2)"> <text>Deny the request, in whole or in part; or</text> </paragraph> <paragraph num="(3)"> <text>Temporarily deny the request pending a court determination of whether disclosure would do substantial injury to the public interest.</text> </paragraph> </paragraph> <paragraph num="E."> <text>The grant of a request for public inspection includes the right to copy the public record or to have it copied by the Comptroller's Office. If the Comptroller grants a request to inspect a public record, in whole or in part, the notice mailed to the applicant shall include the date, time, and place of the inspection, and the name of the employee of the Comptroller’s office to be contacted by the applicant for this purpose.</text> </paragraph> <paragraph num="F."> <text>If the Comptroller denies, in whole or in part, a written request for the inspection of a public record in his possession, the Comptroller shall provide the applicant, within 10 working days of the denial, with a written statement of the grounds for the denial and the remedies available to the applicant for review of his decision.</text> </paragraph> <paragraph num="G."> <text>Any time limit set forth in this regulation:</text> <paragraph num="(1)"> <text>May be extended with the consent of the applicant, for a period not to exceed 30 days; or</text> </paragraph> <paragraph num="(2)"> <text>Shall, if the applicant seeks resolution under General Provisions Article, §4-1B-04, Annotated Code of Maryland, be extended pending the resolution of the dispute.</text> </paragraph> </paragraph> <paragraph num="H."> <text>Charges for Copies, Print-Outs, Electronic Files and Photographs.</text> <paragraph num="(1)"> <text>When the duplication is performed by the applicant or by an employee of the Comptroller's Office without supervision by a senior official, on conventional duplicating equipment located in an office of the Comptroller, the charge for copies or photographs of a public record provided pursuant to this regulation shall be 50 cents per page. A charge of $1 per page shall be made for copies which the Comptroller is required to make in order to delete privileged or confidential information from public records which an applicant will personally inspect and for copies which must be made under the supervision of a senior official.</text> </paragraph> <paragraph num="(2)"> <text>If copies or photographs cannot be made on equipment located in the office where the public records are kept, the Comptroller shall cause the copies to be made at a location of the Comptroller’s choosing, and shall charge for this service, in addition to charges incurred for duplication, an amount sufficient to reimburse the State for the cost of the time of an employee of the Comptroller’s office in supervising this copying.</text> </paragraph> <paragraph num="(3)"> <text>If the Comptroller is required to provide a print-out or electronic file pursuant to this regulation, the Comptroller shall determine a reasonable charge for the print-out or electronic file on a case-by-case basis, taking into account computer time, programming, and material costs.</text> </paragraph> </paragraph> <paragraph num="I."> <text>Except as provided in §J of this regulation, the custodian may not disclose and shall deny a request for inspection or copying of any part of a public record that contains sociological information relating to an individual.</text> </paragraph> <paragraph num="J."> <text>Subject to §B of this regulation, a custodian may disclose sociological information:</text> <paragraph num="(1)"> <text>That is anonymized and aggregated;</text> </paragraph> <paragraph num="(2)"> <text>To other public officials and employees in the performance of their public duties;</text> </paragraph> <paragraph num="(3)"> <text>To the person in interest or the agent or representative of the person in interest;</text> </paragraph> <paragraph num="(4)"> <text>With the consent of the person in interest;</text> </paragraph> <paragraph num="(5)"> <text>Pursuant to a duly issued subpoena; or</text> </paragraph> <paragraph num="(6)"> <text>Pursuant to a court order.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Petition for Promulgation, Amendment, or Repeal of Regulations."> <paragraph num="A."> <text>An interested person may petition the Comptroller, requesting the adoption of a new regulation under the laws administered by the Comptroller or the amendment or repeal of any existing regulation issued under these laws.</text> </paragraph> <paragraph num="B."> <text>The petition shall be submitted in writing and shall provide:</text> <paragraph num="(1)"> <text>The full text of a new proposed regulation or regulations, the codification and the full text of an existing regulation or regulations proposed to be amended, indicating proposed changes, or the codification of the regulation or regulations for which repeal is sought;</text> </paragraph> <paragraph num="(2)"> <text>A statement in support of the proposal made, including:</text> <paragraph num="(a)"> <text>Reference to the statutory basis for the proposal, including, when appropriate, judicial and administrative interpretations of the statute or statutes in question,</text> </paragraph> <paragraph num="(b)"> <text>Specific objections to existing regulations, practices, or interpretations, and</text> </paragraph> <paragraph num="(c)"> <text>The policy considerations which support adoption of the proposal;</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>A statement describing in detail the effect of the proposal on the interested person, including:</text> <paragraph num="(a)"> <text>A statement as to whether the proposal is intended to affect the tax consequences of a transaction or transactions entered into or contemplated by the interested person, its vendors, customers, clients, or other persons upon whose behalf the proposal is made, the taxability of which are known by the interested person to be the subject of an inquiry, audit, refund, or assessment proceeding in the Comptroller's Office,</text> </paragraph> <paragraph num="(b)"> <text>A statement as to whether the proposal is intended to affect the status of the interested person or other persons under any of the licensing or regulatory provisions administered by the Comptroller when it is known by the interested person that the current status of the interested person is the subject of an inquiry, inspection, investigation, or other proceeding in the Comptroller's Office, and</text> </paragraph> <paragraph num="(c)"> <text>An explanation of the circumstances surrounding the inquiry, inspection, investigation, audit, refund, assessment, or other proceeding, if any.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Within 60 days after submission of a petition described in §A, above, the Comptroller shall either deny the petition in writing, stating the reasons for the denial, or initiate rule-making proceedings.</text> </paragraph> <paragraph num="D."> <text>If a petition is denied, another petition on the same topic may not be accepted by the Comptroller for review until 6 months after the date of the denial.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Petition for Declaratory Ruling."> <paragraph num="A."> <text>An interested person may petition the Comptroller for a declaratory ruling with respect to the applicability to a person, property, or state, of facts pertaining to the laws or the regulations administered by the Comptroller.</text> </paragraph> <paragraph num="B."> <text>A petition for declaratory ruling shall be filed in writing, clearly marked to indicate that it is being filed pursuant to this regulation. The petition shall:</text> <paragraph num="(1)"> <text>Contain a detailed statement of the facts on which the petition is based.</text> </paragraph> <paragraph num="(2)"> <text>Set forth fully the statutes, regulations, or judicial decisions relevant to the issue.</text> </paragraph> <paragraph num="(3)"> <text>Pose the question of whether, and in what manner, the statutes, regulations, or judicial decisions apply to the petitioner under the facts outlined in the petition.</text> </paragraph> <paragraph num="(4)"> <text>Contain a statement describing the interest of the petitioner in making the request for the declaratory ruling. The description shall:</text> <paragraph num="(a)"> <text>Include a statement as to whether the declaratory ruling sought is intended to affect the tax consequences of any transaction or transactions entered into or contemplated by the petitioner, its vendors, customers, clients, or any other person upon whose request or upon whose behalf the declaratory ruling is sought, the taxability of which are known by the petitioner to be the subject of an inquiry, audit, refund, or assessment proceeding by the Comptroller's Office;</text> </paragraph> <paragraph num="(b)"> <text>Include a statement as to whether the declaratory ruling sought is intended to affect the status of the petitioner or any other persons under any of the licensing or regulatory provisions administered by the Comptroller when it is known by the petitioner that the current status of the petitioner is the subject of an inquiry, inspection, investigation, or other proceeding in the Comptroller's Office; and</text> </paragraph> <paragraph num="(c)"> <text>Contain an explanation of the circumstances surrounding the inquiry, inspection, investigation, audit, refund, assessment, or other proceedings, if any.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>The Comptroller shall consider the petition and may, at the Comptroller's discretion, issue the declaratory ruling requested. The Comptroller may require argument on the petition. A declaratory ruling issued by the Comptroller shall plainly state that it is a declaratory ruling pursuant to this regulation. A written answer from the Comptroller or any employee of the Comptroller's Office to an inquiry from a taxpayer may not be construed to be a declaratory ruling unless made in conformity with this regulation.</text> </paragraph> <paragraph num="D."> <text>Declaratory Ruling.</text> <paragraph num="(1)"> <text>As to the petitioner, a declaratory ruling shall be binding upon the Comptroller as to any transaction covered by the ruling that is entered into by a person upon whose request or upon whose behalf the declaratory ruling is sought, including a transaction entered into:</text> <paragraph num="(a)"> <text>Before the date of the declaratory ruling; and</text> </paragraph> <paragraph num="(b)"> <text>In reliance upon the ruling, unless a change in the legal basis of the declaratory ruling is made by statute, regulation, or judicial decision after the issuance of the declaratory ruling and before any affected transaction.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>With prospective effect only, a declaratory ruling may be revoked, altered, or amended by the Comptroller at any time.</text> </paragraph> </paragraph> <paragraph num="E."> <text>The Comptroller may publish declaratory rulings of general interest, subject to the protection of the:</text> <paragraph num="(1)"> <text>Identity of the petitioner; and</text> </paragraph> <paragraph num="(2)"> <text>Confidential information contained in the petition for declaratory ruling.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Hearings and Appeals."> <paragraph num="A."> <text>Definitions. In this regulation, the following terms have the meanings indicated:</text> <paragraph num="(1)"> <text>“Comptroller” includes any employee of the Comptroller's Office designated as a hearing officer to conduct informal hearings in contested cases.</text> </paragraph> <paragraph num="(2)"> <text>“Person” means an individual or entity that, as a result of action taken by the Comptroller's Office, is entitled to an informal hearing by law or regulation.</text> </paragraph> <paragraph num="(3)"> <text>“Written application” means a written request for a hearing that is submitted to the Hearings and Appeals Section of the Comptroller’s office via U.S. Mail, facsimile, email, or online appeal, or is delivered in person.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Hearings — Assessments and Refunds.</text> <paragraph num="(1)"> <text>Assessments.</text> <paragraph num="(a)"> <text>General.</text> <paragraph num="(i)"> <text>A person may request a revision of an assessment by submitting a written application for a hearing to the Hearings and Appeals Section of the Comptroller's Office within 30 days of the date of the notice of assessment.</text> </paragraph> <paragraph num="(ii)"> <text>If a person does not submit an application within the 30-day period, the assessment becomes final and not subject to appeal.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>If an assessment is paid by a taxpayer, an application for refund may not be considered unless the application was made within 30 days of the date of the notice of assessment.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Refunds.</text> <paragraph num="(a)"> <text>If the Comptroller denies any portion of a claim for refund, a person may appeal the denial by submitting a written application for a hearing within 30 days of the Comptroller's determination on the refund claim.</text> </paragraph> <paragraph num="(b)"> <text>If a person does not submit an application within the 30-day period, the determination becomes final and not subject to appeal.</text> </paragraph> <paragraph num="(c)"> <text>The withholding of a portion of an approved refund under COMAR 03.04.05 or 03.04.06 is not a denial of the claim for refund from which an appeal may be taken under this regulation. A person who disagrees with the interception of a tax refund may apply for relief as provided in COMAR 03.04.05 and 03.04.06.</text> </paragraph> <paragraph num="(d)"> <text>If the Comptroller withholds a portion of an approved refund pursuant to Tax-General Article, §§13-921 and 13-922, Annotated Code of Maryland, a person who disagrees with the interception of a tax refund for a liability certified by the taxing official of another state may:</text> <paragraph num="(i)"> <text>Submit a written application for a hearing to appeal the certification to the Hearings and Appeals Section of the Comptroller's Office within 30 days of the date of the notice of intercept; or</text> </paragraph> <paragraph num="(ii)"> <text>Request a hearing with the taxing official of the certifying state, in accordance with the laws of the state that certified the liability.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(3)"> <text>A particular form is not required for the written application for a hearing.</text> </paragraph> </paragraph> <paragraph num="B-1."> <text>Correction of Erroneous Assessments.</text> <paragraph num="(1)"> <text>A person who fails to file a timely appeal under Tax-General Article, §13-508(a), Annotated Code of Maryland, may request a correction of an erroneous assessment under Tax-General Article, §13-509, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>A person requesting a correction of an assessment shall provide written documentation that is relevant and responsive to the assessment, within the time period designated by the hearing officer.</text> </paragraph> <paragraph num="(3)"> <text>After reviewing the provided documentation, the hearing officer shall:</text> <paragraph num="(a)"> <text>Issue an order stating clearly the reasons for decreasing or abating the assessment; or</text> </paragraph> <paragraph num="(b)"> <text>Send written notice of the Comptroller's refusal to enter an order.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>An order issued by the hearing officer is final and not subject to appeal.</text> </paragraph> <paragraph num="(5)"> <text>The Comptroller's refusal to issue an order is final and not subject to appeal.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Hearings — Licenses.</text> <paragraph num="(1)"> <text>The appropriate unit of the Comptroller's Office shall schedule a hearing before the denial, suspension, or revocation of a license issued under Tax-General Article, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>In the case of an alcoholic beverage license or a tobacco license issued by the Comptroller's Office, a hearing shall be held by the division responsible for issuing the license.</text> </paragraph> <paragraph num="(3)"> <text>In the case of all other licenses issued by the Comptroller, a hearing shall be held by the Hearings and Appeals Section of the Comptroller's Office.</text> </paragraph> <paragraph num="(4)"> <text>An appeal from a license hearing shall be under Regulation .05 of this chapter.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Scheduling and Attendance.</text> <paragraph num="(1)"> <text>After receipt of a timely application for a hearing or after having issued a notice of proposed action on a license or license application, the Comptroller shall schedule a hearing.</text> </paragraph> <paragraph num="(2)"> <text>The Comptroller shall notify the person:</text> <paragraph num="(a)"> <text>Of the date, time, and place of the hearing;</text> </paragraph> <paragraph num="(b)"> <text>Of the statutory or regulatory authority for the Comptroller's action or proposed action;</text> </paragraph> <paragraph num="(c)"> <text>In the case of a proposed action on a license or license application, of the facts which may warrant the action;</text> </paragraph> <paragraph num="(d)"> <text>That the person may present witnesses and documents at the hearing;</text> </paragraph> <paragraph num="(e)"> <text>That failure to appear for the scheduled hearing shall be treated as a withdrawal of the request for a hearing; and</text> </paragraph> <paragraph num="(f)"> <text>If the hearing is by telephone, video, or other electronic means, of instructions on how to appear for the hearing.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Postponements.</text> <paragraph num="(a)"> <text>The hearing officer shall consider a request for postponement only if the person establishes good cause for the postponement.</text> </paragraph> <paragraph num="(b)"> <text>Except as provided in §D(3)(d) of this regulation, a request for postponement shall be made in writing and be received by the Comptroller no fewer than 5 business days before the scheduled hearing.</text> </paragraph> <paragraph num="(c)"> <text>The hearing officer may require documentation of the reasons for the postponement request from the person.</text> </paragraph> <paragraph num="(d)"> <text>Emergency Request for Postponement.</text> <paragraph num="(i)"> <text>For purposes of this paragraph, “emergency” means a sudden, unforeseen occurrence requiring immediate attention which arises within 5 business days of the hearing.</text> </paragraph> <paragraph num="(ii)"> <text>In an emergency, a request for postponement may be made by telephone.</text> </paragraph> <paragraph num="(iii)"> <text>The hearing officer may require documentation of the reasons for the emergency postponement request from the person.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(4)"> <text>Failure to Attend Hearing.</text> <paragraph num="(a)"> <text>If a person fails to attend a scheduled hearing in person or, in the case of a telephone, video, or other electronic hearing, fails to appear as instructed, the assessment or denial of the application for refund is final and not subject to appeal.</text> </paragraph> <paragraph num="(b)"> <text>If a person fails to attend a scheduled hearing on a proposed action on a license or application for license, the proposed action becomes effective as of the date of the scheduled hearing.</text> </paragraph> <paragraph num="(c)"> <text>If a person fails to attend a scheduled hearing to challenge the certification of a liability owed to another state which resulted in the withholding of a portion of refund, the certification is deemed correct and the intercept is final and not subject to appeal.</text> </paragraph> </paragraph> </paragraph> <paragraph num="E."> <text>Prehearing Procedure.</text> <paragraph num="(1)"> <text>Before a hearing, the hearing officer may:</text> <paragraph num="(a)"> <text>Review or request materials relevant to the proceedings; and</text> </paragraph> <paragraph num="(b)"> <text>Hold a prehearing conference.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>If all parties agree at a prehearing conference, a hearing officer may dispose of an issue by stipulation or settlement.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Hearings.</text> <paragraph num="(1)"> <text>Procedures.</text> <paragraph num="(a)"> <text>The Comptroller shall record all hearings.</text> </paragraph> <paragraph num="(b)"> <text>A person may produce witnesses and documents in support of the person's position.</text> </paragraph> <paragraph num="(c)"> <text>Subpoenas.</text> <paragraph num="(i)"> <text>A person may request that the hearing officer subpoena witnesses.</text> </paragraph> <paragraph num="(ii)"> <text>A person shall make the request in writing, not later than 10 days before the hearing, explaining why the subpoena is necessary.</text> </paragraph> <paragraph num="(iii)"> <text>The hearing officer may decline to issue the subpoena.</text> </paragraph> </paragraph> <paragraph num="(d)"> <text>The hearing officer may question any witnesses and may produce, by subpoena or otherwise, additional witnesses. A person may question any witnesses called by the hearing officer.</text> </paragraph> <paragraph num="(e)"> <text>The hearing officer may allow a person time to provide additional evidence or written arguments, and may reconvene the hearing if the hearing officer considers it necessary.</text> </paragraph> <paragraph num="(f)"> <text>The hearing officer may consult with any employee of the Comptroller and with the person before making a decision in a case.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Evidence.</text> <paragraph num="(a)"> <text>The hearing officer shall consider probative evidence without regard to any technical rules, but may reject evidence which is incompetent, irrelevant, immaterial, unduly repetitious, or not responsive.</text> </paragraph> <paragraph num="(b)"> <text>Copies of documents may be admitted, although the hearing officer may require production of originals.</text> </paragraph> <paragraph num="(c)"> <text>The Comptroller shall retain documentary or other evidence for at least 60 days after the case is finally resolved. The evidence may then be destroyed unless the owner or person producing it makes a written request for its return.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Witnesses shall be under oath or affirmation.</text> </paragraph> <paragraph num="(4)"> <text>Burden of Proof.</text> <paragraph num="(a)"> <text>An assessment or denial of refund is presumed to be correct, and a person has the burden of proving that an error has been made.</text> </paragraph> <paragraph num="(b)"> <text>In a hearing on a license suspension, revocation, or denial, the Comptroller has the burden of proof.</text> </paragraph> <paragraph num="(c)"> <text>In a hearing on the certification of a liability owed to another state which resulted in the withholding of a portion of refund, the certification of the taxing official of the other state is presumed to be correct, and a person has the burden of proving that an error has been made.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>Hearings Conducted by Electronic Means.</text> <paragraph num="(a)"> <text>A hearing officer may conduct all or part of a hearing by telephone, video conferencing, or other electronic means, by the consent of all parties.</text> </paragraph> <paragraph num="(b)"> <text>All substantive and procedural rights applicable to hearings described in this regulation apply to telephone, video, or other electronic hearings, subject only to the limitations of the physical arrangement.</text> </paragraph> <paragraph num="(c)"> <text>Documentary Evidence. For a telephone, video, or other electronic hearing, a party shall provide documentary evidence to be offered to all parties so that it is received by each party and the hearing officer at least 5 days before the scheduled hearing.</text> </paragraph> <paragraph num="(d)"> <text>Default. For a telephone, video, or other electronic hearing, the following may be considered a failure to appear resulting in the assessment or denial of the application for refund becoming final and not subject to appeal:</text> <paragraph num="(i)"> <text>Failure to answer the telephone for 15 minutes;</text> </paragraph> <paragraph num="(ii)"> <text>Failure to free the telephone for a hearing;</text> </paragraph> <paragraph num="(iii)"> <text>Failure to call into a hearing held by telephone, video, or other electronic means within 15 minutes of the scheduled time for hearing; or</text> </paragraph> <paragraph num="(iv)"> <text>Any other failure without good cause to be ready to proceed with the hearing as scheduled.</text> </paragraph> </paragraph> </paragraph> </paragraph> <paragraph num="G."> <text>Final Determinations.</text> <paragraph num="(1)"> <text>The hearing officer shall issue a written final determination on behalf of the Comptroller.</text> </paragraph> <paragraph num="(2)"> <text>The notice of final determination shall summarize:</text> <paragraph num="(a)"> <text>Any adjustments to the assessment or refund denial and the reasons for the Comptroller's action;</text> </paragraph> <paragraph num="(b)"> <text>In the case of an action on a license or application for a license, the reasons for the Comptroller's action; or</text> </paragraph> <paragraph num="(c)"> <text>In the case of the withholding of a portion of a refund for a liability certified by the taxing official of another state, any adjustment to the amount of the intercepted refund and the reasons for the Comptroller’s action.</text> </paragraph> </paragraph> </paragraph> <paragraph num="H."> <text>Appeals.</text> <paragraph num="(1)"> <text>A person dissatisfied with the final determination may appeal to the Maryland Tax Court for a de novo review within 30 days from the date of the notice of final determination.</text> </paragraph> <paragraph num="(2)"> <text>If the Comptroller does not issue a final determination with respect to a claim for refund within 6 months from the date of the filing of the claim, the person may elect to consider the claim disallowed and appeal to the Maryland Tax Court.</text> </paragraph> <paragraph num="(3)"> <text>Effect of Appeals.</text> <paragraph num="(a)"> <text>Assessments.</text> <paragraph num="(i)"> <text>Proceedings for the review of assessments do not stay the accumulation of statutory interest charges.</text> </paragraph> <paragraph num="(ii)"> <text>A person may pay an assessment under protest to avoid incurring additional interest charges during the appeal process.</text> </paragraph> <paragraph num="(iii)"> <text>If a person pays an assessment under protest, and it is subsequently determined that all or a portion of the tax is not owed to the Comptroller, the Comptroller shall pay interest as provided in Tax-General Article, §13-603, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Licenses. The filing of a petition of appeal from a final determination does not, of itself, stay the enforcement of the Comptroller's proposed action.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Hearings Under the Administrative Procedure Act."> <paragraph num="A."> <text>A person who, as a result of an action of the Comptroller, is entitled to a hearing in accordance with State Government Article, Title 10, Subtitle 02, Annotated Code of Maryland, may request a hearing.</text> </paragraph> <paragraph num="B."> <text>The request for a hearing shall be made as set forth in Regulation .04 of this chapter.</text> </paragraph> <paragraph num="C."> <text>To the extent practicable and as permitted by law, the provisions set forth in Regulation .04 of this chapter apply to hearings under this regulation.</text> </paragraph> <paragraph num="D."> <text>The Comptroller shall hold a hearing in accordance with the provisions in State Government Article, Title 10, Subtitle 02, Annotated Code of Maryland.</text> </paragraph> <paragraph num="E."> <text>A person aggrieved by the Comptroller's final determination may file a petition for judicial review in accordance with the provisions of State Government Article, §10-222, Annotated Code of Maryland.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">General Provisions Article, §§4-201 and 4-206; State Government Article, §§10-122(a) and 10-304(b); Tax-General Article, §§2-102 and 2-103; Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: February 9, 1979 (6:3 Md. R. 148)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01C, D amended effective January 31, 1983 (10:2 Md. R. 104)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01E, F adopted effective January 31, 1983 (10:2 Md. R. 104)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01C, D amended effective January 31, 1983 (10:2 Md. R. 104)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 03.07.01 to 03.01.01 and new Regulations .02—.04 adopted effective August 6, 1990 (17:15 Md. R. 1853)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 amended effective February 16, 2026 (53:3 Md. R. 121)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01F amended effective May 2, 2022 (49:9 Md. R. 529)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01G amended effective January 20, 1992 (19:1 Md. R. 23)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04 repealed and new Regulation .04 adopted effective January 14, 1998 (26:1 Md. R. 19)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04 amended effective August 19, 2013 (40:16 Md. R. 1340); May 2, 2022 (49:9 Md. R. 529)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04A, B amended effective June 25, 2001 (28:12 Md. R. 1103)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04B amended effective March 31, 2003 (30:6 Md. R. 418)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04B-1 adopted effective October 9, 2006 (33:20 Md. R. 1611)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05 adopted effective January 14, 1998 (26:1 Md. R. 19)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06 adopted as an emergency provision effective July 1, 2003 (30:19 Md. R. 1325); emergency status extended at 30:25 Md. R. 1841; 30:26 Md. R. 1912; emergency status expired June 30, 2004</annotation> </annotations> </chapter> <chapter num="02" heading="Tax Payments — Immediately Available Funds"> <regulation prefix="Regulation" num=".01" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“ACH credit” means a transaction in which a taxpayer, through the taxpayer's bank and an automated clearing house, originates an entry crediting the State of Maryland's bank account and debiting the taxpayer's bank account for the amount of the payment due.</text> </paragraph> <paragraph num="(2)"> <text>“ACH debit” means a transaction in which the Treasurer, through a designated depository bank and an automated clearing house, originates an entry debiting the taxpayer's bank account and crediting Maryland's bank account for the amount of the payment due.</text> </paragraph> <paragraph num="(3)"> <text>“Automated clearing house (ACH)” means a central clearing facility operated by:</text> <paragraph num="(a)"> <text>A federal reserve bank; or</text> </paragraph> <paragraph num="(b)"> <text>An organization established by agreement with the National Automated Clearing House Association (NACHA) which:</text> <paragraph num="(i)"> <text>Operates as a clearing house for transmitting or receiving entries between banks and bank accounts, and</text> </paragraph> <paragraph num="(ii)"> <text>Authorizes an electronic transfer of funds between banks or bank accounts.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(4)"> <text>“Business day” means the hours between 8 a.m. and 8 p.m. prevailing Eastern time, on a day other than a Saturday, Sunday, or any holiday as defined in Tax-General Article, §1-201(a), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(5)"> <text>“Comptroller” means the Comptroller of Maryland or the Comptroller's designee.</text> </paragraph> <paragraph num="(6)"> <text>“Direct debit” means an electronic transfer of an authorized payment from a taxpayer's checking or savings account into the State's bank account.</text> </paragraph> <paragraph num="(7)"> <text>“Immediately available funds” means an ACH credit, an ACH debit, direct debit, or wire transfer.</text> </paragraph> <paragraph num="(8)"> <text>“Person” means an individual, receiver, trustee, guardian, personal representative, fiduciary, or representative of any kind, including an agent of a taxpayer, and any partnership, firm, association, corporation, or other entity.</text> </paragraph> <paragraph num="(9)"> <text>“Tax” means tax, interest, penalty, and fees.</text> </paragraph> <paragraph num="(10)"> <text>“Taxpayer” means any person required to pay a tax or file a return or a report.</text> </paragraph> <paragraph num="(11)"> <text>“TXP” means the tax payment addendum convention for use with the National Automated Clearing House Association's CCD+ application.</text> </paragraph> <paragraph num="(12)"> <text>“Wire transfer” means a transaction in which a taxpayer, through the taxpayer's bank, originates an entry crediting the State of Maryland's bank account and debiting the taxpayer's bank account on the same day the transaction is initiated.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Requirements for Payment by Immediately Available Funds."> <paragraph num="A."> <text>A taxpayer whose unpaid tax liability is $10,000 or more shall remit payment by immediately available funds pursuant to the following:</text> <paragraph num="(1)"> <text>Except as provided for in §A(2) of this regulation, payment shall be made by using:</text> <paragraph num="(a)"> <text>ACH credit;</text> </paragraph> <paragraph num="(b)"> <text>ACH debit; or</text> </paragraph> <paragraph num="(c)"> <text>Direct debit;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Payment by wire transfer may be used if the taxpayer:</text> <paragraph num="(a)"> <text>Initiates an ACH credit or authorizes an ACH debit transaction which fails; and</text> </paragraph> <paragraph num="(b)"> <text>Receives prior approval from the Comptroller.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>An agent of a taxpayer or taxpayers shall remit payment by immediately available funds under §A of this regulation if the total amount of the payments to be made by the agent for any period exceeds $10,000 in the aggregate, not including any amounts for which the agent has not received timely payment from the taxpayer.</text> </paragraph> <paragraph num="C."> <text>Payment by immediately available funds applies to the payment of:</text> <paragraph num="(1)"> <text>Income tax withheld by an employer;</text> </paragraph> <paragraph num="(2)"> <text>Corporation income tax;</text> </paragraph> <paragraph num="(3)"> <text>Except as provided for in §H of this regulation, sales and use tax;</text> </paragraph> <paragraph num="(4)"> <text>Motor fuel tax;</text> </paragraph> <paragraph num="(5)"> <text>Motor carrier tax;</text> </paragraph> <paragraph num="(6)"> <text>Alcoholic beverage tax; or</text> </paragraph> <paragraph num="(7)"> <text>Tobacco tax.</text> </paragraph> </paragraph> <paragraph num="D."> <text>A person using the ACH debit or credit method shall provide:</text> <paragraph num="(1)"> <text>The taxpayer's Maryland tax account number; and</text> </paragraph> <paragraph num="(2)"> <text>A statement of the type of tax and the tax period for which the payment is being made.</text> </paragraph> </paragraph> <paragraph num="E."> <text>A person using the direct debit method shall provide:</text> <paragraph num="(1)"> <text>The taxpayer's federal employer identification number;</text> </paragraph> <paragraph num="(2)"> <text>The taxpayer's Maryland tax account number;</text> </paragraph> <paragraph num="(3)"> <text>The tax type and tax period for which the payment is being made; and</text> </paragraph> <paragraph num="(4)"> <text>Any additional information required to accurately report the tax due.</text> </paragraph> </paragraph> <paragraph num="F."> <text>A separate ACH credit, ACH debit, direct debit, or wire transfer as allowed under §A(2) of this regulation shall be made for each type of tax and for each period for which the tax is due.</text> </paragraph> <paragraph num="G."> <text>A taxpayer not required to remit payments in immediately available funds may use the ACH credit, ACH debit, or direct debit method for tax payments. The wire transfer method is permitted only if the taxpayer receives prior approval from the Comptroller.</text> </paragraph> <paragraph num="H."> <text>A taxpayer may not make payment using ACH credit for the payment of sales and use tax on sales of alcoholic beverages.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Registration."> <text>A person making a payment by ACH debit, or as an agent for a taxpayer, may be required to register with the Comptroller before initiation of an ACH tax payment.</text> </regulation> <regulation prefix="Regulation" num=".04" heading="Rules for Use of ACH and Direct Debit Payments."> <paragraph num="A."> <text>General Rule. A taxpayer using the ACH payment method shall make the appropriate arrangements to initiate the payment at least one business day before the due date so that the transfer is executed on the date payment is due.</text> </paragraph> <paragraph num="B."> <text>Specific Rules for ACH Debit.</text> <paragraph num="(1)"> <text>A taxpayer using the ACH debit payment method shall make the appropriate arrangements to initiate the payment by 2 p.m. on the last banking day before the due date.</text> </paragraph> <paragraph num="(2)"> <text>The taxpayer shall furnish to the Comptroller the banking information necessary to generate ACH debits against the taxpayer's designated account.</text> </paragraph> <paragraph num="(3)"> <text>If a taxpayer elects the ACH debit payment method and the banking information necessary to generate the ACH debit against the taxpayer's account changes, the taxpayer shall provide the new banking information to the Comptroller 30 days before initiating an ACH transaction.</text> </paragraph> <paragraph num="(4)"> <text>The taxpayer, to initiate payment of a tax, shall contact the Comptroller and report the tax information in accordance with Regulation .02D of this chapter.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Specific Rules for ACH Credit.</text> <paragraph num="(1)"> <text>A taxpayer electing the ACH credit payment method shall initiate each payment of tax by contacting the taxpayer's own financial institution and requesting the institution to transfer both the appropriate identifying information and payment to the State of Maryland's depository bank by an ACH credit.</text> </paragraph> <paragraph num="(2)"> <text>The taxpayer shall remit an ACH credit transaction with an addendum record formatted in accordance with the appropriate TXP convention.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Specific Rules for Direct Debit.</text> <paragraph num="(1)"> <text>The direct debit method is only available for:</text> <paragraph num="(a)"> <text>Income tax withheld by an employer; and</text> </paragraph> <paragraph num="(b)"> <text>Sales and use tax.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The taxpayer shall furnish to the Comptroller the banking information necessary to generate the direct debit against the taxpayer's designated account.</text> </paragraph> <paragraph num="(3)"> <text>The taxpayer, to initiate payment of a tax, shall log on to the bFile (business online filing) program on the Comptroller's website or onto an approved third-party website and provide the tax information in accordance with the prompts and instructions and with Regulation .02E of this chapter.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Miscellaneous Filing and Reporting Provisions."> <paragraph num="A."> <text>A person making a tax payment using the ACH credit, ACH debit, direct debit, or wire transfer method shall file the following returns:</text> <paragraph num="(1)"> <text>For Maryland individual income tax withholding:</text> <paragraph num="(a)"> <text>Annual Employer Withholding Reconciliation Return using Form MW508;</text> </paragraph> <paragraph num="(b)"> <text>Amended Annual Employer Withholding Reconciliation Return on Form MW508A; and</text> </paragraph> <paragraph num="(c)"> <text>Amended Employer’s Return of Income Tax Withheld using Form MW506A or for accelerated filers using Form MW506AM;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Maryland Corporation Income Tax Return Form 500; or</text> </paragraph> <paragraph num="(3)"> <text>For Maryland motor fuel-related taxes:</text> <paragraph num="(a)"> <text>Dealer Tax Return Form GTD100 and all applicable supporting schedules and worksheets;</text> </paragraph> <paragraph num="(b)"> <text>Special Fuel User/Seller Tax Return Form GTD-300 and all applicable supporting schedules and worksheets;</text> </paragraph> <paragraph num="(c)"> <text>Special Return—Jet Fuel and Aviation Gas Return Form GTD-AV and all applicable supporting schedules and worksheets; and</text> </paragraph> <paragraph num="(d)"> <text>Class W Distributor Return Form GTD-100W.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>A person making tax payments using the ACH credit, ACH debit, direct debit, or wire transfer method may not file the corresponding returns or reports if the payment was for any of the following:</text> <paragraph num="(1)"> <text>Employer’s Return of Income Tax Withheld Form MW506 or for accelerated filers Form MW506M;</text> </paragraph> <paragraph num="(2)"> <text>The Declaration of Estimated Corporation Income Tax Form 500D;</text> </paragraph> <paragraph num="(3)"> <text>Maryland Application for Extension of Time to File Corporation Income Tax Return Form 500E; or</text> </paragraph> <paragraph num="(4)"> <text>Sales and Use Tax Return Form 202 or Form 202F.</text> </paragraph> </paragraph> <paragraph num="C."> <text>A taxpayer who remits taxes by ACH credit, ACH debit, direct debit, or wire transfer method shall indicate that fact on all returns required to be filed for that period for which payment is being made as listed under §A of this regulation.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Payment of Delinquent Taxes by Immediately Available Funds."> <text>The Comptroller may require a taxpayer having a delinquent unpaid tax liability to remit the unpaid taxes by immediately available funds regardless of the amount of the delinquent unpaid tax for:</text> <paragraph num="A."> <text>Income tax withheld by an employer;</text> </paragraph> <paragraph num="B."> <text>Corporation income tax; or</text> </paragraph> <paragraph num="C."> <text>Sales and use tax.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Tax-General Article, §§2-103, 13-104, and 13-105, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: April 26, 1993 (20:8 Md. R. 722)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01B amended effective January 14, 1999 (26:1 Md. R. 19); November 10, 2003 (30:22 Md. R. 1577); March 27, 2017 (44:6 Md. R. 324)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02 amended effective January 14, 1999 (26:1 Md. R. 19)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02 amended as an emergency provision effective July 1, 2003 (30:15 Md. R. 989); amended permanently effective November 10, 2003 (30:22 Md. R. 1577)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02 amended effective March 27, 2017 (44:6 Md. R. 324)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02A amended effective February 9, 2009 (36:3 Md. R. 207)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02A, B amended effective February 27, 1995 (22:4 Md. R. 235)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02A, B amended as an emergency provision effective July 1, 2003 (30:15 Md. R. 989)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02C amended effective May 13, 2002 (29:9 Md. R. 744); April 30, 2012 (39:8 Md. R. 533)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02F amended effective March 31, 2014 (41:6 Md. R. 377)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02I adopted effective April 30, 2012 (39:8 Md. R. 533)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02G amended as an emergency provision effective July 1, 2003 (30:15 Md. R. 989); emergency status expired December 31, 2003</annotation> <annotation type="History" subtype="Administrative History">Regulation .04A amended effective February 27, 1995 (22:4 Md. R. 235)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04B amended as an emergency provision effective July 1, 2003 (30:15 Md. R. 989)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04B amended and D adopted effective November 10, 2003 (30:22 Md. R. 1577)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05 amended as an emergency provision effective July 1, 2003 (30:15 Md. R. 989)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05 amended effective November 10, 2003 (30:22 Md. R. 1577)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05A amended effective February 27, 1995 (22:4 Md. R. 235)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05A, B amended effective January 14, 1999 (26:1 Md. R. 19); March 21, 2011 (38:6 Md. R. 393); April 30, 2012 (39:8 Md. R. 533); March 31, 2014 (41:6 Md. R. 377); May 2, 2022 (49:9 Md. R. 529)</annotation> </annotations> </chapter> <chapter num="03" heading="Record-Keeping Requirements for Records Created by Computer and Electronic Systems"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <text>The purpose of this chapter is to serve as a supplement to the requirements imposed on taxpayers for the maintenance and retention of books, records, and other sources of information under COMAR 03.02.02.03, 03.02.03.04, 03.03.01.05, 03.03.01.06—.07, 03.03.04.04, and 03.06.03.02. This chapter addresses the situation where all or a part of the taxpayer's records are received, created, maintained, or generated through various computer, electronic, and imaging processes and systems.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Electronic data interchange” or “EDI technology” means the computer-to-computer exchange of business transactions in a standardized structured electronic format.</text> </paragraph> <paragraph num="(2)"> <text>“Hard copy” means any documents, records, reports, or other data printed on paper.</text> </paragraph> <paragraph num="(3)"> <text>Machine-Sensible Record.</text> <paragraph num="(a)"> <text>“Machine-sensible record” means a collection of related information in an electronic format.</text> </paragraph> <paragraph num="(b)"> <text>“Machine-sensible record” does not include hard-copy records that are created or recorded on paper or stored in or by an imaging system such as microfilm, microfiche, or storage-only imaging systems.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Storage-Only Imaging System.</text> <paragraph num="(a)"> <text>“Storage-only imaging system” means a system of computer hardware and software that provides for the storage, retention, and retrieval of documents originally created on paper.</text> </paragraph> <paragraph num="(b)"> <text>“Storage-only imaging system” does not include any system, or part of a system, that manipulates or processes information or data contained on the document in any manner other than to reproduce the document in hard copy or as an optical image.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Record-Keeping Requirements—General."> <paragraph num="A."> <text>If a taxpayer retains records required to be retained by the Comptroller in both machine-sensible and hard-copy formats, the taxpayer shall make the records available to the Comptroller in both formats upon request of the Comptroller.</text> </paragraph> <paragraph num="B."> <text>Notwithstanding the requirement in §A of this regulation, a taxpayer may not be prohibited from demonstrating tax compliance with traditional hard-copy documents.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Record-Keeping Requirements—Machine-Sensible Records."> <paragraph num="A."> <text>General Requirements.</text> <paragraph num="(1)"> <text>Machine-sensible records used to establish tax compliance shall contain sufficient transaction-level detail information so that the details underlying the machine-sensible records can be identified and made available to the Comptroller.</text> </paragraph> <paragraph num="(2)"> <text>At the time of an examination, the retained machine-sensible records shall be capable of being retrieved and converted to a standard record format.</text> </paragraph> <paragraph num="(3)"> <text>A taxpayer who does not create the electronic equivalent of a traditional paper document in the ordinary course of business is not required to construct that record for tax purposes.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Electronic Data Interchange Requirements.</text> <paragraph num="(1)"> <text>If a taxpayer uses electronic data interchange processes and technology, the level of record detail, in combination with other records related to the transactions, shall be equivalent to that contained in an acceptable paper record. For example, the retained records shall contain such information as vendor name, invoice date, product description, quantity purchased, price, amount of tax, indication of tax status, and shipping detail. Codes may be used to identify some or all of the data elements, if the taxpayer provides a method which allows the Comptroller to interpret the coded information.</text> </paragraph> <paragraph num="(2)"> <text>The taxpayer may capture the information necessary to satisfy §B(1) of this regulation at any level within the accounting system and need not retain the original electronic data interchange transaction records if the audit trail, authenticity, and integrity of the retained records can be established.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Business Process Information.</text> <paragraph num="(1)"> <text>Upon the request of the Comptroller, the taxpayer shall provide a description of the business process that created the retained records. The description shall include the relationship between the records and the tax documents prepared by the taxpayer and the measures employed to ensure the integrity of the records.</text> </paragraph> <paragraph num="(2)"> <text>The taxpayer shall be capable of demonstrating the:</text> <paragraph num="(a)"> <text>Functions being performed as they relate to the flow of data through the system;</text> </paragraph> <paragraph num="(b)"> <text>Internal controls used to ensure accurate and reliable processing; and</text> </paragraph> <paragraph num="(c)"> <text>Internal controls used to prevent unauthorized addition, alteration, or deletion of retained records.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The following specific documentation is required for machine-sensible records retained pursuant to this regulation:</text> <paragraph num="(a)"> <text>Record formats or layouts;</text> </paragraph> <paragraph num="(b)"> <text>Field definitions, including the meaning of all codes used to represent information;</text> </paragraph> <paragraph num="(c)"> <text>File descriptions, for example, data set name; and</text> </paragraph> <paragraph num="(d)"> <text>Detailed charts of accounts and account descriptions.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Records Maintenance Requirements."> <text>The taxpayer's computer hardware or software shall accommodate the extraction and conversion of retained machine-sensible records.</text> </regulation> <regulation prefix="Regulation" num=".06" heading="Access to Machine-Sensible Records."> <text>The taxpayer shall provide the Comptroller access to machine-sensible records in one or more of the following manners:</text> <paragraph num="A."> <text>The taxpayer may arrange to provide the Comptroller, either directly or through a third party, with the hardware, software, and personnel resources to access the machine-sensible records;</text> </paragraph> <paragraph num="B."> <text>The taxpayer may convert the machine-sensible records to a standard record format specified by the Comptroller, including copies of files, on a magnetic medium that is agreed to by the Comptroller; or</text> </paragraph> <paragraph num="C."> <text>The taxpayer and the Comptroller may agree on other means of providing access to the machine-sensible records taking into account the taxpayer's facts and circumstances.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Taxpayer Responsibility."> <text>A taxpayer may contract with a third party to provide custodial or management services of the records. This contract does not relieve the taxpayer of its responsibilities under this chapter.</text> </regulation> <regulation prefix="Regulation" num=".08" heading="Alternative Storage Media."> <paragraph num="A."> <text>For purposes of storage and retention, a taxpayer may:</text> <paragraph num="(1)"> <text>Convert hard-copy documents, received or produced in the normal course of business and required to be retained, to microfilm, microfiche, or other storage-only imaging systems; and</text> </paragraph> <paragraph num="(2)"> <text>After a 3-month period, discard the original hard-copy documents, if the conditions of §B of this regulation are met.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Requirements.</text> <paragraph num="(1)"> <text>Microfilm, microfiche, and other storage-only imaging systems shall meet the requirements of this regulation.</text> </paragraph> <paragraph num="(2)"> <text>Documentation establishing the procedures for converting the hard-copy documents to microfilm, microfiche, or other storage-only imaging system shall be maintained and made available on request. The documentation shall, at a minimum, contain a sufficient description to allow an original document to be followed through the conversion system as well as internal procedures established for inspection and quality assurance.</text> </paragraph> <paragraph num="(3)"> <text>A taxpayer shall establish procedures for the effective identification, processing, storage, and preservation of the stored documents and for making them available for the period they are required to be retained.</text> </paragraph> <paragraph num="(4)"> <text>A taxpayer shall provide adequate facilities and equipment for reading, locating, and reproducing any documents maintained on microfilm, microfiche, or other storage-only imaging system so that records may be reviewed in a prompt and efficient manner.</text> </paragraph> <paragraph num="(5)"> <text>When displayed on storage-only imaging equipment or reproduced on paper, the documents shall exhibit a high degree of legibility and readability. For this purpose, legibility is defined as the quality of a letter or numeral that enables the observer to identify it positively and quickly to the exclusion of all other letters or numerals. Readability is defined as the quality of a group of letters or numerals being recognizable as words or complete numbers.</text> </paragraph> <paragraph num="(6)"> <text>All data stored on microfilm, microfiche, or other storage-only imaging systems shall be maintained and arranged in a manner that permits the prompt and efficient location of a particular record.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The Comptroller is under no obligation to use records stored on microfilm, microfiche, or other storage-only imaging system if there is evidence that it lacks authenticity or integrity or does not meet the requirements set forth in §B of this regulation.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Effect On Hard-Copy Record-Keeping Requirements."> <paragraph num="A."> <text>Except as otherwise provided in this chapter, this chapter does not relieve taxpayers of the responsibility to retain hard-copy records that are created or received in the ordinary course of business, as required by existing law and regulations.</text> </paragraph> <paragraph num="B."> <text>If hard-copy records are not produced or received in the ordinary course of transacting business, for example, when the taxpayer uses electronic data interchange technology, hard-copy records need not be created.</text> </paragraph> <paragraph num="C."> <text>Hard-copy records generated at the time of a transaction using a credit or debit card shall be retained unless all the details necessary to determine correct tax liability relating to the transaction are subsequently received and retained by the taxpayer in accordance with this chapter. These details include those listed in Regulation .04B(1) of this chapter.</text> </paragraph> <paragraph num="D."> <text>This regulation does not prevent the Comptroller from requesting hard-copy printouts in lieu of retained machine-sensible records at the time of examination.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Records Retention—Time Period."> <text>Records required to be retained under this chapter shall be preserved for the same time period as all other records are required to be kept for the applicable tax.</text> </regulation> <annotations> <annotation type="Authority">Tax-General Article, §2-103, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: September 7, 1998 (25:18 Md. R. 1434)</annotation> </annotations> </chapter> <chapter num="04" heading="Nonresident Contractor" reason="Repealed"> <annotations> <annotation type="History" subtype="Administrative History">Effective date: May 24, 2004 (31:10 Md. R. 794)</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.09 repealed effective August 18, 2014 (41:16 Md. R. 944)</annotation> </annotations> </chapter> <chapter num="05" heading="Private Letter Rulings"> <regulation prefix="Regulation" num=".01" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Authorized representative” means an attorney, agent, or person designated by a petitioner to represent the petitioner in a petition for a private letter ruling.</text> </paragraph> <paragraph num="(2)"> <text>“Person” means:</text> <paragraph num="(a)"> <text>An individual, receiver, trustee, guardian, personal representative, fiduciary, or representative of any kind;</text> </paragraph> <paragraph num="(b)"> <text>Any partnership, firm, association, corporation, or other entity; and</text> </paragraph> <paragraph num="(c)"> <text>A governmental entity or a unit or instrumentality of a governmental entity.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>“Petition” means a written request for a private letter ruling that is submitted to the Legal Division of the Comptroller’s Office by first-class mail, postage prepaid, or electronically or is delivered in person.</text> </paragraph> <paragraph num="(4)"> <text>Petitioner.</text> <paragraph num="(a)"> <text>“Petitioner” means a person who is requesting a private letter ruling.</text> </paragraph> <paragraph num="(b)"> <text>“Petitioner” does not include a class or group of persons who are not related parties in a specific and actual prospective transaction.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>“Private letter ruling” means a final, written, non-appealable determination:</text> <paragraph num="(a)"> <text>Applicable to a specific set of facts;</text> </paragraph> <paragraph num="(b)"> <text>Submitted in a written petition under this chapter; and</text> </paragraph> <paragraph num="(c)"> <text>Issued by the Comptroller of Maryland on:</text> <paragraph num="(i)"> <text>The application of tax law administered by the Comptroller under Tax-General Article, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(ii)"> <text>The application of regulations under this title to a specific set of facts; and</text> </paragraph> <paragraph num="(iii)"> <text>Other matters over which the Comptroller has administrative authority.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(6)"> <text>“Tax” means those State and local taxes and fees administered by the Comptroller.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="General."> <paragraph num="A."> <text>A private letter ruling is binding on the Comptroller for a period of 7 years from the date the private letter ruling is issued unless void, modified, or revoked in accordance with the provisions of Regulation .07 of this chapter.</text> </paragraph> <paragraph num="B."> <text>A private letter ruling is a determination of the Comptroller only as to the transaction that is the subject of the ruling.</text> </paragraph> <paragraph num="C."> <text>A petitioner is not bound by a private letter ruling.</text> </paragraph> <paragraph num="D."> <text>A petitioner’s failure to follow a private letter ruling may be considered in determining whether interest and penalty should be reduced or abated for reasonable cause in any subsequent challenge of an assessment or denial of a refund on the issue covered by the private letter ruling.</text> </paragraph> <paragraph num="E."> <text>A private letter ruling may be used as evidence of a petitioner’s knowledge or intent in a subsequent proceeding.</text> </paragraph> <paragraph num="F."> <text>The Comptroller may use information submitted in a petition for a private letter ruling for subsequent audit purposes.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Petition for Private Letter Ruling."> <paragraph num="A."> <text>A petition for private letter ruling shall be submitted with respect to a specific party and a specific, actual, and prospective transaction or situation.</text> </paragraph> <paragraph num="B."> <text>A petition for private letter ruling may be submitted by either:</text> <paragraph num="(1)"> <text>A person who is a party to the subject transaction; or</text> </paragraph> <paragraph num="(2)"> <text>An authorized representative on behalf of a party to the subject transaction.</text> </paragraph> <aftertext>EXAMPLE: The president of a trade association may submit a petition for private letter ruling on the taxability of a transaction contemplated by the trade association, such as whether a prospective purchase by the non-profit trade association is exempt from sales and use tax.</aftertext> </paragraph> <paragraph num="C."> <text>A petition for private letter ruling may not be submitted by:</text> <paragraph num="(1)"> <text>A group of persons that are not related parties in the subject transaction, or a person acting on their behalf;</text> </paragraph> <paragraph num="(2)"> <text>A person that is not a party to the subject transaction;</text> </paragraph> <paragraph num="(3)"> <text>A person that is not an authorized representative of the party to the subject transaction; or</text> </paragraph> <paragraph num="(4)"> <text>An anonymous or hypothetical party.</text> </paragraph> <aftertext>EXAMPLE: The president of a trade association may not submit a petition for private letter ruling on the taxability of a type of transaction that some or all its members are contemplating, because the trade association is not itself a party to the transaction and does not represent any party to the transaction in the transaction.</aftertext> </paragraph> <paragraph num="D."> <text>A petition for private letter ruling shall be submitted in the form and manner required by the Comptroller. The petition shall:</text> <paragraph num="(1)"> <text>Identify the petitioner and all parties involved in the transaction or question;</text> </paragraph> <paragraph num="(2)"> <text>Contain a concise statement of the question or issue on which the petition is based;</text> </paragraph> <paragraph num="(3)"> <text>Contain a detailed statement of the facts on which the petition is based;</text> </paragraph> <paragraph num="(4)"> <text>Contain a redacted or anonymized version of the statement of facts upon which the petition is based, which may be published under Regulation .06 of this chapter;</text> </paragraph> <paragraph num="(5)"> <text>Identify all statutes, regulations, judicial decisions, or other published federal or state guidance relevant to the petition, including authority adverse to the petitioner’s position;</text> </paragraph> <paragraph num="(6)"> <text>Include a discussion of whether, and in what manner, the statutes, regulations, judicial decisions, and other published federal or state guidance apply to the petitioner under the facts outlined in the petition;</text> </paragraph> <paragraph num="(7)"> <text>Contain a description of the petitioner’s interest in the private letter ruling, which shall include:</text> <paragraph num="(a)"> <text>A statement as to whether the private letter ruling sought is intended to affect the tax consequences of any transaction or transactions entered into or contemplated by the petitioner, its vendors, customers, clients, or any other person who is a party to the transaction described in the petition, which are known by the petitioner to be the subject of a Comptroller inquiry, audit, refund, or assessment proceeding or any inquiry, audit, refund, or assessment proceeding conducted on behalf of and with the approval of the Comptroller;</text> </paragraph> <paragraph num="(b)"> <text>A statement as to whether the private letter ruling sought is intended to affect the petitioner’s status under any of the licensing, regulatory, or statutory provisions administered by the Comptroller, which is known by the petitioner to be the subject of an inquiry, inspection, investigation, audit, refund request, voluntary disclosure, or other proceeding in the Comptroller’s Office; and</text> </paragraph> <paragraph num="(c)"> <text>An explanation of the circumstances surrounding the inquiry, audit, refund, assessment, inspection, investigation, or other proceedings, if any;</text> </paragraph> </paragraph> <paragraph num="(8)"> <text>Contain a statement as to whether the petitioner has sought or is seeking a private letter ruling or other guidance from the Internal Revenue Service, another state, or another taxing authority on the transaction or question that is the subject of its petition for a private letter ruling to the Comptroller of Maryland and, if so, from what other state or taxing authority;</text> </paragraph> <paragraph num="(9)"> <text>Contain, if the petitioner asserts a position or alternative positions, a concise proposed draft ruling;</text> </paragraph> <paragraph num="(10)"> <text>Contain the signature of the petitioner or the petitioner’s authorized representative; and</text> </paragraph> <paragraph num="(11)"> <text>Include, if the petition is submitted by an authorized representative, a completed Maryland Form 548 Power of Attorney.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Requests for Additional Information."> <paragraph num="A."> <text>At any time before a private letter ruling is issued, the Comptroller may request additional information from a petitioner.</text> </paragraph> <paragraph num="B."> <text>Additional information may include:</text> <paragraph num="(1)"> <text>Statements or other information required by Regulation .03 of this chapter;</text> </paragraph> <paragraph num="(2)"> <text>Documents or supporting information;</text> </paragraph> <paragraph num="(3)"> <text>Specific facts about the issue or transaction that is the subject of the petition; or</text> </paragraph> <paragraph num="(4)"> <text>Clarification of statements of facts submitted to the Comptroller as part of the request for a private letter ruling.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The petitioner shall submit the information to the Comptroller within 30 days after the date of the Comptroller’s request for additional information. The Comptroller’s request for additional information shall state the date on which the additional information is due and the manner of submission of the information.</text> </paragraph> <paragraph num="D."> <text>If a petitioner fails to timely submit the additional information requested by the Comptroller, the Comptroller may deny the petition for private letter ruling.</text> </paragraph> <paragraph num="E."> <text>The Comptroller may reopen a petition for private letter ruling denied under §D of this regulation if, within 12 months after the denial of the petition, the petitioner:</text> <paragraph num="(1)"> <text>Submits the additional information requested by Comptroller; and</text> </paragraph> <paragraph num="(2)"> <text>Affirms that there have been no material changes to the facts submitted in the petition for private letter ruling.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Withdrawals and Denials of Petitions."> <paragraph num="A."> <text>Petitioner may withdraw the petition for private letter ruling at any time before the private letter ruling is issued.</text> </paragraph> <paragraph num="B."> <text>Denial of Petition for Private Letter Ruling. The Comptroller may deny a petition for private letter ruling for good cause, including:</text> <paragraph num="(1)"> <text>The issue is the subject of existing guidance to taxpayers published by the Comptroller;</text> </paragraph> <paragraph num="(2)"> <text>The petitioner did not timely submit additional information requested by the Comptroller under Regulation .04 of this chapter.</text> </paragraph> <paragraph num="(3)"> <text>The issue identified in the petition is:</text> <paragraph num="(a)"> <text>Under extensive study or review; or</text> </paragraph> <paragraph num="(b)"> <text>Currently being considered in a rule-making procedure, contested case, or any other agency or judicial proceeding that may resolve the issue;</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>The Comptroller has reason to believe the issue is the subject of an examination, audit, or pending refund request of the petitioner for the same or a prior tax period;</text> </paragraph> <paragraph num="(5)"> <text>The petition for private letter ruling does not identify the taxpayer or taxpayers;</text> </paragraph> <paragraph num="(6)"> <text>The petition involves a hypothetical situation or alternative plans;</text> </paragraph> <paragraph num="(7)"> <text>The transaction for which the petition for private letter ruling is submitted is designed to avoid taxation;</text> </paragraph> <paragraph num="(8)"> <text>The facts or issues identified in the petition are unclear, overbroad, insufficient, or otherwise inappropriate as a basis on which to issue a private letter ruling;</text> </paragraph> <paragraph num="(9)"> <text>The petition seeks to determine whether a statute is constitutional under the Maryland Constitution or the United States Constitution;</text> </paragraph> <paragraph num="(10)"> <text>The issue is addressed by statute, regulation, or Court decision; or</text> </paragraph> <paragraph num="(11)"> <text>The issue involves the tax consequence of any proposed but not yet enacted federal, state, or local legislation.</text> </paragraph> </paragraph> <paragraph num="C."> <text>If the Comptroller denies a petition for private letter ruling under this section, the Comptroller shall notify the petitioner in writing of the reason for the denial within 60 days of the date on which the petition was submitted to the Comptroller.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Issuance and Publication of Private Letter Ruling."> <paragraph num="A."> <text>A private letter ruling shall be issued to the petitioner in writing.</text> </paragraph> <paragraph num="B."> <text>Publication.</text> <paragraph num="(1)"> <text>The Comptroller shall publish periodically on the Comptroller’s website redacted or anonymized copies of private letter rulings the Comptroller determines may be of interest to the public.</text> </paragraph> <paragraph num="(2)"> <text>The Comptroller, in its sole discretion, shall determine whether to publish a private letter ruling.</text> </paragraph> <paragraph num="(3)"> <text>A published private letter ruling is not binding on the Comptroller as to any person other than the petitioner who requested the private letter ruling.</text> </paragraph> <paragraph num="(4)"> <text>Published private letter rulings may be relied upon by the public as informal guidance.</text> </paragraph> <paragraph num="(5)"> <text>If the Comptroller intends to publish a private letter ruling, the Comptroller shall provide, at least 15 business days prior to publication, a redacted or anonymized draft for publication of the private letter ruling to the petitioner or the petitioner’s authorized representative.</text> </paragraph> <paragraph num="(6)"> <text>In the draft for publication, the Comptroller shall redact or anonymize identifying details, trade secrets, commercial or financial information considered privileged, and any information that would constitute an unwarranted invasion of personal privacy.</text> </paragraph> <paragraph num="(7)"> <text>The draft for publication shall retain information sufficient to provide meaningful guidance to the public.</text> </paragraph> <paragraph num="(8)"> <text>Within 15 business days of the date the draft of the private letter ruling intended for publication is sent to petitioner, the petitioner may submit revisions to the proposed draft for publication of the anonymized or redacted information, if any, to the Comptroller.</text> </paragraph> <paragraph num="(9)"> <text>Failure of the petitioner to submit proposed revisions within 15 business days shall be deemed a waiver of any claim that the version for publication contains confidential information.</text> </paragraph> <paragraph num="(10)"> <text>The Comptroller shall respond to petitioner’s proposed revisions of the anonymized or redacted private letter ruling before publication.</text> </paragraph> <paragraph num="(11)"> <text>The Comptroller shall consider the petitioner’s proposed redactions to the draft intended for publication; however, the Comptroller, in its sole discretion, shall determine the contents of the published private letter ruling.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Status of Private Letter Rulings."> <paragraph num="A."> <text>Effect and Non-Appealability.</text> <paragraph num="(1)"> <text>A private letter ruling becomes binding on the Comptroller on the date it is issued.</text> </paragraph> <paragraph num="(2)"> <text>A private letter ruling is binding on the Comptroller for 7 years from the date it is issued, unless the private letter ruling is void or is modified or revoked under this regulation.</text> </paragraph> <paragraph num="(3)"> <text>A private letter ruling may not be appealed to the Comptroller’s Hearings and Appeals Division, the Maryland Tax Court, any other administrative agency or tribunal, or any State or federal court.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Void Private Letter Rulings.</text> <paragraph num="(1)"> <text>A private letter ruling is void and of no effect from the date it is issued if:</text> <paragraph num="(a)"> <text>The petition contains a misstatement or omission of material facts in the petition; or</text> </paragraph> <paragraph num="(b)"> <text>The facts are determined to be materially different from the representations on which the void private letter ruling was based.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>A void private letter ruling is not binding on the Comptroller.</text> </paragraph> <paragraph num="(3)"> <text>Penalty and interest shall be applied to any tax owed but not remitted in reliance on a private letter ruling that is void, and it shall not be a defense to the assessment of any tax, interest, or penalty that the petitioner relied on the private letter ruling in not paying the tax.</text> </paragraph> <paragraph num="(4)"> <text>The Comptroller may consider a misstatement, omission, or misrepresentation of material facts, whether made by the petitioner or the petitioner’s authorized representative, that voids a private letter ruling to indicate fraud.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Modification or Revocation of Private Letter Rulings</text> <paragraph num="(1)"> <text>A private letter ruling is of no force or effect, and no longer binds the Comptroller, automatically upon a material change in fact, or as of the effective date of a change in any statute, regulation or rule, or the issuance of a final decision in a contested case on which the private letter ruling relies.</text> </paragraph> <paragraph num="(2)"> <text>A petitioner may request a written modification or revocation of a private letter ruling. A request for modification or revocation of a private letter ruling shall:</text> <paragraph num="(a)"> <text>Be submitted in writing;</text> </paragraph> <paragraph num="(b)"> <text>Include a detailed description of the basis for the modification or revocation request; and</text> </paragraph> <paragraph num="(c)"> <text>Conform to the requirements of Regulation .03 of this chapter.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The Comptroller may modify or revoke a private letter ruling if the Comptroller determines that a material change in facts or a change in law, regulations, rules, or a final decision in a contested case affects the validity of the private letter ruling. When modifying a private letter ruling, the Comptroller shall notify the petitioner in writing of the modified private letter ruling.</text> </paragraph> <paragraph num="(4)"> <text>A modified or revoked private letter ruling does not apply to any period that predates the date the material change in facts occurred, or that predates the date of the change in law, regulations, rules, or final decision in a contested case that resulted in the modification or revocation of the private letter ruling.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Renewal of Private Letter Ruling.</text> <paragraph num="(1)"> <text>A petitioner may request a renewal of a private letter ruling no earlier than 6 months before the expiration of the private letter ruling.</text> </paragraph> <paragraph num="(2)"> <text>A request for renewal of a private letter ruling shall:</text> <paragraph num="(a)"> <text>Be submitted in writing;</text> </paragraph> <paragraph num="(b)"> <text>Include a detailed description of the basis for the renewal, including:</text> <paragraph num="(i)"> <text>A statement that no material facts have changed; and</text> </paragraph> <paragraph num="(ii)"> <text>A statement that no law, regulation, rule, or decision in a contested case affects the validity of the private letter ruling.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(3)"> <text>The Comptroller may deny a request for renewal of a private letter ruling:</text> <paragraph num="(a)"> <text>If the Comptroller, in its sole discretion, determines that:</text> <paragraph num="(i)"> <text>Material facts have changed; or</text> </paragraph> <paragraph num="(ii)"> <text>There has been a change in law, regulation, rule, or final decision in a contested case that affects the validity of the private letter ruling; or</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>For any of the reasons listed in Regulation .05B of this chapter.</text> </paragraph> </paragraph> </paragraph> <paragraph num="E."> <text>Expiration of Private Letter Ruling.</text> <paragraph num="(1)"> <text>Unless renewed, a private letter ruling automatically expires as to the petitioner 7 years from the date the private letter ruling is issued.</text> </paragraph> <paragraph num="(2)"> <text>An expired private letter ruling is not binding on the Comptroller.</text> </paragraph> <paragraph num="(3)"> <text>An expired private letter ruling may be used as evidence of petitioner’s knowledge or intent in a subsequent proceeding.</text> </paragraph> </paragraph> </regulation> <annotations> <annotation type="Authority">State Government Article, §10-122(a); Tax-General Article, §§2-102, 2-103, and 13-1A-05; Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: January 8, 2024 (50:26 Md. R. 1131)</annotation> </annotations> </chapter> </subtitle> <subtitle num="02" heading="Alcohol and Tobacco Tax"> <chapter num="01" heading="Alcoholic Beverages"> <regulation prefix="Regulation" num=".01" heading="Method of Tax Payment Applicable to Beer Delivered Into Maryland."> <paragraph num="A."> <text>Prepayment of Beer Tax. Beer may not be consigned into the State of Maryland, unless:</text> <paragraph num="(1)"> <text>The consignor is the holder of a nonresident dealer's permit issued by the Alcohol and Tobacco Commission;</text> </paragraph> <paragraph num="(2)"> <text>The permittee has furnished the Comptroller a suitable security;</text> </paragraph> <paragraph num="(3)"> <text>All required beer taxes have been prepaid as provided in this regulation; and</text> </paragraph> <paragraph num="(4)"> <text>All applicable provisions of Alcoholic Beverages Article and Tax-General Article, Annotated Code of Maryland, have been met.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Certificates to Evidence Prepayment of Tax.</text> <paragraph num="(1)"> <text>Prepayment of Maryland beer tax by the holder of a nonresident dealer's permit shall be evidenced by certificates issued by the Comptroller.</text> </paragraph> <paragraph num="(2)"> <text>Before consigning any beer into the State for consumption in the State, each holder of a nonresident dealer's permit shall obtain from the Comptroller a certificate denoting prepayment of the Maryland beer tax. The prepayment shall be in an amount equivalent to the Maryland beer tax paid by the holder of the nonresident dealer's permit for the total number of gallons of beer delivered during the immediate preceding months of July and August, provided, however, that if deliveries were not made in either or both of these months, or if the Comptroller shall find that the prepayment so computed is inadequate or excessive, the Comptroller shall determine the amount of the prepayment to be made before the issuance of the certificate. However, prepayment of the beer tax may not be required of a holder of a nonresident dealer's permit covering consignments to Classes E, F, and G licensees, or to the holder of a Maryland manufacturer's license. The beer tax on beer brewed outside the United States, unless prepaid as provided in this regulation, shall be prepaid through the acquisition of a tax prepayment certificate obtained from the Comptroller covering each individual order before delivery within this State.</text> </paragraph> <paragraph num="(3)"> <text>Not later than the 15th day of each month, all nonresident dealers authorized to sell beer to Maryland licensed wholesalers shall file a complete and accurate beer tax return with the Comptroller covering all dispositions of beer into this State during the preceding calendar month. This return shall be accompanied by cash remittance covering the beer tax computed on it, less a deduction for taxes paid on dispositions of beer upon which the beer tax has been prepaid pursuant to §B(2) of this regulation on an individual order basis.</text> </paragraph> <paragraph num="(4)"> <text>The Comptroller may at any time increase or decrease the amount of any prepayment of the beer tax made pursuant to §B(1), above, if it is found by the Comptroller that the amount of the prepayment is inadequate or excessive. If a nonresident dealer is required to increase the amount of beer tax prepayment, that nonresident dealer may not consign any additional amounts of beer into the State until a supplemental prepayment certificate has been issued denoting the additional prepayment of beer tax.</text> </paragraph> <paragraph num="(5)"> <text>If the permit of a nonresident dealer expires, is surrendered, or is cancelled, the nonresident dealer may file a refund claim together with the original beer tax prepayment certificates with the Comptroller for the amount of the outstanding beer tax prepayment certificates. When the Comptroller is satisfied that all beer tax due under the Tax-General Article has been paid, together with any and all interest and penalties, the Comptroller may refund to the nonresident dealer any beer tax prepayment remaining.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Securities.</text> <paragraph num="(1)"> <text>Every nonresident dealer engaged in the business of selling or delivering beer for consumption within this State shall file with the Comptroller a continuing security in the minimum penalty of $5,000. This security shall be in such form as required by Tax-General Article, §13-826, and shall be conditioned upon the payment of all taxes, penalties, and interest imposed by the Tax-General Article upon the sale or delivery of beer.</text> </paragraph> <paragraph num="(2)"> <text>Securities filed under this Regulation shall be governed by the provisions of Tax-General Article, §§13-827—13-831.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Repealed." /> <regulation prefix="Regulation" num=".03" heading="— .07 Recodified to COMAR 14.23.01." /> <regulation prefix="Regulation" num=".08" heading=". Credit or Refund of Taxes"> <text>Maryland, may not be allowed to any licensee for the sale and delivery of any alcoholic beverage alleged to have been made</text> <text>outside this State unless it shall be proved to the satisfaction of the Comptroller that:</text> <paragraph num="A."> <text>The sale and delivery was made to a person, firm, or corporation authorized to receive the alcoholic beverages under the</text> </paragraph> <paragraph num="B."> <text>Delivery.</text> <paragraph num="(1)"> <text>The licensee is obligated to and delivers the alcoholic beverages to a licensed common carrier for transportation outside this State to the authorized purchaser;</text> </paragraph> <paragraph num="(2)"> <text>The delivery to the regular place of business of the authorized purchaser actually is made by a vehicle owned by the licensee and regularly used by the licensee in the conduct of business; or</text> </paragraph> <paragraph num="(3)"> <text>The delivery is made by contract carrier, previously approved by the Comptroller, to the regular place of business of the authorized purchaser.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Recodified to COMAR 14.23.01." /> <regulation prefix="Regulation" num=".10" heading="Repealed." /> <regulation prefix="Regulation" num=".11" heading="— .22 Recodified to COMAR 14.23.01." /> <annotations> <annotation type="Authority">Tax-General Article §2-103, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date:</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 effective December 1, 1972</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 amended effective December 14, 1979 (6:25 Md. R. 1978)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01A amended effective June 15, 1979 (6:12 Md. R. 1046); September 14, 1981 (8:18 Md. R. 1476); July 15, 1985 (12:14 Md. R. 1432)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02 effective October 1, 1967</annotation> <annotation type="History" subtype="Administrative History">Regulation .02A amended effective July 12, 1987 (14:14 Md. R. 1570)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective January 31, 1983 (10:2 Md. R. 104)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02E amended effective July 12, 1987 (14:14 Md. R. 1570)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02F amended effective July 12, 1987 (14:14 Md. R. 1570)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03 effective December 1, 1972</annotation> <annotation type="History" subtype="Administrative History">Regulation .03F amended as an emergency provision effective July 14, 1977 (4:16 Md. R. 1203)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03F amended effective December 14, 1979 (6:25 Md. R. 1978); September 14, 1981 (8:18 Md. R. 1476)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04 effective December 10, 1968</annotation> <annotation type="History" subtype="Administrative History">Regulation .04A amended effective November 16, 1979 (6:23 Md. R. 1838)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05 effective March 1, 1974</annotation> <annotation type="History" subtype="Administrative History">Regulation .05G amended effective November 16, 1979 (6:23 Md. R. 1838)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06 effective September 1, 1962</annotation> <annotation type="History" subtype="Administrative History">Regulation .06C, D adopted effective November 16, 1979 (6:23 Md. R. 1838)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06D amended effective October 25, 1982 (9:21 Md. R. 2104)</annotation> <annotation type="History" subtype="Administrative History">Regulations .07 effective November 1, 1963</annotation> <annotation type="History" subtype="Administrative History">Regulations .08, .09 effective July 15, 1949</annotation> <annotation type="History" subtype="Administrative History">Regulation .10 effective December 1, 1972</annotation> <annotation type="History" subtype="Administrative History">Regulation .10A, C amended effective December 14, 1979 (6:25 Md. R. 1978); September 14, 1981 (8:18 Md. R. 1476)</annotation> <annotation type="History" subtype="Administrative History">Regulation .11 effective June 1, 1973</annotation> <annotation type="History" subtype="Administrative History">Regulation .12 repealed effective December 14, 1979 (6:25 Md. R. 1978)</annotation> <annotation type="History" subtype="Administrative History">Regulation .12 adopted effective October 17, 1980 (7:21 Md. R. 1992)</annotation> <annotation type="History" subtype="Administrative History">Regulation .13 adopted effective November 23, 1981 (8:23 Md. R. 1854)</annotation> <annotation type="History" subtype="Administrative History">Regulation .14 adopted effective October 16, 1989 (16:20 Md. R. 2179)</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.04 and .07—.12 amended effective August 6, 1990 (17:15 Md. R. 1853)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02 repealed and new Regulation .02 adopted effective May 1, 1991 (18:8 Md. R. 863)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02 repealed effective October 5, 1998 (25:20 Md. R. 1527)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03 amended effective October 1, 1996 (23:18 Md. R. 1315); October 5, 1998 (25:16 Md. R. 1527)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03 amended as an emergency provision effective April 25, 2006 (33:15 Md. R. 1271); amended permanently effective October 9, 2006 (33:20 Md. R. 1611)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03A amended effective May 1, 1991 (18:8 Md. R. 863)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03D amended effective April 5, 2010 (37:7 Md. R. 569)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04 amended as an emergency provision effective April 25, 2006 (33:15 Md. R. 1271); amended permanently effective October 9, 2006 (33:20 Md. R. 1611)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04A, C amended effective October 5, 1998 (25:20 Md. R. 1527)</annotation> <annotation type="History" subtype="Administrative History">Regulations .05, .06, and .13 repealed and new Regulations .05, .06, and .13 adopted effective August 6, 1990 (17:15 Md. R. 1853)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05 amended effective March 1, 1997 (24:4 Md. R. 290)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05 amended as an emergency provision effective April 25, 2006 (33:15 Md. R. 1271); amended permanently effective October 9, 2006 (33:20 Md. R. 1611)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05B amended effective May 1, 1992 (19:7 Md. R. 745)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05D amended effective October 5, 1998 (25:20 Md. R. 1527)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05F amended effective November 8, 2004 (31:22 Md. R. 1595); December 6, 2007 (34:24 Md. R. 2157)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06C adopted effective October 5, 1998 (25:20 Md. R. 1527)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10 repealed effective October 1, 1996 (23:18 Md. R. 1315)</annotation> <annotation type="History" subtype="Administrative History">Regulation .11 amended effective October 5, 1998 (25:20 Md. R. 1527)</annotation> <annotation type="History" subtype="Administrative History">Regulation .11 amended as an emergency provision effective April 25, 2006 (33:15 Md. R. 1271); amended permanently effective October 9, 2006 (33:20 Md. R. 1611)</annotation> <annotation type="History" subtype="Administrative History">Regulation .11 amended effective April 5, 2010 (37:7 Md. R. 569)</annotation> <annotation type="History" subtype="Administrative History">Regulation .12 amended effective May 1, 1991 (18:8 Md. R. 863); March 1, 1997 (24:4 Md. R. 290)</annotation> <annotation type="History" subtype="Administrative History">Regulation .13 repealed and new Regulation .13 adopted effective May 4, 1998 (25:9 Md. R. 678)</annotation> <annotation type="History" subtype="Administrative History">Regulation .13 amended as an emergency provision effective April 25, 2006 (33:15 Md. R. 1271); amended permanently effective October 9, 2006 (33:20 Md. R. 1611)</annotation> <annotation type="History" subtype="Administrative History">Regulation .14A, B amended effective October 5, 1998 (25:20 Md. R. 1527)</annotation> <annotation type="History" subtype="Administrative History">Regulation .15 adopted effective October 1, 1995 (22:17 Md. R. 1316)</annotation> <annotation type="History" subtype="Administrative History">Regulation .15 amended effective October 5, 1998 (25:20 Md. R. 1527)</annotation> <annotation type="History" subtype="Administrative History">Regulation .16 adopted effective December 16, 1996 (23:25 Md. R. 1784)</annotation> <annotation type="History" subtype="Administrative History">Regulation .16 amended effective October 5, 1998 (25:20 Md. R. 1527)</annotation> <annotation type="History" subtype="Administrative History">Regulation .17 adopted effective September 22, 1997 (24:19 Md. R. 1339)</annotation> <annotation type="History" subtype="Administrative History">Regulation .18 adopted effective October 5, 1998 (25:20 Md. R. 1527)</annotation> <annotation type="History" subtype="Administrative History">Regulation .19 adopted effective March 1, 2007 (33:26 Md. R. 1995)</annotation> <annotation type="History" subtype="Administrative History">Regulation .20 adopted effective April 5, 2010 (37:7 Md. R. 569)</annotation> <annotation type="History" subtype="Administrative History">Regulation .20 amended effective February 16, 2015 (42:3 Md. R. 314)</annotation> <annotation type="History" subtype="Administrative History">Regulation .21 adopted effective April 5, 2010 (37:7 Md. R. 569)</annotation> <annotation type="History" subtype="Administrative History">Regulation .22 adopted effective April 5, 2010 (37:7 Md. R. 569)</annotation> <annotation type="History" subtype="Administrative History">Regulations .03—.09, .11— .22 recodified in new chapter COMAR 14.23.01 effective December 26, 2022 (49:26 Md. R. 1080)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01A amended effective July 10, 2023 (50:13 Md. R. 511)</annotation> </annotations> </chapter> <chapter num="02" heading="Tobacco Tax"> <regulation prefix="Regulation" num=".01" heading="Purchase of Cigarette Tax Stamps."> <paragraph num="A."> <text>The cigarette tax stamps to evidence the tobacco tax imposed by Tax-General Article, §12-102, shall be purchased from the Comptroller.</text> </paragraph> <paragraph num="B."> <text>Cigarette tax stamps shall be purchased by presenting a requisition to the Comptroller on forms and in a manner required by the Comptroller.</text> </paragraph> <paragraph num="C."> <text>A person may not purchase cigarette tax stamps from any person other than the Comptroller unless the purchaser has obtained written permission from the Comptroller.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Cigarette Sales to Out-of-State Vendors."> <paragraph num="A."> <text>A wholesaler or subwholesaler in the State who sells cigarettes to an out-of-State wholesaler or retailer for resale to out-of-State consumers shall:</text> <paragraph num="(1)"> <text>Deliver the cigarettes outside Maryland in the licensee's vehicle;</text> </paragraph> <paragraph num="(2)"> <text>Deliver the cigarettes to a common carrier for shipment outside of Maryland; or</text> </paragraph> <paragraph num="(3)"> <text>In the case of cigarettes destined for transport and sale out of State, deliver cigarettes bearing Maryland tax stamps or tax stamps of the jurisdiction in which they will be resold.</text> </paragraph> </paragraph> <paragraph num="B."> <text>A Maryland wholesaler or subwholesaler who delivers in Maryland to an out-of-State wholesaler, subwholesaler, or retailer any cigarettes which do not bear Maryland tax stamps, tax stamps of the state or district in which they will be resold, or does not impose a cigarette tax will be held liable for the Maryland tobacco tax.</text> </paragraph> <paragraph num="C."> <text>Wholesalers who make deliveries as described in §A shall keep complete and accurate records of these deliveries. Reports of these deliveries shall be made on schedules attached to monthly reports.</text> </paragraph> <paragraph num="D."> <text>The tax shall be assessed and collected by the Comptroller from the wholesaler in the absence of complete and accurate records of deliveries.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Wholesaler and Subwholesaler Record Requirements."> <paragraph num="A."> <text>Each licensee shall:</text> <paragraph num="(1)"> <text>Take a monthly inventory at the beginning of business on the first day of each month or at the close of business on the last day of each month of all cigarettes on the premises. Any distributor who finds it impractical to take inventory on these dates shall notify the Comptroller of another specific date on which inventory will be taken. Inventories shall exclude cigarettes:</text> <paragraph num="(a)"> <text>In vending machines; and</text> </paragraph> <paragraph num="(b)"> <text>Transferred to retail stock on written memorandum.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Obtain invoices covering all purchases of cigarettes whether tax stamped or unstamped.</text> </paragraph> <paragraph num="(3)"> <text>Maintain a daily receiving record of cigarettes which includes the following:</text> <paragraph num="(a)"> <text>Date;</text> </paragraph> <paragraph num="(b)"> <text>Invoice number;</text> </paragraph> <paragraph num="(c)"> <text>Quantity;</text> </paragraph> <paragraph num="(d)"> <text>Brand; and</text> </paragraph> <paragraph num="(e)"> <text>Supplier name.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Prepare an invoice for every sale of cigarettes which includes:</text> <paragraph num="(a)"> <text>Name and address of the purchaser; and</text> </paragraph> <paragraph num="(b)"> <text>Amount of cigarettes purchased.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>Retain invoices covering all purchases of Maryland cigarette tax stamps.</text> </paragraph> <paragraph num="(6)"> <text>Maintain a daily record of tax stamps affixed to cigarettes.</text> </paragraph> <paragraph num="(7)"> <text>Maintain a record of names and addresses of all retailers to whom cigarettes are sold.</text> </paragraph> <paragraph num="(8)"> <text>Prepare credit memoranda with the date the following transactions were completed:</text> <paragraph num="(a)"> <text>Cigarettes returned by customers to wholesale stock; and</text> </paragraph> <paragraph num="(b)"> <text>Unstamped and tax stamped cigarettes returned to manufacturers.</text> </paragraph> </paragraph> <paragraph num="(9)"> <text>Prepare memoranda providing details of the exchange of fresh cigarettes for stale cigarettes for factory representatives indicating:</text> <paragraph num="(a)"> <text>The name and address of the factory representative; and</text> </paragraph> <paragraph num="(b)"> <text>The company represented.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>A wholesaler who prepares a written memo when removing cigarettes from wholesale stock for retail sales is not required to prepare a retail invoice.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Sales to Armed Forces Exchanges or Commissaries."> <paragraph num="A."> <text>When deliveries of unstamped cigarettes are made to an armed forces exchange or commissary, the person making the delivery shall possess an invoice with the following:</text> <paragraph num="(1)"> <text>Name and address of wholesaler;</text> </paragraph> <paragraph num="(2)"> <text>Name and address of purchaser; and</text> </paragraph> <paragraph num="(3)"> <text>Quantity and brands of cigarettes.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Unstamped cigarettes shall be subject to confiscation if the conditions of §A are not met.</text> </paragraph> <paragraph num="C."> <text>Wholesalers selling unstamped cigarettes in §A shall file the form required by the Comptroller with the following:</text> <paragraph num="(1)"> <text>Date of sale;</text> </paragraph> <paragraph num="(2)"> <text>Name and address of exchange; and</text> </paragraph> <paragraph num="(3)"> <text>Quantity and brands sold.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Cigarette Tax Stamps."> <paragraph num="A."> <text>Purchases, Payments, and Tax Credits.</text> <paragraph num="(1)"> <text>Tax stamps may be purchased for:</text> <paragraph num="(a)"> <text>Cash;</text> </paragraph> <paragraph num="(b)"> <text>Approved credit up to 95 percent of the face amount of the security filed with and approved by the Comptroller as required by Tax-General Article, §13-825, Annotated Code of Maryland; and</text> </paragraph> <paragraph num="(c)"> <text>Cigarette tax credits issued by the Comptroller.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Tax stamp payments are due for:</text> <paragraph num="(a)"> <text>Cash sales at the time of purchase; and</text> </paragraph> <paragraph num="(b)"> <text>Credit sales made during the month with the cigarette tax return due by the 21st of the month following the report month.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Approved cigarette tax credits used when purchasing cigarette tax stamps shall be presented at the time the purchase order for cigarette tax stamps is placed with the Comptroller.</text> </paragraph> <paragraph num="(4)"> <text>If any licensed wholesaler who purchases cigarette tax stamps on credit fails to remit full payment for accumulated cigarette tax stamps purchased on credit by the due date, the credit privileges may be suspended or revoked by the Comptroller.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The Comptroller may exempt a licensed wholesaler from posting a security when the wholesaler has been in continuous compliance with the:</text> <paragraph num="(1)"> <text>Tobacco tax laws of Maryland for the past 5 years; and</text> </paragraph> <paragraph num="(2)"> <text>Conditions of any bond or other security filed with the Comptroller pursuant to Tax-General Article, §13-825, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The Comptroller may revoke an exemption granted to a person under this regulation for:</text> <paragraph num="(1)"> <text>Failure to be in continuous compliance with the tobacco tax laws;</text> </paragraph> <paragraph num="(2)"> <text>Failure to pay any tobacco tax or assessment when due;</text> </paragraph> <paragraph num="(3)"> <text>Failure to file a tobacco tax return or report when due; or</text> </paragraph> <paragraph num="(4)"> <text>For other good and sufficient reasons.</text> </paragraph> </paragraph> <paragraph num="D."> <text>A licensee may apply to the Comptroller for reinstatement of a revoked exemption under §C of this regulation. The Comptroller may reinstate the security exemption if the licensed wholesaler has been in continuous compliance as provided in §B for a period of 2 years following the revocation.</text> </paragraph> <paragraph num="E."> <text>A licensed wholesaler applying for an exemption from filing a security shall complete forms provided by the Comptroller and shall submit the supporting information as the Comptroller deems necessary. This information may include, but is not limited to, an audited financial statement, copies of federal and State tax returns for the preceding 3 years, and a current balance sheet. An exempt licensed wholesaler shall file a renewal application for exemption concurrent with the license renewal application in order to maintain the exemption. When the licensed wholesaler is a corporation, a new exemption application shall be filed any time the officer of the corporation exercising direct control over its fiscal management is changed.</text> </paragraph> <paragraph num="F."> <text>Security Exemption.</text> <paragraph num="(1)"> <text>The Comptroller shall notify the applicant in a timely fashion of the approval or rejection of the security exemption.</text> </paragraph> <paragraph num="(2)"> <text>If approved, the amount of the maximum credit limit based on the past 5 years experience of the wholesaler shall be established.</text> </paragraph> <paragraph num="(3)"> <text>If, after an exemption has been approved, a licensee's need to purchase tax stamps is in an amount that exceeds the maximum credit limit, the licensee may apply for an additional exemption from filing a security in accordance with §E of this regulation.</text> </paragraph> </paragraph> <paragraph num="G."> <text>Wholesalers who do not post a security or have not been granted a security exemption under this regulation will be required to purchase stamps by authorizing the Comptroller to withdraw the amounts due from the wholesaler’s bank account, otherwise known a direct debit.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Sales to Maryland Subwholesalers for Resale Outside Maryland."> <paragraph num="A."> <text>A wholesaler may deliver unstamped cigarettes to a Maryland subwholesaler only if that subwholesaler has applied for and received permission from the Comptroller to buy unstamped cigarettes for sale outside Maryland.</text> </paragraph> <paragraph num="B."> <text>A subwholesaler who receives the permission in §A of this regulation shall:</text> <paragraph num="(1)"> <text>File monthly returns containing schedules showing each delivery outside Maryland;</text> </paragraph> <paragraph num="(2)"> <text>Segregate unstamped cigarettes for sale outside Maryland from other inventory; and</text> </paragraph> <paragraph num="(3)"> <text>Mark unstamped cigarettes for sale outside Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Sample Cigarettes."> <paragraph num="A."> <text>Packages of sample cigarettes, which are to be provided to consumers free of charge, shall be unstamped and prominently identified as “Sample Cigarettes Not for Sale—All Applicable State Taxes Paid”.</text> </paragraph> <paragraph num="B."> <text>Manufacturers shall supply the Comptroller with a complete listing, including addresses of all representatives, warehouses, advertising agencies, etc., who distribute or store sample cigarettes in Maryland on their behalf.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Repealed." /> <regulation prefix="Regulation" num=".09" heading="Premium Cigar Ingredients."> <text>Premium cigars include those that are made from 100 percent whole tobacco leaves where the filler, binder, and wrapper, are made of all tobacco, and may include adhesives or other materials used to maintain size, texture, or flavor and includes no tips, filters or nontobacco mouthpieces.</text> </regulation> <annotations> <annotation type="Authority">Tax-General Article, §§2-103, 12-303, and 12-306, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date:</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 effective June 27, 1961</annotation> <annotation type="History" subtype="Administrative History">Regulation .01D repealed effective January 23, 1981 (8:2 Md. R. 110)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02 effective April 28, 1965</annotation> <annotation type="History" subtype="Administrative History">Regulations .03—.04 effective June 27, 1961</annotation> <annotation type="History" subtype="Administrative History">Regulation .05 effective July 1, 1969</annotation> <annotation type="History" subtype="Administrative History">Regulation .05A amended effective December 21, 1981 (8:25 Md. R. 1993)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05F adopted effective November 16, 1979 (6:23 Md. R. 1838)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05 repealed and new Regulation .05 adopted effective September 19, 1988 (15:19 Md. R. 2245)</annotation> <annotation type="History" subtype="Administrative History">Regulations .06—.08 effective June 27, 1961</annotation> <annotation type="History" subtype="Administrative History">Regulation .07 repealed effective August 6, 1990 (17:15 Md. R. 1853)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09 adopted effective January 1, 1987 (13:25 Md. R. 2656)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective August 6, 1990 (17:15 Md. R. 1854)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05 amended effective July 1, 1993 (20:7 Md. R. 639)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05G amended effective July 10. 2023 (50:13 Md. R. 511)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06 amended effective July 10. 2023 (50:13 Md. R. 511)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07B amended effective July 10. 2023 (50:13 Md. R. 511)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08 adopted effective May 29, 2000 (27:10 Md. R. 964)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08 repealed as an emergency provision effective May 1, 2011 (38:11 Md. R. 670); emergency extended to March 16, 2012 (38:21 Md. R. 1274); repealed permanently effective November 28, 2011 (38:24 Md. R. 1499)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08D amended effective August 1, 2005 (32:13 Md. R. 1110); September 1, 2006 (33:17 Md. R. 1436)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08H adopted effective March 23, 2009 (36:6 Md. R. 487)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09 adopted effective March 4, 2013 (40:4Md. R. 344)</annotation> </annotations> </chapter> <chapter num="03" heading="Maryland Cigarette Sales Below Cost Act"> <annotations> <annotation type="History" subtype="Administrative History">Effective date: November 24, 1969</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—03, .04C, .05C, and .06 amended effective January 23, 1981 (8:2 Md. R. 110)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective August 6, 1990 (17:15 Md. R. 1854)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04B amended effective June 25, 2001 (28:12 Md. R. 1103)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07 adopted effective July 4, 1994 (31:13 Md. R. 1154)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07 amended effective April 1, 2002 (29:6 Md. R. 566)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07C amended effective May 29, 2000 (27:10 Md. R. 964)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08 adopted effective June 17, 1999 (26:12 Md. R. 925)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified to new chapter COMAR 14.23.02 effective December 26, 2022 (49:26 Md. R. 1080)</annotation> </annotations> </chapter> <chapter num="04" heading="Administration"> <regulation prefix="Regulation" num=".01" heading="Tax Returns and Reports."> <paragraph num="A."> <text>Alcoholic Beverage Tax Returns and Reports.</text> <paragraph num="(1)"> <text>Holders of a manufacturer's or a wholesaler's license authorized to sell beer, wine, or liquor, or Class E, F, or G license holders authorized to sell beer, wine, or liquor, or holders of a nonresident dealer permit authorized to sell beer shall file a tax return with the Revenue Administration Division on forms prescribed by the Comptroller for each month that their license or permit is active. A tax return is required for each period even if the licensee or permittee had no activity. Manufacturers and wholesalers shall file a beer, wine, or liquor tax return under a filing frequency provided in §A(4) of this regulation. Nonresident dealers shall file a beer tax return by the 15th of the month following the report month. Class E, F, and G licensees shall file the appropriate tax return by the 25th of the month following the report month.</text> </paragraph> <paragraph num="(2)"> <text>Holders of an import-export, nonresident storage, or a public storage permit shall file a report with the Revenue Administration Division on forms prescribed by the Comptroller for each month that their permit is active. A report is required for each month even if the permittee had no activity. Import-export, nonresident storage, and public storage reports are due by the 15th of the month following the report month.</text> </paragraph> <paragraph num="(3)"> <text>Family beer and wine facility permit holders shall file a report with the Revenue Administration Division on forms prescribed by the Comptroller for each year that the permit is active. A family beer and wine facility permit report is required for each report year beginning October 1 and ending September 30 of the following year. Reports are due by October 15 following the report year, and shall be filed even if the permittee had no activity for that year.</text> </paragraph> <paragraph num="(4)"> <text>Filing frequency for Manufacturers and Wholesalers of Beer, Wine or Liquor.</text> <paragraph num="(a)"> <text>The Comptroller shall notify manufacturers and wholesalers of their filing frequency under this regulation.</text> </paragraph> <paragraph num="(b)"> <text>The required return shall be filed:</text> <paragraph num="(i)"> <text>Monthly;</text> </paragraph> <paragraph num="(ii)"> <text>Quarterly; or</text> </paragraph> <paragraph num="(iii)"> <text>Semiannually.</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>Monthly. The taxpayer is required to file and pay the tax monthly on or before the 20th day of the month following the report month.</text> </paragraph> <paragraph num="(d)"> <text>Quarterly. The taxpayer is required to file and pay the tax quarterly on or before the 15th day of the month that follows a calendar quarter for that report. The reports will be due April, July, October, and January of the following year.</text> </paragraph> <paragraph num="(e)"> <text>Semiannually. The taxpayer is required to file the return and pay the tax semiannually on or before the 15th day of January and July.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>A holder of a nonresident winery, distillery, and brewery permit authorized to sell wine, distilled spirits, or beer shall file a tax return with the Revenue Administration Division on forms prescribed by the Comptroller for each month that the holder's permit is active. A tax return is required for each month even if the permittee had no activity. A nonresident permit holder shall file a tax return by the 10th of the month following the report month.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Tobacco Tax Returns.</text> <paragraph num="(1)"> <text>A manufacturer of cigarettes shall file a tobacco tax return with the Revenue Administration Division on forms prescribed by the Comptroller, listing all sample cigarettes distributed within the State. A tobacco tax return is required for each month even if the manufacturer did not distribute sample cigarettes in this State. Sample cigarettes shipped into Maryland during the report month by a third party (advertising agency, etc.), on behalf of a manufacturer, shall be reported by the manufacturer. Sample cigarettes shipped to federal reservations in Maryland need not be reported. However, complete and accurate records of these shipments shall be maintained on the manufacturer's premises and shall be subject to audit verification. Manufacturers shall file returns by the 15th of the month following the report month.</text> </paragraph> <paragraph num="(2)"> <text>Licensed cigarette wholesalers shall file a tobacco tax return with the Revenue Administration Division on forms prescribed by the Comptroller for all months that their license is active. A tobacco tax return is required for each month even if the licensee did not take the first possession of any unstamped cigarettes in this State. Licensees shall file returns by the 21st of the month following the report month.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Tax Return or Report Waiver. A license or permit holder described in §A or B of this regulation may file a written request for a waiver from filing a nonactivity return or report, and shall provide adequate reasons for the waiver. The Comptroller shall make a determination based on the reasons presented in the request and notify the license or permit holder in writing of the decision.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Reports of Boards of License Commissioners and County Dispensaries."> <paragraph num="A."> <text>Report of Retail License Activity.</text> <paragraph num="(1)"> <text>Each retail alcoholic beverage license-issuing authority shall file on a monthly basis a report with the Comptroller, on forms provided or approved by the Comptroller, listing all retail alcoholic beverage license activity, including issuances, cancellations, transfers, revocations, etc., for the report month. Each issuing authority shall file the monthly report with the Comptroller by the 15th of the month following the report month. Reports are due even if there is no activity.</text> </paragraph> <paragraph num="(2)"> <text>Each alcoholic beverage license-issuing authority shall file annually a complete report of all retail alcoholic beverage licenses renewed for the year on forms provided or approved by the Comptroller. This annual report shall be filed by the 15th of the month following the month the licenses are renewed.</text> </paragraph> <paragraph num="(3)"> <text>Reports filed by the alcoholic beverage license-issuing authority shall include the names of licensees, entity name and trade name, address, and any other information the Comptroller may require. The Comptroller may adopt a Statewide control number to be used by the alcoholic beverage license-issuing authority when filing reports.</text> </paragraph> <paragraph num="(4)"> <text>Each alcoholic beverage license-issuing authority shall file annually a complete report of all revenue derived for the year preceding from retail alcoholic beverage licenses, on forms provided or approved by the Comptroller. This annual report shall be filed by August 15 annually.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Report of Dispensary Activities. Each county dispensary shall file annually a complete report summarizing all dispensary activities for the year on forms provided or approved by the Comptroller. This report shall be filed by August 15 annually and shall include gross profits, expenses, net profits of the dispensary, and any other information relating to the sale of alcoholic beverages that the Comptroller may require.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Alcohol Beverages Article, §1-302; Tax-General Article, §2-103; Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: April 3, 1989 (16:6 Md. R. 727)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01A amended effective August 6, 1990 (17:15 Md. R. 1854); February 12, 1996 (23:3 Md. R. 166); September 22, 1997 (24:19 Md. R. 1339); October 9, 2006 (33:20 Md. R. 1611)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01A amended as an emergency provision effective April 25, 2006 (33:15 Md. R. 1271); amended permanently effective October 9, 2006 (33:20 Md. R. 1611)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01A amended effective October 20, 2008 (35:21 Md. R. 1823); July 18, 2016 (43:14 Md. R. 779); November 15, 2021 (48:23 Md. R. 979); July 10, 2023 (50:13 Md. R. 511)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01B amended effective August 6, 1990 (17:15 Md. R. 1854); November 15, 2021 (48:23 Md. R. 979)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02 adopted effective June 1, 1996 (23:10 Md. R. 730)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02 repealed effective July 10, 2023 (50:13 Md. R. 511)</annotation> </annotations> </chapter> <chapter num="05" heading="Alcoholic Beverage Trade Practices"> <annotations> <annotation type="History" subtype="Administrative History">Effective date: October 1, 1996 (23:18 Md. R. 1315)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01B amended effective December 11, 2000 (27:24 Md. R. 2198); September 2, 2002 (29:17 Md. R. 1377); May 1, 2005 (32:6 Md. R. 635)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01B amended as an emergency provision effective April 25, 2006 (33:15 Md. R. 1271); amended permanently effective October 9, 2006 (33:20 Md. R. 1612)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02A amended effective December 11, 2000 (27:24 Md. R. 2198)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03A amended effective December 11, 2000 (27:24 Md. R. 2198)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04B amended effective February 9, 2009 (36:3 Md. R. 207); December 11, 2014 (41:24 Md. R. 1426)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06B amended effective January 26, 1998 (25:2 Md. R. 75)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07A amended effective December 11, 2000 (27:24 Md. R. 2198); September 2, 2002 (29:17 Md. R. 1377)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09C amended effective May 1, 2005 (32:6 Md. R. 635)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10A amended effective December 11, 2000 (27:24 Md. R. 2198); March 9, 2001 (28:5 Md. R. 548); December 11, 2014 (41:24 Md. R. 1426)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10C amended effective September 2, 2002 (29:17 Md. R. 1377)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10E amended effective January 26, 1998 (25:2 Md. R. 75); February 9, 2009 (36:3 Md. R. 207)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10F amended effective December 11, 2014 (41:24 Md. R. 1426)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10G amended effective December 11, 2000 (27:24 Md. R. 2198)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10H adopted effective September 2, 2002 (29:17 Md. R. 1377)</annotation> <annotation type="History" subtype="Administrative History">Regulation .11B, C amended effective May 1, 2005 (32:6 Md. R. 635); February 9, 2009 (36:3 Md. R. 207)</annotation> <annotation type="History" subtype="Administrative History">Regulation .11C, G amended and H adopted effective January 26, 1998 (25:2 Md. R. 75)</annotation> <annotation type="History" subtype="Administrative History">Regulation .11H amended effective September 2, 2002 (29:17 Md. R. 1377); February 9, 2009 (36:3 Md. R. 207)</annotation> <annotation type="History" subtype="Administrative History">Regulation .12A, B amended effective January 26, 1998 (25:2 Md. R. 75)</annotation> <annotation type="History" subtype="Administrative History">Regulation .12B amended effective May 1, 2005 (32:6 Md. R. 635); December 11, 2014 (41:24 Md. R. 1426)</annotation> <annotation type="History" subtype="Administrative History">Regulation .12B, F amended effective December 11, 2000 (27:24 Md. R. 2198)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified to new chapter COMAR 14.23.04 effective December 26, 2022 (49:26 Md. R. 1080)</annotation> </annotations> </chapter> <chapter num="06" heading="Fire Safety Performance Standard for Cigarettes"> <annotations> <annotation type="History" subtype="Administrative History">Effective date: October 4, 2010 (37:20 Md. R. 1392)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified to new chapter COMAR 14.23.05 effective December 26, 2022 (49:26 Md. R. 1080)</annotation> </annotations> </chapter> </subtitle> <subtitle num="03" heading="Motor Fuel Tax"> <chapter num="01" heading="Motor Fuel License and Tax"> <regulation prefix="Regulation" num=".01" heading="Licenses."> <paragraph num="A."> <text>Applications for licenses shall be on forms provided by the Comptroller and shall indicate the type and class of license sought, as follows:</text> <paragraph num="(1)"> <text>Dealer:</text> <paragraph num="(a)"> <text>Class “A”,</text> </paragraph> <paragraph num="(b)"> <text>Class “B”,</text> </paragraph> <paragraph num="(c)"> <text>Class “C”,</text> </paragraph> <paragraph num="(d)"> <text>Class “D”,</text> </paragraph> <paragraph num="(e)"> <text>Class “G-Temporary”;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Special Fuel Seller;</text> </paragraph> <paragraph num="(3)"> <text>Special Fuel User;</text> </paragraph> <paragraph num="(4)"> <text>Distributor; or</text> </paragraph> <paragraph num="(5)"> <text>Turbine Fuel Seller.</text> </paragraph> </paragraph> <paragraph num="B."> <text>If the licensee discontinues business, the license shall be returned to the Comptroller for cancellation. Unless a bond rider has been accepted by the Comptroller, licensees shall apply for a new license and furnish a new bond under the following circumstances:</text> <paragraph num="(1)"> <text>When there has been a change in the name of the company even though the ownership remains the same;</text> </paragraph> <paragraph num="(2)"> <text>When the business of an individual or a partnership is taken over and continued by a corporation;</text> </paragraph> <paragraph num="(3)"> <text>When the licensee is a corporation and surrenders its charter and the business is continued by an individual, a partnership, or any other legal entity;</text> </paragraph> <paragraph num="(4)"> <text>When an individual is licensed as a dealer, user, or seller, dies, and the business is continued by another person or entity;</text> </paragraph> <paragraph num="(5)"> <text>When an individually owned business is taken over and continued by a partnership;</text> </paragraph> <paragraph num="(6)"> <text>When a business owned by a partnership is taken over and continued by an individual;</text> </paragraph> <paragraph num="(7)"> <text>When a business which is owned by a partnership is taken over and continued by an individual, another partnership, or corporation;</text> </paragraph> <paragraph num="(8)"> <text>When any other situation arises in which a business that is owned by one type of legal entity is taken over and continued by a different legal entity; or</text> </paragraph> <paragraph num="(9)"> <text>When there is a change in the Federal Identification Number.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Licensed special fuel users making a sale of special fuel that is exempt from the motor fuel tax shall be reclassified and licensed as a special fuel seller.</text> </paragraph> <paragraph num="D."> <text>Change of Class of Dealer License.</text> <paragraph num="(1)"> <text>When a licensed dealer fails to meet the qualifications required by Tax-General Article, §9-319, Annotated Code of Maryland, for the specific class of license held, the dealer shall immediately notify the Comptroller.</text> </paragraph> <paragraph num="(2)"> <text>The dealer shall provide the Comptroller any additional information requested by the Comptroller.</text> </paragraph> <paragraph num="(3)"> <text>The Comptroller may then issue to the dealer any alternative license to which the dealer may be entitled.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Sales to Unlicensed Seller or User."> <paragraph num="A."> <text>Sales of motor fuel shall be made with the motor fuel tax, as applicable, included.</text> </paragraph> <paragraph num="B."> <text>Exceptions are as follows:</text> <paragraph num="(1)"> <text>Special fuel:</text> <paragraph num="(a)"> <text>When sold and delivered into a storage tank permanently and solely connected to a heating plant, commercial stationary apparatus, stationary vapor burning apparatus (including propane tanks not connected to the vehicle propulsion system on recreational type vehicles), or watercraft,</text> </paragraph> <paragraph num="(b)"> <text>When sold to the holder of a valid exemption certificate, provided the certificate exempts that particular type of special fuel; or</text> </paragraph> <paragraph num="(c)"> <text>When sold to agencies and instrumentalities of the United States Government;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Aviation turbine fuel when sold to:</text> <paragraph num="(a)"> <text>Carriers and operators as specified in Tax-General Article, §9-303(c)(1) and (2), Annotated Code of Maryland,</text> </paragraph> <paragraph num="(b)"> <text>The State of Maryland,</text> </paragraph> <paragraph num="(c)"> <text>Local governments of this State,</text> </paragraph> <paragraph num="(d)"> <text>Agencies and instrumentalities of the United States Government, or</text> </paragraph> <paragraph num="(e)"> <text>Foreign governments.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Motor Fuel Tax Report."> <text>All dealers, special fuel users, special fuel sellers, and turbine fuel sellers shall provide the name and address of the person or persons responsible for preparing the applicable tax report. This person shall provide all information requested in the following areas:</text> <paragraph num="A."> <text>Stock reports;</text> </paragraph> <paragraph num="B."> <text>EDP systems;</text> </paragraph> <paragraph num="C."> <text>Marketing;</text> </paragraph> <paragraph num="D."> <text>Security;</text> </paragraph> <paragraph num="E."> <text>Internal audit;</text> </paragraph> <paragraph num="F."> <text>Motor fuel taxes; and</text> </paragraph> <paragraph num="G."> <text>Aviation fuel taxes.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Security Requirements."> <paragraph num="A."> <text>All securities shall be in an amount of an even $1,000.</text> </paragraph> <paragraph num="B."> <text>Cash offered as security shall be converted by the offeror into a banking instrument as specified by and in the manner determined by the Comptroller.</text> </paragraph> <paragraph num="C."> <text>Dealers that are licensed special fuel sellers, special fuel users, or turbine fuel sellers are required to post only one security, the amount of which will be determined by the Comptroller.</text> </paragraph> <paragraph num="D."> <text>The Comptroller may increase the amount of the security requirement on 30 days' notice.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Filing—Records."> <paragraph num="A."> <text>Except as provided in §B of this regulation, fuel tax returns shall be filed monthly with appropriate remittance on forms prescribed by the Comptroller. If no sales or operations were conducted in any particular reporting period, required returns shall be filed, stating this fact.</text> </paragraph> <paragraph num="B."> <text>Annual Filing Option.</text> <paragraph num="(1)"> <text>A special fuel user engaged in the business of agriculture may request approval to file an annual fuel tax return.</text> </paragraph> <paragraph num="(2)"> <text>To qualify for the annual filing option, a special fuel user shall:</text> <paragraph num="(a)"> <text>Be engaged in the business of agriculture;</text> </paragraph> <paragraph num="(b)"> <text>Have an average taxable use of 2,000 gallons or less; and</text> </paragraph> <paragraph num="(c)"> <text>Submit a written request and receive written approval from the Comptroller, before filing.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Special Fuel Sellers and Turbine Fuel Sellers.</text> <paragraph num="(1)"> <text>Special fuel sellers and turbine fuel sellers shall maintain records of all special fuels acquired, sold, or used, both taxable and nontaxable. Records shall include the total miles the seller's own vehicles were operated and all records shall be available at the time of the audit.</text> </paragraph> <paragraph num="(2)"> <text>All sales or use of special fuels made from retail type dispensers at retail service stations shall be made with tax included (kerosene may be excluded provided the seller is the holder of a valid Exemption Certificate).</text> </paragraph> </paragraph> <paragraph num="D."> <text>Special fuel users shall maintain records of all special fuels acquired and used, both taxable and nontaxable, and records of the miles traveled by each special fuel powered vehicle.</text> </paragraph> <paragraph num="E."> <text>The inability of the Motor Fuel Tax Bureau to trace motor fuel from seller to purchaser as a result of inadequate reporting or record keeping may result in the assessment of tax and interest against either the supplier or the purchaser.</text> </paragraph> <paragraph num="F."> <text>Exemption certificate holders shall file annually on forms prescribed by the Comptroller, at renewal time, all purchases of special fuel by type of product as well as each supplier thereof. (Licensed dealers, special fuel sellers, special fuel users, and turbine fuel sellers are excluded.)</text> </paragraph> <paragraph num="G."> <text>Licensed distributors shall report receipts, sales, and use of all motor fuels on forms provided by the Comptroller as prescribed.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Sales—Exchanges—Transfers—Exports."> <paragraph num="A."> <text>Arrangements for the transfer of ownership of motor fuel by dealers, special fuel sellers, special fuel users, turbine fuel sellers, and distributors, for future delivery, whether called sales, loans, exchanges, or otherwise, shall be recognized only when such arrangements are reflected in sales agreements or contracts. They shall be reported as “sales” only when:</text> <paragraph num="(1)"> <text>The “fuels” sold move physically from the possession of the vendor to that of the vendee; or</text> </paragraph> <paragraph num="(2)"> <text>The “fuels” sold remain in the storage of the vendor, the full quantity being immediately available to the vendee for disposition.</text> </paragraph> </paragraph> <paragraph num="B."> <text>When a sales agreement or contract is made on temperature corrected gallons, the invoices or delivery ticket required for audit purposes shall show the volumetric gallonage and the temperature adjusted gallonage.</text> </paragraph> <paragraph num="C."> <text>Sales of motor fuel for exportation, under such circumstances that title passes to the purchaser in Maryland, may be sold tax exempt for immediate exportation under the following conditions:</text> <paragraph num="(1)"> <text>To purchasers of gasoline possessing a valid Class A or D license;</text> </paragraph> <paragraph num="(2)"> <text>To purchasers of gasoline possessing a valid Class C license and a letter of special permission issued by the Motor Fuel Tax Bureau for the product to be acquired and exported;</text> </paragraph> <paragraph num="(3)"> <text>To purchasers of special fuels possessing a currently valid exemption certificate for type of special fuel being acquired;</text> </paragraph> <paragraph num="(4)"> <text>The transportation of motor fuel shall be accomplished by vehicles owned and operated by a petroleum transporter registered under Business Regulation Article, Title 10, Subtitle 4, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Documentation (a bill of lading, meter ticket, or loading ticket) shall accompany each vehicle transporting motor fuel and shall conform to COMAR 03.03.03.05.</text> </paragraph> <paragraph num="E."> <text>Whenever diesel fuel is modified or created by blending kerosene and fuel oil, metered loading tickets shall be attached to sales invoices, bills of lading, or delivery tickets showing the quantity of each product blended. These documents shall be available at the time of the audit or inspection.</text> </paragraph> <paragraph num="F."> <text>Dealers, special fuel sellers, special fuel users, and turbine fuel sellers importing motor fuel into the State shall maintain on file a shipping and receiving document indicating specifications of the product received.</text> </paragraph> <paragraph num="G."> <text>Records, receiving documents, delivery tickets, sales invoices, and bills of lading shall be maintained for audit purposes by all dealers that blend casinghead or natural gasoline, benzene, naphtha, gas, oil, kerosene, heating oil, butane, alcohol, or any combination of these or other items into a motor fuel within the State, or create motor fuel within the State. These records shall indicate the name and address of each customer to whom sales have been made.</text> </paragraph> <paragraph num="H."> <text>All vehicles used to make metered sales of motor fuel shall utilize a meter calibrated to meet the accuracy requirements set forth in the current edition of the National Institute of Standards and Technology Handbook 44, as specified by Agriculture Article, §11-203(c), Annotated Code of Maryland.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Requirements for Invoices Used as Proof of Payment of the Tax."> <paragraph num="A."> <text>Except for retail service station invoices, motor fuel invoices shall:</text> <paragraph num="(1)"> <text>Contain the amount of Maryland motor fuel tax charged; or if the tax is not charged, the statement “Maryland motor fuel tax is not included”;</text> </paragraph> <paragraph num="(2)"> <text>Contain the date of delivery;</text> </paragraph> <paragraph num="(3)"> <text>Contain the name and address of purchaser;</text> </paragraph> <paragraph num="(4)"> <text>Contain the name and address of seller pre-printed on the invoice;</text> </paragraph> <paragraph num="(5)"> <text>Contain the number of gallons;</text> </paragraph> <paragraph num="(6)"> <text>Be serially or sequentially numbered; and</text> </paragraph> <paragraph num="(7)"> <text>Contain the trade name and type of fuel.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Retail service station invoices shall include the statement “The seller certifies that the motor fuel tax will be paid as required by law.”</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Gains—Losses."> <paragraph num="A."> <text>Stock gains and losses shall be reported on forms and in accordance with instructions provided by the Comptroller.</text> </paragraph> <paragraph num="B."> <text>Losses or gains shall be established upon products metered or physically inventoried as received in the State. Losses which occur in inventory after the receipt shall be supported by gauger's reports or other acceptable documentation.</text> </paragraph> <paragraph num="C."> <text>Transportation gains or losses incurred enroute for delivery into the State shall be recorded for audit purposes.</text> </paragraph> <paragraph num="D."> <text>Losses of motor fuel resulting from theft, faulty equipment, or any other cause except temperature correction shall be reported to the Comptroller upon discovery or by the first business day thereafter.</text> </paragraph> <paragraph num="E."> <text>Allowable losses incurred in the storage of motor fuel shall be prorated on the percentage of tax exempt sales to total sales. Direct shipments from supplier to customer are not allowed in the proration calculation. Direct shipments shall be deducted from total sales and from either taxable or nontaxable sales, as applicable.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Volumetric and Temperature Adjusted Gallons."> <paragraph num="A."> <text>Licensees Reporting on a Temperature Adjusted Basis.</text> <paragraph num="(1)"> <text>Inventory. If inventory is reported on a temperature adjusted basis (“net”), all receipts shall be reported on that basis.</text> </paragraph> <paragraph num="(2)"> <text>Sales. If inventories and receipts are reported on a “net” basis (temperature adjusted), and any sales are made on a “gross” (not temperature adjusted) basis, the sales shall be documented and the adjustments resulting therefrom reported on the appropriate form.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Licensees Reporting on a Gross (Not Temperature Adjusted) Basis.</text> <paragraph num="(1)"> <text>Inventory. If inventory is reported on a “gross” (not temperature adjusted) basis, all receipts shall be reported on that basis.</text> </paragraph> <paragraph num="(2)"> <text>Sales. If inventories and receipts are reported on a “gross” (not temperature adjusted) basis, and any sales are made on a “net” (temperature adjusted) basis, the sales shall be documented and the adjustments reported on the appropriate form.</text> </paragraph> </paragraph> <paragraph num="C."> <text>“Volumetric gallon of motor fuel” means the United States gallon of 231 cubic inches as measured by volume.</text> </paragraph> <paragraph num="D."> <text>“Temperature corrected gallon of motor fuel” means a volumetric gallon of 231 cubic inches adjusted to the measurement of a gallon at 60?F as determined by API/ASTM-IP Petroleum Measurement Table, “Table 6B”.</text> </paragraph> <paragraph num="E."> <text>Natural Gas. In order to determine the quantity of liquid or compressed natural gas consumed, the following formulas will be used:</text> <paragraph num="(1)"> <text>Liquefied natural gas: 100 cubic feet at 14.73 psi and 60?F shall be considered as 1 gallon of liquid motor fuel;</text> </paragraph> <paragraph num="(2)"> <text>Compressed natural gas: 1 cubic foot multiplied by .00831 shall be considered as 1 gallon of liquid motor fuel.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Liquid Propane Gas. To determine the quantity of liquid propane gas consumed, the following formula will be used:</text> <paragraph num="(1)"> <text>If product is gauged in decitherms, divide by 9.1 to convert to gallons;</text> </paragraph> <paragraph num="(2)"> <text>If product is gauged in pounds, divide by 4.24 to convert to gallons (To convert decitherms to pounds, multiply by .465).</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Special Fuel Dispensers."> <paragraph num="A."> <text>Retail type special fuel dispensers (pumps) may have a security seal affixed by a State motor fuel agent.</text> </paragraph> <paragraph num="B."> <text>Whenever a retail type dispenser is used to dispense special fuel and the computer metering device of the dispenser is removed, replaced, or repaired, the meter readings and serial numbers of both the retail dispenser and metering device shall be reported to the Comptroller within 30 days, and a copy of the service or repair order shall be maintained on the premises and shall indicate date of service, location, type of service performed, serial number, and meter readings of both the defective device and the replacement device, if a replacement is made.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Contaminated Product."> <paragraph num="A."> <text>Contaminated products (interface, interface mix, transmix, and products failing to meet State specifications) may not be:</text> <paragraph num="(1)"> <text>Imported, exported, or moved within the State without the written approval of the Comptroller;</text> </paragraph> <paragraph num="(2)"> <text>Commingled and inventoried in any gasoline or special fuel storage within the State without written approval of the Comptroller.</text> </paragraph> </paragraph> <paragraph num="B."> <text>A statement signed by the appropriate official confirming proper disposal of product shall be filed with supporting records before credit for contaminated product can be considered.</text> </paragraph> <paragraph num="C."> <text>Licensees may not receive credit for sludge removed from storage tanks until proof has been established by a representative of the Comptroller that contaminated products were actually inventoried.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".12" heading="Motor Fuel Consumed by Licensed Dealers."> <text>Licensed dealers under normal report procedures may take credit for motor fuel taxes on gallonage for which a refund would be allowed under these regulations, provided that adequate records are available at the time of the audit to support the refund credits.</text> </regulation> <regulation prefix="Regulation" num=".13" heading="Inventory."> <paragraph num="A."> <text>Dealers, special fuel sellers, special fuel users, and turbine fuel sellers shall have at their bulk plants, marine terminals, and tank farms, calibration charts for each tank containing motor fuel. These charts shall show the tank number, capacity, dimensions, and gallons corresponding to measurements in feet, inches, and fractions that indicate the amount of fuel in the tank or tanks.</text> </paragraph> <paragraph num="B."> <text>Dealers, special fuel sellers, special fuel users, and turbine fuel sellers shall have gauge sticks, tapes, or electronic measurement devices. The devices shall correspond to the calibration charts for each tank and shall be capable of determining the gallonage contained in each tank.</text> </paragraph> <paragraph num="C."> <text>Inventory Records.</text> <paragraph num="(1)"> <text>Dealers, special fuel sellers, special fuel users, and turbine fuel sellers shall keep a monthly physical inventory record which shall show the quantity of each product on hand at the close of each month's business which shall be the result of actual measurements taken physically on that date.</text> </paragraph> <paragraph num="(2)"> <text>At locations where multiple ownership of inventories are maintained, segregated or commingled, whether called throughput, terminal, or other identification, a reconciliation of ownership of each product shall be presented to each owner by the entity having control of the inventory. The physical inventory reconciliation schedule shall be reflective of the same date and time for all parties.</text> </paragraph> <paragraph num="(3)"> <text>Tax liability accrues on special fuel upon delivery to a retail service station unless that retail service station recipient is the holder of a valid exemption certificate for that specific type of fuel. Inventories of motor fuel that are the property of the supplier, but in the care of a service station dealer, are taxable upon delivery as are deliveries to supplier operated retail service stations. Kerosene, dyed fuel, and propane at supplier operated service stations are excluded, provided they are not sold for taxable use.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Dealers, special fuel sellers, special fuel users, and turbine fuel sellers having inventories in their custody for another party, shall report all receipts and disbursements from that inventory as sales to and receipts from participants maintaining multiple ownership of the commingled inventory. The custodian shall report, as his inventory, all products in his care and control.</text> </paragraph> <paragraph num="E."> <text>Dealers, special fuel sellers, special fuel users, and turbine fuel sellers, who are participants in commingled inventories, shall obtain authorization from the Comptroller before beginning this activity. The request for permission shall be in writing, indicate the names and addresses of all participants involved, and the terms and duration of the arrangements. Authorization is not required when the commingled inventory results from a sale to a purchaser, the terms of which include the total withdrawal from sellers inventory within 60 days of the date of sale. All other requirements of this chapter are applicable to fuels involved in this type of transaction.</text> </paragraph> <paragraph num="F."> <text>Inventories stored at locations operated by persons other than a licensed dealer, special fuel seller, special fuel user, or turbine fuel seller shall be reported by each individual licensee that owns the fuel.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".14" heading="Security of Motor Fuels."> <paragraph num="A."> <text>Dealers, special fuel sellers, special fuel users, and turbine fuel sellers shall maintain adequate security programs at all storage locations maintained in the State.</text> </paragraph> <paragraph num="B."> <text>All bulk plants, terminals, and tank farms maintaining storage of motor fuels shall have approved seals on all meters indicating compliance with the requirements of the most current edition of the National Institute of Standards and Technology Handbook 44, as specified by Agriculture Article, §11-203(c), Annotated Code of Maryland.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".15" heading="Blending and Injection—Reporting."> <text>All authorized dealers, special fuel sellers, and turbine fuel sellers are required to report separately, on appropriate schedules, commingled, casinghead or natural gasoline, benzene, naphtha, heating oil, alcohol, additives, or any other component, or any combination of them, that is blended into a refined motor fuel after the fuel has been received in this State. The schedule shall indicate the percentages and gallonages of the various materials blended.</text> </regulation> <regulation prefix="Regulation" num=".16" heading="Exemption Certificates."> <paragraph num="A."> <text>Exemption certificates are issued to identify purchasers authorized to acquire tax exempt special fuel from a licensed special fuel seller, or turbine fuel seller. They are issued and applicable only for specific types of fuel and valid only for the period indicated on the certificate. Suppliers are responsible for the tax on all sales made to holders of expired or otherwise invalid exemption certificates and for the tax on all sales to purchasers not in possession of a valid exemption certificate, except as provided for in Regulation .02B(1) of this chapter.</text> </paragraph> <paragraph num="B."> <text>The type of special fuel to be exempt from the tax will be determined by the certificate number as designated on schedules published by the Comptroller and available to licensed suppliers upon request.</text> </paragraph> <paragraph num="C."> <text>If the exemption certificate holder discontinues business, the exemption certificate shall be returned to the Comptroller for cancellation. Exemption certificates are non-transferable and holders are expected to apply for and secure a new certificate under the following circumstances:</text> <paragraph num="(1)"> <text>When there has been a change in the name of the company or entity even though the ownership remains the same;</text> </paragraph> <paragraph num="(2)"> <text>When the business of an individual or a partnership is taken over and continued by a corporation;</text> </paragraph> <paragraph num="(3)"> <text>When the licensee is a corporation and surrenders its charter and the business is continued by an individual, a partnership, or any other legal person;</text> </paragraph> <paragraph num="(4)"> <text>When an individual licensed as a dealer, user, or seller, dies, and the business is continued by another person or entity;</text> </paragraph> <paragraph num="(5)"> <text>When an individually owned business is taken over and continued by a partnership;</text> </paragraph> <paragraph num="(6)"> <text>When a business owned by a partnership is taken over and continued by an individual;</text> </paragraph> <paragraph num="(7)"> <text>When a business which is owned by an individual, partnership, or corporation is taken over and continued by a different individual, partnership, or corporation;</text> </paragraph> <paragraph num="(8)"> <text>When any other situation arises in which a business that is owned by one type of legal entity is taken over and continued by a different legal entity;</text> </paragraph> <paragraph num="(9)"> <text>When there is a change in the Federal Identification Number; or</text> </paragraph> <paragraph num="(10)"> <text>When the use of a previously exempted product for which the exemption was granted is changed.</text> </paragraph> </paragraph> <paragraph num="D."> <text>An application for an exemption certificate shall be on forms provided by the Comptroller and shall indicate the type of special fuel for which an exemption is sought.</text> </paragraph> <paragraph num="E."> <text>An exemption certificate for kerosene may be issued to sellers of kerosene at retail if:</text> <paragraph num="(1)"> <text>Kerosene is the only special fuel (other than propane) offered for sale and never sold for taxable use;</text> </paragraph> <paragraph num="(2)"> <text>All other taxable special fuels (other than propane) offered for sale are purchased tax paid from the supplier; or</text> </paragraph> <paragraph num="(3)"> <text>The seller is a licensed special fuel seller.</text> </paragraph> </paragraph> <paragraph num="F."> <text>An exemption certificate for propane may be issued to sellers of propane at retail if:</text> <paragraph num="(1)"> <text>Propane is the only special fuel (other than kerosene) offered for sale and never sold for taxable use;</text> </paragraph> <paragraph num="(2)"> <text>All other taxable special fuels (other than kerosene) offered for sale are purchased tax paid from the supplier; or</text> </paragraph> <paragraph num="(3)"> <text>The seller is a licensed special fuel seller.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".17" heading="Racing Fuel."> <paragraph num="A."> <text>Gasoline having an anti-knock index (R + M)/2 of greater than 98 may be considered racing fuel if the manufacturer's specifications have been filed with and approved annually by the Field Enforcement Bureau.</text> </paragraph> <paragraph num="B."> <text>Racing fuel may not be:</text> <paragraph num="(1)"> <text>Considered a motor fuel as defined in Tax-General Article, §9-101, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(2)"> <text>Blended with any other gasoline and offered for sale; or</text> </paragraph> <paragraph num="(3)"> <text>Used as a fuel, either straight or blended, in a motor vehicle operated on a highway.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".18" heading="Definitions."> <text>For the purpose of the administration of Tax-General Article, §9-319, Annotated Code of Maryland, relating to storage capacity requirements:</text> <paragraph num="A."> <text>“Control” means having absolute authority and responsibility for all fuels placed into and removed from a given tank or tanks. If “control” is claimed by a person leasing or renting a tank or tanks owned by another person, the lease or rental arrangement shall be for a period of at least 3 years beyond the date of the filing of the application for a dealer's license by the person claiming “control”.</text> </paragraph> <paragraph num="B."> <text>“Maintaining” means same as “control”.</text> </paragraph> <paragraph num="C."> <text>“Storage capacity” for a Class A licensee means a minimum of 1,000,000 gallons of gasoline and 1,000,000 gallons of special fuel.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".19" heading="Warehousing—Terminalling—Storing for Others."> <text>Unlicensed entities that provide motor fuel storage facilities or related services, or both, shall:</text> <paragraph num="A."> <text>Obtain written permission from the Comptroller before storing motor fuel or providing related services;</text> </paragraph> <paragraph num="B."> <text>Report monthly on forms provided by the Comptroller; and</text> </paragraph> <paragraph num="C."> <text>Provide a reconciliation of ownership of each product, monthly, to each owner maintaining an inventory at that facility.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".20" heading="Penalties and Interest."> <paragraph num="A."> <text>Penalties.</text> <paragraph num="(1)"> <text>If a person fails to pay a tax when due, the Comptroller may assess a penalty in an amount not to exceed 10 percent of the tax.</text> </paragraph> <paragraph num="(2)"> <text>If a person fails to file a return when due, the Comptroller may assess a penalty in an amount not to exceed $25.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Interest.</text> <paragraph num="(1)"> <text>If a person fails to file a return when due, interest shall be assessed as prescribed in Tax-General Article, Title 13, Annotated Code of Maryland. Interest will not be assessed, however, unless the computed interest for a return exceeds $2.</text> </paragraph> <paragraph num="(2)"> <text>Interest on unpaid tax assessments shall be assessed as prescribed in Tax-General Article, Title 13, Annotated Code of Maryland, but the $2 minimum does not apply.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".21" heading="Appeals—Hearing."> <paragraph num="A."> <text>The Comptroller shall schedule a hearing before denial of an application for a motor fuel tax license or an exemption certificate.</text> </paragraph> <paragraph num="B."> <text>A person may appeal the Comptroller's decision canceling a motor fuel tax license or an exemption certificate.</text> </paragraph> <paragraph num="C."> <text>The hearing process is governed by COMAR 03.01.01.05.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Tax-General Article, §2-103, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: April 1, 1973</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.04; .07C, E, F; .08C, D; .09A, D, F; .12A, C; .13C;</annotation> <annotation type="History" subtype="Administrative History">.14C; .15A; .17 amended effective November 22, 1982 (9:23 Md. R. 2255)</annotation> <annotation type="History" subtype="Administrative History">Regulations .02, .07F, and .13C amended, and .03G adopted</annotation> <annotation type="History" subtype="Administrative History">effective October 8, 1984 (11:20 Md. R. 1740)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07F amended effective September 14, 1981 (8:18 Md. R. 1476)</annotation> <annotation type="History" subtype="Administrative History">Regulation .18 adopted effective November 22, 1982 (9:23 Md. R.</annotation> <annotation type="History" subtype="Administrative History">2255); repealed effective October 8, 1984 (11:20 Md. R. 1740)</annotation> <annotation type="History" subtype="Administrative History">Chapter repealed effective August 26, 1985 (12:17 Md. R. 1698)</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.20 adopted effective August 26, 1985 (12:17 Md. R. 1698)</annotation> <annotation type="History" subtype="Administrative History">Regulation .21 adopted as an emergency provision effective May 21,</annotation> <annotation type="History" subtype="Administrative History">1987 (14:12 Md. R. 1348); emergency status expired August 30, 1987</annotation> <annotation type="History" subtype="Administrative History">(Emergency provisions are temporary and not printed in COMAR)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective January 23, 1989 (16:1 Md. R. 66)</annotation> <annotation type="History" subtype="Administrative History">Regulation .20 repealed effective August 6, 1990 (17:15 Md. R. 1853)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective August 20, 1990 (17:16 Md. R. 1987)</annotation> <annotation type="History" subtype="Administrative History">Regulations .01, .02, .04—.06, and .17 amended, and new Regulation .21</annotation> <annotation type="History" subtype="Administrative History">adopted effective September 28, 1992 (19:19 Md. R. 1703)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05E amended effective January 14, 1999 (26:1 Md. R. 19)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06C amended effective January 14, 1999 (26:1 Md. R. 19)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07A amended effective January 14, 1999 (26:1 Md. R. 19)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09B amended effective January 14, 1999 (26:1 Md. R. 19)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10A amended effective January 14, 1999 (26:1 Md. R. 19)</annotation> <annotation type="History" subtype="Administrative History">Regulation .11B amended effective January 14, 1999 (26:1 Md. R. 19)</annotation> <annotation type="History" subtype="Administrative History">Regulations .13C amended effective May 16, 2022 (49:10 Md. R. 562)</annotation> <annotation type="History" subtype="Administrative History">Regulations .16E, F amended effective May 16, 2022 (49:10 Md. R. 562)</annotation> <annotation type="History" subtype="Administrative History">Regulation .17A amended effective January 14, 1999 (26:1 Md. R. 19); May 16, 2022 (49:10 Md. R. 562)</annotation> <annotation type="History" subtype="Administrative History">Regulation .18C adopted effective January 14, 1999 (26:1 Md. R. 19)</annotation> <annotation type="History" subtype="Administrative History">Regulation .20A amended effective May 8, 1995 (22:9 Md. R. 644); January 14, 1999 (26:1 Md. R.19)</annotation> <annotation type="History" subtype="Administrative History">Regulation .21 amended effective January 14, 1999 (26:1 Md. R. 19)</annotation> </annotations> </chapter> <chapter num="02" heading="Refund Claim—Motor Fuel Tax"> <regulation prefix="Regulation" num=".01" heading="Claim Form and Procedure."> <text>Claims for the refund of motor fuel tax shall be made on forms required by the Comptroller and verified by the affidavit of the claimant or an officer if the claimant is a corporation.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Claims Supported by Original Invoices."> <paragraph num="A."> <text>Claims shall be supported by original invoices to be approved for refund. Invoices for fuel delivered into claimant's bulk storage tank shall show:</text> <paragraph num="(1)"> <text>Actual date of delivery;</text> </paragraph> <paragraph num="(2)"> <text>Name and address of purchaser;</text> </paragraph> <paragraph num="(3)"> <text>Name and address of seller preprinted on the invoice;</text> </paragraph> <paragraph num="(4)"> <text>The amount of motor fuel tax charged;</text> </paragraph> <paragraph num="(5)"> <text>If tax is not charged, the statement “Maryland Motor Fuel Tax is not included”;</text> </paragraph> <paragraph num="(6)"> <text>Number of metered gallons purchased, type of fuel, and total cost of fuel; and</text> </paragraph> <paragraph num="(7)"> <text>Serial or sequential invoice numbers.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Invoices for fuel purchased through retail dispensers shall show:</text> <paragraph num="(1)"> <text>Actual date of purchase;</text> </paragraph> <paragraph num="(2)"> <text>Name and address/location of seller;</text> </paragraph> <paragraph num="(3)"> <text>Name of purchaser; purchaser's signature shall be accepted on electronically generated invoices;</text> </paragraph> <paragraph num="(4)"> <text>Number of gallons purchased, type of fuel, and total cost of fuel;</text> </paragraph> <paragraph num="(5)"> <text>Serial or sequential invoice numbers; time referenced electronically generated retail invoices shall be accepted as serialized.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Carbon Copies."> <paragraph num="A."> <text>Except as provided in §B of this regulation, carbon copies of invoices may not be accepted.</text> </paragraph> <paragraph num="B."> <text>Carbon copies may be accepted when used in:</text> <paragraph num="(1)"> <text>Meter imprinters to print the number of gallons metered; or</text> </paragraph> <paragraph num="(2)"> <text>Multi-part forms if:</text> <paragraph num="(a)"> <text>The original (top part) is used as a shipping/delivery ticket,</text> </paragraph> <paragraph num="(b)"> <text>The form has been approved by the Comptroller, and</text> </paragraph> <paragraph num="(c)"> <text>The part used as an invoice has preprinted on it the notation “Original Invoice” or other language approved by the Comptroller.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Credit Card Invoices."> <paragraph num="A."> <text>Credit card and retail service station invoices may not be acceptable for refund purposes unless they meet all the requirements of Regulation .02 of this chapter.</text> </paragraph> <paragraph num="B."> <text>Credit card invoices containing only the purchaser's account number shall be accepted, if supporting documentation is provided that confirms the account number of the refund claimant.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Certain Invoices Not Acceptable."> <text>Accounts receivable invoices, buy back invoices, statements, and assignments are not acceptable for refund purposes.</text> </regulation> <regulation prefix="Regulation" num=".06" heading="Altered Invoices."> <text>Claims accompanied by altered invoices shall be investigated thoroughly. If the investigation proves an invoice has been altered in any respect, the altered invoice may not be honored.</text> </regulation> <regulation prefix="Regulation" num=".07" heading="Gallonage Records."> <paragraph num="A."> <text>Refund claimants for a motor fuel tax shall maintain an accurate record of metered gallons used for highway as well as for non-highway purposes.</text> </paragraph> <paragraph num="B."> <text>Refund claimants for aviation fuel tax shall maintain an accurate record of metered gallons used in taxable and nontaxable modes of operation.</text> </paragraph> <paragraph num="C."> <text>Refund claim information shall be reported on forms prescribed by the Comptroller.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Retail Electronic Invoicing System."> <text>Electronically generated documents may be considered original invoices if they:</text> <paragraph num="A."> <text>Meet all the requirements of Regulation .02 of this chapter; and</text> </paragraph> <paragraph num="B."> <text>Have been approved for use by the Comptroller.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Disallowed Invoices."> <text>The following shall be disallowed:</text> <paragraph num="A."> <text>Purchase invoices prepared by a claimant when the claimant operates the fuel dispenser (pump); and</text> </paragraph> <paragraph num="B."> <text>Claims filed in the absence of satisfactory records for auditing purposes whenever the seller does not prepare an actual invoice at the time of sale.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Refunds—Tank Leaks."> <paragraph num="A."> <text>A claimant shall notify the Comptroller immediately upon discovery of a leak or suspected leak and immediately implement the following procedure:</text> <paragraph num="(1)"> <text>Determine physical inventory using gauge sticks;</text> </paragraph> <paragraph num="(2)"> <text>Maintain daily meter readings of all pumps;</text> </paragraph> <paragraph num="(3)"> <text>Maintain daily gauge stick readings of all tanks;</text> </paragraph> <paragraph num="(4)"> <text>Maintain gauge stick readings before and after each tank receipt; and</text> </paragraph> <paragraph num="(5)"> <text>Provide a copy of the credit memorandum from a supplier or casualty underwriter, or an affidavit to the fact that one or both have rejected any claim or part of a claim.</text> </paragraph> </paragraph> <paragraph num="B."> <text>If, after this procedure is followed and it cannot be established that a leak exists, the suspected tank shall be tested by a procedure normal and acceptable to the petroleum industry, and evidence of the test results filed with the Comptroller, before a refund will be considered.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Identifying Number."> <paragraph num="A."> <text>Refund claimants shall indicate on forms provided by the Comptroller their identifying number, currently in effect with the federal government, which shall be one of the following:</text> <paragraph num="(1)"> <text>Federal identification number;</text> </paragraph> <paragraph num="(2)"> <text>Federal employers' identification number; or</text> </paragraph> <paragraph num="(3)"> <text>Social Security number.</text> </paragraph> </paragraph> <paragraph num="B."> <text>All applications shall be completed in full before submission.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".12" heading="Solid Waste Compacting, Redi-Mix, Petroleum Motor Vehicles, Well Drilling Motor Vehicles, and Certain Farm Equipment Vehicles."> <paragraph num="A."> <text>Claims for refund authorized by Tax-General Article, §13-901(f)(1)(ii)4, Annotated Code of Maryland, shall be on refund forms provided or approved by the Comptroller and may not be deducted as a credit on any tax return or IFTA report.</text> </paragraph> <paragraph num="B."> <text>Claims shall include:</text> <paragraph num="(1)"> <text>Original invoices as prescribed by Regulation .02 of this chapter, and, in instances where the fuel is purchased from retail service stations, the invoices shall also include:</text> <paragraph num="(a)"> <text>Vehicle license tag number, or</text> </paragraph> <paragraph num="(b)"> <text>Vehicle unit number;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>A statement of fuel used, which indicates the following for each vehicle involved in the claim:</text> <paragraph num="(a)"> <text>Vehicle license tag number or unit number, and</text> </paragraph> <paragraph num="(b)"> <text>Total gallons of fuel used.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Claims for refund of taxes paid on fuel used from a claimant's bulk storage facility shall:</text> <paragraph num="(1)"> <text>Include original invoices for all bulk purchases;</text> </paragraph> <paragraph num="(2)"> <text>Be submitted only after all fuel represented by that invoice, or invoices, is actually used and accounted for; and</text> </paragraph> <paragraph num="(3)"> <text>Include a statement of fuel used, which indicates for each vehicle, the information in §B(2) of this regulation, and if any fuel is used from the same bulk storage, for vehicles for which the tax is nonrefundable, indicate those gallons used.</text> </paragraph> </paragraph> <paragraph num="D."> <text>If vehicles are fueled from claimant's bulk storage, detailed records required by Regulation .07 of this chapter shall be maintained for audit purposes. These records shall support all information submitted on the statement of fuel used as specified in §§B(2) and C(3) of this regulation and be in the form of fueling tickets, fueling logs, or other accounting records acceptable to the Comptroller, prepared at the time of vehicle fueling.</text> </paragraph> <paragraph num="E."> <text>Claimants licensed under Tax-General Article, Title 9, Subtitle 3, Annotated Code of Maryland, maintaining bulk storage from which vehicles are fueled, shall report and pay the tax required before filing a claim for refund.</text> </paragraph> <paragraph num="F."> <text>Claims shall be considered only for qualifying vehicles using Maryland tax-paid fuel.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".13" heading="Appeal—Informal Hearing."> <paragraph num="A."> <text>A person desiring to appeal an assessment or denial of a refund may apply for an informal hearing which shall be held in accordance with procedures set forth in COMAR 03.01.01.04.</text> </paragraph> <paragraph num="B."> <text>Informal hearings shall be held at a location determined by the Comptroller, and the location shall be set in the notice issued by the Comptroller.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Tax-General Article, §2-103, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: April 1, 1973</annotation> <annotation type="History" subtype="Administrative History">Regulations .01, .02D, .04, .06—.08, .10, .15A, .16 amended effective</annotation> <annotation type="History" subtype="Administrative History">November 22, 1982 (9:23 Md. R. 2255)</annotation> <annotation type="History" subtype="Administrative History">Regulations .01, .02, .08, .13, and .15A amended effective October 8, 1984</annotation> <annotation type="History" subtype="Administrative History">(11:20 Md. R. 1740)</annotation> <annotation type="History" subtype="Administrative History">Regulation .14 repealed effective November 22, 1982 (9:23 Md. R. 2255)</annotation> <annotation type="History" subtype="Administrative History">Regulation .17 adopted effective November 22, 1982 (9:23 Md. R. 2255);</annotation> <annotation type="History" subtype="Administrative History">repealed effective October 8, 1984 (11:20 Md. R. 1740)</annotation> <annotation type="History" subtype="Administrative History">Chapter repealed effective August 26, 1985 (12:17 Md. R. 1699)</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.12 adopted effective August 26, 1985 (12:17 Md. R. 1699)</annotation> <annotation type="History" subtype="Administrative History">Regulation .13 adopted effective November 17, 1986 (13:23 Md. R. 2479)</annotation> <annotation type="History" subtype="Administrative History">Regulation .13 amended effective September 7, 1987 (14:18 Md. R. 1963)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective January 23, 1989 (16:1 Md. R. 66)</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.04 amended effective September 28, 1992 (19:19 Md. R.</annotation> <annotation type="History" subtype="Administrative History">1703)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07 amended effective January 14, 1999 (26:1 Md. R. 19)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08 adopted effective August 20, 1990 (17:16 Md. R. 1987)</annotation> <annotation type="History" subtype="Administrative History">Regulation .12 repealed effective August 6, 1990 (17:15 Md. R. 1853)</annotation> <annotation type="History" subtype="Administrative History">Regulation .13 recodified to Regulation .12 and amended effective August 20, 1990 (17:16 Md. R. 1987)</annotation> <annotation type="History" subtype="Administrative History">Regulation .12 amended effective January 14, 1999 (26:1 Md. R. 19)</annotation> <annotation type="History" subtype="Administrative History">Regulation .13 adopted effective September 28, 1992 (19:19 Md. R. 1703)</annotation> <annotation type="History" subtype="Administrative History">Regulation .13A amended effective January 13, 1999 (26:1 Md. R. 19)</annotation> </annotations> </chapter> <chapter num="03" heading="Petroleum Transporters"> <regulation prefix="Regulation" num=".01" heading="Repealed." /> <regulation prefix="Regulation" num=".02" heading="Repealed." /> <regulation prefix="Regulation" num=".03" heading="Repealed." /> <regulation prefix="Regulation" num=".04" heading="Repealed." /> <regulation prefix="Regulation" num=".05" heading="Loading Tickets and Manifests."> <text>Vehicles and vessels transporting petroleum products shall carry a loading ticket or manifest containing the following information:</text> <paragraph num="A."> <text>Name of petroleum transporter;</text> </paragraph> <paragraph num="B."> <text>Date and time loaded;</text> </paragraph> <paragraph num="C."> <text>Volumetric gallons of each grade of product loaded;</text> </paragraph> <paragraph num="D."> <text>Name of company operating facility where loaded;</text> </paragraph> <paragraph num="E."> <text>Name of shipper (title holder of product after loading);</text> </paragraph> <paragraph num="F."> <text>Name and address of ultimate consignee;</text> </paragraph> <paragraph num="G."> <text>Any deviation from original manifest or loading ticket shall be indicated thereon or by an additional ticket, all of which must show the names and addresses of all parties involved in the transaction;</text> </paragraph> <paragraph num="H."> <text>A serial numbering sequence; and</text> </paragraph> <paragraph num="I."> <text>The certified octane rating as determined under the Federal Petroleum Marketing Practices Act for each grade of gasoline.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Marking of Compartments."> <text>Each pot or compartment of each vehicle shall be labeled to indicate the certified gallonage capacity, based on a volumetric gallon equaling 231 cubic inches of liquid, on each side of the pot or compartment in a place and manner that shall be readily discernible at a distance of 50 feet when the vehicle is not in motion. The gallonage capacity of each pot or compartment need not be labeled if the vehicle bears an identification plate affixed by the manufacturer indicating the certified gallonage capacity by pot or compartment.</text> </regulation> <regulation prefix="Regulation" num=".07" heading="Loading Tickets or Manifests Required for Commingled Products."> <text>A loading ticket or manifest as described in Regulation .05 of this chapter is required to transport commingled products as defined in COMAR 03.03.05.15.</text> </regulation> <regulation prefix="Regulation" num=".08" heading="Loading Tickets or Manifests for Home Heating Oil and Certain Other Deliveries."> <text>Petroleum transporters making deliveries of fuel oil or kerosene for use as a heating fuel only by the purchasers, and when the gallons to be delivered are unknown until the actual delivery, shall have in their possession:</text> <paragraph num="A."> <text>A loading ticket, manifest, or other documentation containing all information required by Regulation .05A—E of this chapter; and</text> </paragraph> <paragraph num="B."> <text>Delivery tickets for each drop made indicating date, product, volume, name, and address for each individual delivery point.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Transporters of Waste Oil."> <paragraph num="A."> <text>Transporters of motor fuel from tank cleaning or spill clean-up operations shall be considered petroleum transporters regardless of whether the products are contaminated, commingled, or clean.</text> </paragraph> <paragraph num="B."> <text>Transporters of used crankcase motor oils and solvents may not be considered petroleum transporters provided that no other motor fuel is being simultaneously transported.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Inspection of Petroleum Transporters."> <text>Any designated agent of the Field Enforcement Bureau of the Comptroller of the Treasury, or any police officer as defined in the Transportation Article, §11-147, Annotated Code of Maryland, may examine and inspect a vehicle, its manifest, its carried product, and other information in order to determine compliance with Business Regulation Article, Title 10, Subtitle 4, Annotated Code of Maryland, and related regulations.</text> </regulation> <regulation prefix="Regulation" num=".11" heading="Reporting Fuel Movements."> <paragraph num="A."> <text>A registered petroleum transporter who is also a common or contract carrier shall report all intrastate and interstate movements of motor fuel monthly in a format prescribed by the Comptroller.</text> </paragraph> <paragraph num="B."> <text>A registered petroleum transporter who is not a common or contract carrier shall report movements of motor fuel upon the request of and on forms provided by the Comptroller.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".12" heading="Display of Owner's Name."> <paragraph num="A."> <text>The name required for display on the conveyance shall be the name of the petroleum transporter as registered under the federal employers' identification number.</text> </paragraph> <paragraph num="B."> <text>The name may be an individual's name when it is a sole proprietorship.</text> </paragraph> <paragraph num="C."> <text>A trade name, division name, or logo may be displayed in addition to, but not instead of, the registered petroleum transporter's name.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".13" heading="Hazardous Material Placarding or Labeling."> <text>Vehicles transporting motor vehicle fuel or aviation fuel in one or more cargo tanks having a combined capacity exceeding 1,000 pounds (approximately 140 U.S. gallons), shall display on all 4 sides of the vehicle, hazardous materials placards as prescribed by the United States Department of Transportation.</text> </regulation> <regulation prefix="Regulation" num=".14" heading="Repealed." /> <regulation prefix="Regulation" num=".15" heading="Color and Symbol Coding of Vehicle Discharge Valves."> <paragraph num="A."> <text>To facilitate the clean transfer of motor fuel from a distribution point to a purchaser, discharge valves of vehicles used in transporting motor fuel shall be color coded. Color coding shall conform to the American Petroleum Institute (API) recommended system which is found at COMAR 03.03.05.14.</text> </paragraph> <paragraph num="B."> <text>Whenever a petroleum transport vehicle loads product at a bulk plant, terminal, or distribution point, the operator of the vehicle shall display a tag, an identification card, or other acceptable product identification marker on each discharge valve or connection on the vehicle.</text> </paragraph> <paragraph num="C."> <text>The tag, identification card, or acceptable product identification marker shall be of the proper color code, indicating what product is in the line after loading the vehicle.</text> </paragraph> <paragraph num="D."> <text>The color of the tag, identification card, or acceptable product identification marker shall match the color coding of equipment at the loading facility for each grade of motor fuel loaded.</text> </paragraph> <paragraph num="E."> <text>Care should be exercised at out-of-State loading facilities as their color coding systems may differ from Maryland's.</text> </paragraph> <paragraph num="F."> <text>The petroleum transporter should ensure that each vehicle is furnished with sufficient tags, identification cards, or acceptable product identification markers to be in compliance with this regulation.</text> </paragraph> <paragraph num="G."> <text>Color coded tags, identification cards, or acceptable product identification markers may not be removed from a discharge valve or connection until a different product is loaded and after thorough draining or when replacement is necessary.</text> </paragraph> <paragraph num="H."> <text>Deliveries of motor fuel may not be made to any facility not in compliance with the color coding requirements of COMAR 03.03.05.14.</text> </paragraph> <paragraph num="I."> <text>The requirements of this regulation are not applicable to the storage or transportation of liquefied petroleum gas (LPG) or liquefied natural gas (LNG).</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".16" heading="Loading of Conveyances."> <text>Whenever the operator of a petroleum transporter conveyance is intending to load a different grade or type of motor fuel than was previously contained in a pot, compartment, or hold, the operator shall first ensure complete drainage before loading.</text> </regulation> <annotations> <annotation type="Authority">Business Regulation Article, §10-202 and Title 10, Subtitle 4; Tax-General Article, §2-103; Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: June 30, 1975 (2:14 Md. R. 1010)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective December 16, 1977 (4:26 Md. R. 2022)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 repealed and new Regulation .01 adopted effective September 7, 1987 (14:18 Md. R. 1963)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02 repealed and new Regulation .02 adopted effective September 7, 1987 (14:18 Md. R. 1963)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03 amended effective September 7, 1987 (14:18 Md. R. 1963)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04 amended effective September 7, 1987 (14:18 Md. R. 1963)</annotation> <annotation type="History" subtype="Administrative History">Regulations .05J, K and .11 adopted effective November 22, 1982 (9:23 Md. R. 2256)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05K amended effective September 7, 1987 (14:18 Md. R. 1963)</annotation> <annotation type="History" subtype="Administrative History">Regulations .05, .07, and .08 amended effective August 20, 1990 (17:16 Md. R. 1987)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09 amended effective September 7, 1987 (14:18 Md. R. 1963);</annotation> <annotation type="History" subtype="Administrative History">August 20, 1990 (17:16 Md. R. 1987)</annotation> <annotation type="History" subtype="Administrative History">Regulation .11 repealed and new Regulation .11 adopted effective September 7, 1987 (14:18 Md. R. 1963)</annotation> <annotation type="History" subtype="Administrative History">Regulations .12—.14 adopted effective September 7, 1987 (14:18 Md. R. 1963)</annotation> <annotation type="History" subtype="Administrative History">Regulation .15 adopted effective August 20, 1990 (17:16 Md. R. 1987)</annotation> <annotation type="History" subtype="Administrative History">Regulation .16 adopted effective August 20, 1990 (17:16 Md. R. 1987)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective January 14, 1999 (26:1 Md. R. 20)</annotation> <annotation type="History" subtype="Administrative History">Regulations .10 amended effective May 16, 2022 (49:10 Md. R. 562)</annotation> <annotation type="History" subtype="Administrative History">Regulations .15 amended effective May 16, 2022 (49:10 Md. R. 562)</annotation> </annotations> </chapter> <chapter num="04" heading="Motor Carrier Tax"> <regulation prefix="Regulation" num=".01" heading="Definitions."> <text>In this chapter, unless otherwise specified, “IFTA” means the International Fuel Tax Agreement.</text> </regulation> <regulation prefix="Regulation" num=".01-1" heading="International Fuel Tax Agreement."> <text>The provisions and requirements of the International Fuel Tax Agreement (IFTA) Articles of Agreement, Procedures Manual, and Audit Manual apply to the fuel use, taxation, registration, and reporting requirements of motor carriers licensed under IFTA by Maryland, without reference to any other Maryland statute or regulation under Tax-General Article, §9-205, Annotated Code of Maryland.</text> </regulation> <regulation prefix="Regulation" num=".01-2" heading="Registration — Reports."> <paragraph num="A."> <text>Motor carriers shall file an IFTA report and fuel use tax schedule of their operations in all IFTA jurisdictions and pay all taxes due all IFTA jurisdictions for each filing period. The report, schedule, and any taxes due shall be postmarked or received by the Comptroller not later than the last day of the next month following the close of the filing period.</text> </paragraph> <paragraph num="B."> <text>Filing of Quarterly IFTA Reports and Schedules.</text> <paragraph num="(1)"> <text>Motor carriers shall file on a quarterly basis for quarters ending the last day of March, June, September, and December.</text> </paragraph> <paragraph num="(2)"> <text>Annual Filing of Quarterly IFTA Reports and Schedules. Motor carriers that operate less than 5,000 miles annually in all IFTA jurisdictions except Maryland may submit a written request to the Comptroller to file the four quarterly reports and schedules once annually by January 31 for the prior year.</text> </paragraph> <paragraph num="(3)"> <text>The motor carrier shall have written permission from the Comptroller to file on the annual basis described in §B(2) of this regulation, after the Comptroller receives approval from all other affected IFTA jurisdictions.</text> </paragraph> <paragraph num="(4)"> <text>Reports shall be signed by an officer or authorized representative of the motor carrier, certifying that the IFTA reports and schedules are true and correct.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Failure to file IFTA reports and schedules on time, or to pay taxes when due, may result in the denial of additional identification markers for the current year and the denial of an annual renewal application. The registration and IFTA license of any motor carrier currently delinquent for one or more tax filing periods will be considered revoked, and the Maryland State Police or the Field Enforcement Bureau is authorized to remove all identification markers and copies or originals of IFTA licenses from the vehicles of a motor carrier operating on State highways.</text> </paragraph> <paragraph num="D."> <text>Every motor carrier shall notify this office within 30 days concerning any change of name, address, federal identifying number, or Social Security number.</text> </paragraph> <paragraph num="E."> <text>When more than one operating division operates vehicles over State highways, a single IFTA report and schedules shall be filed by the parent company covering all operations under one IFTA license.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Credits and Refunds."> <paragraph num="A."> <text>Any credits accrued and applied for fuel purchased in any IFTA jurisdiction shall be supported by invoices as defined in §D of this regulation.</text> </paragraph> <paragraph num="B."> <text>If a motor carrier elects to file for refund of the excess credit, the motor carrier may do so under the provisions of §§C and D of this regulation by entering the appropriate refund amount requested on the IFTA report.</text> </paragraph> <paragraph num="C."> <text>A motor carrier requesting refund under the provisions of Tax-General Article, §9-214, Annotated Code of Maryland, shall have filed quarterly IFTA tax reports and schedules.</text> </paragraph> <paragraph num="D."> <text>Every motor carrier shall be prepared to present evidence to substantiate a claim for refund of the excess purchases of fuel on which any IFTA jurisdiction motor fuel tax has been paid. Those motor carriers who maintain bulk storage shall have records substantiating inventories and gallons metered for each unit. The evidence shall consist of invoices of the vendor which comply with the requirements of Tax-General Article, §9-310, Annotated Code of Maryland, and shall show:</text> <paragraph num="(1)"> <text>For invoices where fuel is delivered into bulk storage of the motor carrier:</text> <paragraph num="(a)"> <text>Actual date of delivery,</text> </paragraph> <paragraph num="(b)"> <text>Name and address of purchaser,</text> </paragraph> <paragraph num="(c)"> <text>Preprinted name and address of seller on the invoice,</text> </paragraph> <paragraph num="(d)"> <text>The amount of motor fuel tax charged,</text> </paragraph> <paragraph num="(e)"> <text>If tax is not charged, the statement “Maryland (or appropriate other IFTA jurisdiction) Motor Fuel Tax is not included”,</text> </paragraph> <paragraph num="(f)"> <text>Number of metered gallons purchased, type of fuel, and total cost of fuel, and</text> </paragraph> <paragraph num="(g)"> <text>Serialized invoice number;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>For retail service station invoices:</text> <paragraph num="(a)"> <text>Date of purchase,</text> </paragraph> <paragraph num="(b)"> <text>Seller's name and address/location,</text> </paragraph> <paragraph num="(c)"> <text>Purchaser's name (in the case of a lessee/lessor agreement, invoices shall be accepted in either name, providing a legal connection can be made to the reporting party),</text> </paragraph> <paragraph num="(d)"> <text>Number of gallons and total cost of fuel,</text> </paragraph> <paragraph num="(e)"> <text>Fuel type, and</text> </paragraph> <paragraph num="(f)"> <text>Company unit number or vehicle license plate number and state.</text> </paragraph> </paragraph> </paragraph> <paragraph num="E."> <text>Credit card invoices containing the purchaser's account number without the purchaser's name shall be accepted, if supporting documentation is provided that confirms the account number of the refund claimant.</text> </paragraph> <paragraph num="F."> <text>Fuel credit card invoices, bank credit card invoices, or other purchase receipts will not be acceptable for refund purposes unless they meet all the requirements of §§D(2) and E of this regulation.</text> </paragraph> <paragraph num="G."> <text>Account receivable invoices and monthly statements will not be acceptable for refund purposes.</text> </paragraph> <paragraph num="H."> <text>Claims accompanied by invoices on which there is evidence of alteration will be investigated. If the investigation proves an invoice has been altered in any respect, the altered invoice will not be honored.</text> </paragraph> <paragraph num="I."> <text>Except as provided in COMAR 03.03.02.03, carbon copies of invoices may not be accepted.</text> </paragraph> <paragraph num="J."> <text>Refund claimants shall maintain an accurate record of gallonage used for highway and non-highway purposes.</text> </paragraph> <paragraph num="K."> <text>All refund claims submitted shall be prepared on forms supplied by the Comptroller. Supporting schedules shall be complete and all trip records and fuel invoices shall be maintained for audit. Microfilm records of these documents, instead of the original, may be accepted if prior approval is obtained from the Comptroller and retrieval of those microfilm records is available at time of audit.</text> </paragraph> <paragraph num="L."> <text>The refund may not be payable unless tax paid on the number of gallons of motor fuel purchased in all IFTA jurisdictions exceeds tax due on the number of gallons of motor fuel used in all IFTA jurisdictions during the period covered by the refund claim.</text> </paragraph> <paragraph num="M."> <text>Retail Electronic Invoicing System. Electronically generated documents may be considered original invoices if they:</text> <paragraph num="(1)"> <text>Meet all the requirements of this regulation; and</text> </paragraph> <paragraph num="(2)"> <text>Have been approved for use by the Comptroller.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Surety Bond."> <paragraph num="A."> <text>The Comptroller may require an applicant for an IFTA license to post a surety bond if an examination of the applicant's prior filing history indicates:</text> <paragraph num="(1)"> <text>The applicant has failed to file a quarterly return;</text> </paragraph> <paragraph num="(2)"> <text>The applicant has failed to pay required tax; or</text> </paragraph> <paragraph num="(3)"> <text>A financial guarantee is necessary to protect the interest of the State or other IFTA jurisdiction.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The applicant shall post a bond in an amount equal to the estimated average annual net tax due to IFTA member jurisdictions rounded to the next even $1,000.</text> </paragraph> <paragraph num="C."> <text>Bond amounts may be adjusted at the discretion of the Comptroller to insure compliance with the IFTA requirements.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Records."> <paragraph num="A."> <text>Every motor carrier required to register and report to the Comptroller shall keep satisfactory records of:</text> <paragraph num="(1)"> <text>The miles traveled in all operations within:</text> <paragraph num="(a)"> <text>Maryland, and</text> </paragraph> <paragraph num="(b)"> <text>Each other jurisdiction; and</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The fuel purchased within:</text> <paragraph num="(a)"> <text>Maryland, and</text> </paragraph> <paragraph num="(b)"> <text>Each other jurisdiction where the fuel is used in qualified motor vehicles.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Miles traveled, fuel purchased, and fuel use records shall distinguish the operation of vehicles not subject to the IFTA from those vehicles subject to the IFTA.</text> </paragraph> <paragraph num="C."> <text>Records maintained on fuel purchases and use shall be identified as to type of fuel used.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Trip Permits."> <paragraph num="A."> <text>A motor carrier may obtain a trip permit for an unregistered commercial motor vehicle from either the Field Enforcement Bureau or one of its duly authorized trip permit agents.</text> </paragraph> <paragraph num="B."> <text>Registered and unregistered motor carriers may obtain a trip permit for an unregistered commercial motor vehicle, provided that the request for the trip permit includes:</text> <paragraph num="(1)"> <text>Name, address, federal identification number or Social Security number of the motor carrier; and</text> </paragraph> <paragraph num="(2)"> <text>Make, serial number, and state in which the vehicle is licensed.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Trip permits are valid for 15 consecutive days beginning and ending on the dates specified on the face of the trip permit.</text> </paragraph> <paragraph num="D."> <text>Trip permits shall be carried in the cab of the vehicle whenever the vehicle is in the State, and they are not transferable between motor carriers or between vehicles.</text> </paragraph> <paragraph num="E."> <text>A trip permit may not be issued to any licensee who is currently suspended or revoked in any IFTA jurisdiction.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Lease Agreements."> <paragraph num="A."> <text>A lessor, lessee, independent contractor, or household goods agent shall be licensed, liable for reporting, and liable for payment of fuel use taxes as required by the International Fuel Tax Agreement (IFTA).</text> </paragraph> <paragraph num="B."> <text>A lessor regularly engaged in the business of leasing or renting motor vehicles without drivers, for compensation to licensees or to other lessees, may be deemed to be the licensee. The lessor may be issued a license if an application has been properly filed and approved by the base jurisdiction.</text> </paragraph> <paragraph num="C."> <text>In the case of a carrier using independent contractors under long-term leases (30 days or more), the lessor and lessee are given the option of designating which party will report and pay fuel use tax. In the absence of a written agreement or contract, or if the document is silent regarding responsibility for reporting and paying fuel use tax, the lessee is responsible for reporting and paying fuel use tax. If the lessee (carrier) through a written agreement or contract assumes responsibility for reporting and paying fuel use taxes, the base jurisdiction for purposes of IFTA is the base jurisdiction of the lessee, regardless of the jurisdiction in which the qualified motor vehicle is registered for vehicle registration purposes by the lessor.</text> </paragraph> <paragraph num="D."> <text>In the case of a short-term motor vehicle rental by a lessor regularly engaged in the business of leasing or renting motor vehicles without drivers for compensation to licensees or other lessees of 29 days or less, the lessor shall report and pay the fuel use tax unless the following two conditions are met:</text> <paragraph num="(1)"> <text>The lessor has a written rental contract which designates the lessee as the party responsible for reporting and paying the fuel use tax; and</text> </paragraph> <paragraph num="(2)"> <text>The lessor has a copy of the lessee's IFTA fuel tax license which is valid for the term of the rental.</text> </paragraph> </paragraph> <paragraph num="E."> <text>In the case of a carrier using independent contractors under short-term/trip leases of 29 days or less, the trip lessor shall report and pay all fuel taxes.</text> </paragraph> <paragraph num="F."> <text>Household Goods Carrier.</text> <paragraph num="(1)"> <text>In the case of a household goods carrier using independent contractors, agents, or service representatives, under intermittent leases, the party liable for motor fuel tax is:</text> <paragraph num="(a)"> <text>The lessee (carrier) when the qualified motor vehicle is being operated under the lessee's jurisdictional operating authority; or</text> </paragraph> <paragraph num="(b)"> <text>The lessor (independent contractor, agent, or service representative) when the qualified motor vehicle is being operated under the lessor's jurisdictional operating authority.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Under §F(1)(a) of this regulation, the base jurisdiction for purposes of IFTA is the base jurisdiction of the lessee (carrier), regardless of the jurisdiction in which the qualified motor vehicle is registered for vehicle registration purposes by the lessor or lessee.</text> </paragraph> <paragraph num="(3)"> <text>Under §F(1)(b) of this regulation, the base jurisdiction for purposes of IFTA is the base jurisdiction of the lessor, regardless of the jurisdiction in which the qualified motor vehicle is registered for vehicle registration purposes.</text> </paragraph> </paragraph> <paragraph num="G."> <text>Filing of leases is not required as a condition of licensing, but leases shall be made available upon request of an IFTA jurisdiction.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Registration of Vehicles."> <paragraph num="A."> <text>IFTA Licenses and Identification Markers (Decals). IFTA licenses and decals shall be valid upon issuance and shall expire on December 31 of the year indicated on the license. A carrier is allowed a 2-month grace period during January and February to display the new year IFTA license and decals, if the carrier displays the immediate prior year IFTA license and decals.</text> </paragraph> <paragraph num="B."> <text>Display of IFTA Decals. A motor carrier shall display an IFTA decal on the exterior portion of both sides of the cab, permanently affixed in a conspicuous place, and shall follow the directions for applying the decals to the vehicle as indicated on the reverse side of the decal. In the case of transporters, manufacturers, dealers, or driveway operations, the decals need not be permanently affixed, but may be temporarily displayed in a visible manner on both sides of the cab.</text> </paragraph> <paragraph num="C."> <text>If an IFTA decal which has been issued by the Field Enforcement Bureau becomes illegible, the motor carrier may apply to the Field Enforcement Bureau for issuance of a duplicate decal.</text> </paragraph> <paragraph num="D."> <text>A motor carrier shall be issued an IFTA license and a 2-decal set for each vehicle and the original license or copy shall be carried in the vehicle at all times. Once IFTA decals are affixed to a specific vehicle, they are not transferable to any other vehicle.</text> </paragraph> <paragraph num="E."> <text>When a vehicle to which IFTA decals have been affixed is sold, traded, or otherwise disposed of by the operator, or passes from the control of the operator through lease or otherwise, the Field Enforcement Bureau shall be notified within 30 days of the cancellation. If the motor carrier neglects or fails to notify the Field Enforcement Bureau, the motor carrier is responsible for reporting the miles traveled by the vehicle and paying the tax due.</text> </paragraph> <paragraph num="F."> <text>A motor carrier shall return unused IFTA decals to the Field Enforcement Bureau.</text> </paragraph> <paragraph num="G."> <text>A Maryland domiciled carrier that is required under Tax-General Article, §9-219, Annotated Code of Maryland, to display IFTA decals on each commercial motor vehicle, and that purchases a commercial motor vehicle for titling in Maryland, has 30 days from the date of purchase to obtain an IFTA license and affix IFTA decals to the vehicle. The bill of sale or temporary registration identification documents issued under Transportation Article, §13-402 or 13-405, Annotated Code of Maryland, shall be carried in the cab of the vehicle during this 30-day period. The motor carrier may not operate the vehicle outside Maryland until IFTA decals are displayed.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Revocation."> <text>The Comptroller is empowered to suspend or revoke the IFTA license and decals of any motor carrier, upon a finding by the Comptroller that the registrant has failed to comply with Tax-General Article, Title 9, Subtitle 2, Annotated Code of Maryland, or any regulation promulgated by the Comptroller under that statute. The revocation shall be made only after 30 days notice to the registrant to comply with all sections of the law and regulations. Reapplication for registration will not be granted until a motor carrier has complied with all sections of the law and regulations.</text> </regulation> <regulation prefix="Regulation" num=".09" heading="Repealed." /> <regulation prefix="Regulation" num=".10" heading="Improper Use of Licenses and Decals."> <text>The Maryland State Police shall remove and return to the Field Enforcement Bureau all IFTA licenses and decals that are being used in any improper manner.</text> </regulation> <regulation prefix="Regulation" num=".11" heading="Penalty for False Statements."> <text>Any person who willfully and knowingly makes a false statement, orally or in writing, in the form of a receipt for the sale of motor fuel for the purposes of obtaining or attempting to obtain or to assist any other person, partnership, or corporation to obtain or attempt to obtain a credit or refund or reduction of liability for taxes under this subtitle will be notified to the effect that all permits and registrations have been revoked.</text> </regulation> <regulation prefix="Regulation" num=".12" heading="Licensing of Trip Permit Vendors."> <paragraph num="A."> <text>Qualifications. In order to ensure a sufficient number and availability of locations where a motor carrier may purchase a trip permit required by Tax-General Article, §9-219, Annotated Code of Maryland, before entering this State, the Field Enforcement Bureau, in its discretion, may license applicants to issue trip permits if they meet the following qualifications:</text> <paragraph num="(1)"> <text>The applicant shall have 3 years experience in the issuance of trip permits or other similar experiences;</text> </paragraph> <paragraph num="(2)"> <text>The applicant shall possess a business rating, reputation, and capability satisfactory to the Field Enforcement Bureau;</text> </paragraph> <paragraph num="(3)"> <text>The applicant shall be capable of providing the service at all times specified by the Field Enforcement Bureau;</text> </paragraph> <paragraph num="(4)"> <text>The applicant shall be capable of delivering copies of all issued trip permits to the offices of the Field Enforcement Bureau by the next working day; and</text> </paragraph> <paragraph num="(5)"> <text>The applicant shall possess the financial capability to purchase trip permits from the Field Enforcement Bureau in advance of sale in quantities of not less than 200.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Issuance of Trip Permits by Licensees.</text> <paragraph num="(1)"> <text>Licensees shall sell trip permits in the manner prescribed by the Field Enforcement Bureau.</text> </paragraph> <paragraph num="(2)"> <text>The licensee may charge the purchaser of a trip permit a fee for its service not to exceed the rate established by the Field Enforcement Bureau.</text> </paragraph> <paragraph num="(3)"> <text>Licensees may only sell permits to a motor carrier for a specific commercial motor vehicle. Permits may not be sold for resale.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Liability. The Field Enforcement Bureau is not liable for the illegal or improper acts of its licensees.</text> </paragraph> <paragraph num="D."> <text>Inspection of Records. The applicant agrees to the availability and inspection of all its records by the Field Enforcement Bureau, during normal business hours, for the determination of compliance with the Field Enforcement Bureau requirements.</text> </paragraph> <paragraph num="E."> <text>Transferability and Revocation of License. The license to sell trip permits is nontransferable and revocable for cause or for no cause upon 10 days written notice from the Field Enforcement Bureau to the licensee that the license is revoked. Licensees may terminate the license by giving 30 days written notice to the Field Enforcement Bureau. If the license arrangement is cancelled by either party, the licensee shall promptly turn in to the offices of the Field Enforcement Bureau all unissued trip permits, and the Field Enforcement Bureau shall refund their cost.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".13" heading="Penalties and Interest."> <paragraph num="A."> <text>Penalties.</text> <paragraph num="(1)"> <text>If a person fails to file an IFTA report and schedules when due, a penalty shall be assessed in the amount of 10 percent of the tax due, with a minimum assessment of $50.</text> </paragraph> <paragraph num="(2)"> <text>A penalty of $50 shall be assessed when an IFTA report and schedules are not filed when due, even if taxes are not due.</text> </paragraph> <paragraph num="(3)"> <text>If a person files an IFTA report and schedules timely but, for whatever reason, underpays the proper tax due an IFTA jurisdiction, a penalty shall be assessed in the amount of 10 percent of the additional tax due, with a minimum assessment of $50.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Interest.</text> <paragraph num="(1)"> <text>If a person fails to file a return when due, interest shall be assessed as prescribed in Tax-General Article, Title 13, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>Interest on unpaid tax assessments shall be assessed as prescribed in Tax-General Article, Title 13, Annotated Code of Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".14" heading="Appeal—Informal Hearing."> <paragraph num="A."> <text>A person desiring to appeal an assessment or denial of a refund may apply for an informal hearing which shall be held in accordance with procedures set forth in COMAR 03.01.01.04.</text> </paragraph> <paragraph num="B."> <text>Informal hearings shall be held at a location determined by the Comptroller, and the location shall be set in the notice issued by the Comptroller.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Tax-General Article, §§2-103 and 9-205, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: June 1, 1974</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 amended effective November 22, 1982 (9:23 Md. R. 2257); September 7, 1987 (14:18 Md. R. 1963)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01A amended effective September 14, 1981 (8:18 Md. R. 1476)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01C amended effective June 2, 1978 (5:11 Md. R. 881); September 14, 1981 (8:18 Md. R. 1476)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01D amended effective September 14, 1981 (8:18 Md. R. 1476)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02A amended effective September 7, 1987 (14:18 Md. R. 1963)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02C amended effective November 22, 1982 (9:23 Md. R. 2257)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02F amended effective November 22, 1982 (9:23 Md. R. 2257)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02H amended effective November 22, 1982 (9:23 Md. R. 2257)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03 amended effective October 20, 1986 (13:21 Md. R. 2319)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04A amended effective September 7, 1987 (14:18 Md. R. 1963)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05 amended effective June 2, 1978 (5:11 Md. R. 881)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05A amended effective September 14, 1981 (8:18 Md. R. 1476); November 22, 1982 (9:23 Md. R. 2257); August 26, 1985 (12:17 Md. R. 1699)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05C amended effective November 22, 1982 (9:23 Md. R. 2257)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05D amended effective November 22, 1982 (9:23 Md. R. 2257)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05F amended effective March 23, 1979 (6:6 Md. R. 509); September 14, 1981 (8:18 Md. R. 1476)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05 repealed and new Regulation .05 adopted effective September 7, 1987 (14:18 Md. R. 1963)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06 amended effective November 22, 1982 (9:23 Md. R. 2257)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07 amended effective June 2, 1978 (5:11 Md. R. 881); September 14, 1981 (8:18 Md. R. 1476); November 22, 1982 (9:23 Md. R. 2257); September 7, 1987 (14:18 Md. R. 1963)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08 amended effective September 14, 1981 (8:18 Md. R. 1476); November 22, 1982 (9:23 Md. R. 2257); September 7, 1987 (14:18 Md. R. 1963)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09 amended effective September 14, 1981 (8:18 Md. R. 1476); November 22, 1982 (9:23 Md. R. 2257); September 7, 1987 (14:18 Md. R. 1963)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10 amended effective November 22, 1982 (9:23 Md. R. 2257)</annotation> <annotation type="History" subtype="Administrative History">Regulation .12 amended effective November 22, 1982 (9:23 Md. R. 2257)</annotation> <annotation type="History" subtype="Administrative History">Regulation .12F amended effective June 2, 1978 (5:11 Md. R. 881)</annotation> <annotation type="History" subtype="Administrative History">Regulation .13 adopted effective June 2, 1978 (5:11 Md. R. 881)</annotation> <annotation type="History" subtype="Administrative History">Regulation .13 amended effective November 22, 1982 (9:23 Md. R. 2257)</annotation> <annotation type="History" subtype="Administrative History">Regulation .13A amended effective September 7, 1987 (14:18 Md. R. 1963)</annotation> <annotation type="History" subtype="Administrative History">Regulation .13B amended effective September 7, 1987 (14:18 Md. R. 1963)</annotation> <annotation type="History" subtype="Administrative History">Regulation .13E amended effective September 7, 1987 (14:18 Md. R. 1963)</annotation> <annotation type="History" subtype="Administrative History">Regulation .14 adopted effective November 22, 1982 (9:23 Md. R. 2257); repealed effective August 26, 1985 (12:17 Md. R. 1699)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective January 23, 1989 (16:1 Md. R. 66)</annotation> <annotation type="History" subtype="Administrative History">Regulation .12 repealed effective August 6, 1990 (17:15 Md. R. 1853)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised and recodified from COMAR 03.03.06 to COMAR 03.03.04 effective August 20, 1990 (17:16 Md. R. 1987)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 amended effective October 26, 1992 (19:21 Md. R. 1890)</annotation> <annotation type="History" subtype="Administrative History">Regulations .02, .05, .07, .10, and .12 amended, and Regulation .14 adopted effective September 28, 1992 (19:19 Md. R. 1703)</annotation> <annotation type="History" subtype="Administrative History">Regulation .13A amended effective May 8, 1995 (22:9 Md. R. 644)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective January 14, 1999 (26:1 Md. R. 20)</annotation> <annotation type="History" subtype="Administrative History">Regulations .01-2C amended effective May 16, 2022 (49:10 Md. R. 562)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03 amended effective June 21, 2004 (31:12 Md. R. 911)</annotation> <annotation type="History" subtype="Administrative History">Regulations .05A amended effective May 16, 2022 (49:10 Md. R. 562)</annotation> <annotation type="History" subtype="Administrative History">Regulations .07 amended effective May 16, 2022 (49:10 Md. R. 562)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08 amended effective June 19, 2006 (33:12 Md. R. 996)</annotation> <annotation type="History" subtype="Administrative History">Regulations .10 amended effective May 16, 2022 (49:10 Md. R. 562)</annotation> <annotation type="History" subtype="Administrative History">Regulations .12 amended effective May 16, 2022 (49:10 Md. R. 562)</annotation> </annotations> </chapter> <chapter num="05" heading="Motor Fuel Inspection"> <regulation prefix="Regulation" num=".01" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated, unless otherwise specified.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“ASTM” means the American Society for Testing and Materials.</text> </paragraph> <paragraph num="(2)"> <text>“Bureau” means the Field Enforcement Bureau of the Comptroller of the Treasury.</text> </paragraph> <paragraph num="(3)"> <text>“Conventional gasoline” means any gasoline meeting the minimum specifications established by ASTM, but not meeting the standards for reformulated gasoline established by the United States Environmental Protection Agency (US EPA).</text> </paragraph> <paragraph num="(4)"> <text>“Department” means the Department of the Environment.</text> </paragraph> <paragraph num="(5)"> <text>“Dispenser” means a device from which motor fuel is transferred from storage at a retail outlet or wholesale purchaser-consumer facility to an ultimate consumer.</text> </paragraph> <paragraph num="(6)"> <text>“Ethanol blend” means gasoline which contains at least 9 percent by volume ethanol, excluding denaturants, as determined in accordance with one of the test methodologies specified in COMAR 03.03.06.03B.</text> </paragraph> <paragraph num="(7)"> <text>“Ethanol-enhanced oxygenated gasoline” means gasoline containing less than 9 percent by volume ethanol, excluding denaturants, as determined in accordance with one of the test methods specified in COMAR 03.03.06.03B.</text> </paragraph> <paragraph num="(8)"> <text>“Ethanol flex fuel” means automotive fuel blend of gasoline and 51 to 83 percent volume ethanol, commercially known as “E85”, for use in ground vehicles equipped with flexible-fuel spark ignition engines.</text> </paragraph> <paragraph num="(9)"> <text>“Gasoline” means any fuel sold for use in internal combustion spark-ignited engines and which is commonly or commercially known or sold as gasoline, including oxygenated gasoline.</text> </paragraph> <paragraph num="(10)"> <text>“Motor fuel” means gasoline or special fuel.</text> </paragraph> <paragraph num="(11)"> <text>“Motor vehicle fuel” means motor fuel.</text> </paragraph> <paragraph num="(12)"> <text>“Nonoxygenated gasoline” means gasoline which contains no oxygenates or oxygenates in quantities less than or equal to 0.4 percent oxygen by weight.</text> </paragraph> <paragraph num="(13)"> <text>“Oxygenate” means any oxygen-containing compound approved for use in gasoline under the US EPA's substantially similar definition or under a bona fide US EPA oxygenate waiver.</text> </paragraph> <paragraph num="(14)"> <text>“Oxygenated gasoline” means gasoline which contains one or more oxygenates in quantities exceeding 0.4 percent oxygen by weight.</text> </paragraph> <paragraph num="(15)"> <text>“Oxygenated gasoline control area” means a geographic area in which all gasoline sold or dispensed during an oxygenated gasoline control period is subject to the minimum oxygen content requirements of Regulation .01-1N of this chapter. There are three oxygenated gasoline control areas as follows:</text> <paragraph num="(a)"> <text>The Northeast Oxygenated Gasoline Control Area is comprised of Cecil County;</text> </paragraph> <paragraph num="(b)"> <text>The Baltimore Oxygenated Gasoline Control Area is comprised of Baltimore City and Anne Arundel, Baltimore, Carroll, Harford, Howard, and Queen Anne's counties; and</text> </paragraph> <paragraph num="(c)"> <text>The Washington Oxygenated Gasoline Control Area is comprised of Calvert, Charles, Frederick, Montgomery, and Prince George's counties.</text> </paragraph> </paragraph> <paragraph num="(16)"> <text>“Oxygenated gasoline control period” means the 4-month period which begins each November 1 and runs without interruption through the following February 28 or, in leap years, the following February 29.</text> </paragraph> <paragraph num="(17)"> <text>“Oxygenate waiver” means an authorization granted by the Administrator of the US EPA under §211(f)(4) of the federal Clean Air Act which permits the addition of specified oxygenates in specified volumes to unleaded nonoxygenated gasoline.</text> </paragraph> <paragraph num="(18)"> <text>“Ozone attainment areas” means the geographic areas of the State which are not ozone nonattainment areas.</text> </paragraph> <paragraph num="(19)"> <text>“Ozone nonattainment area” means the geographic areas of the State comprised of Baltimore City and Anne Arundel, Baltimore, Calvert, Carroll, Cecil, Charles, Frederick, Harford, Howard, Kent, Montgomery, Prince George's, and Queen Anne's counties.</text> </paragraph> <paragraph num="(20)"> <text>“Reformulated gasoline (RFG)” means gasoline meeting the requirements of the US EPA definition established under §211(k) of the federal Clean Air Act (42 U.S.C. §7545).</text> </paragraph> <paragraph num="(21)"> <text>“Reformulated gasoline control area” means ozone nonattainment areas.</text> </paragraph> <paragraph num="(22)"> <text>“Retail outlet” means an establishment at which motor fuel is sold or offered for sale to an ultimate consumer.</text> </paragraph> <paragraph num="(23)"> <text>“Special fuel” means any fuel other than gasoline which is sold for use in motor vehicles.</text> </paragraph> <paragraph num="(24)"> <text>“Substantially similar definition” means an interpretive rule issued by the Administrator of the US EPA under §211(f)(1) of the federal Clean Air Act which permits the addition of specified oxygenates in specified volumes to unleaded nonoxygenated gasoline. The most recent definition appeared in the February 11, 1991, Federal Register (56 FR 5352).</text> </paragraph> <paragraph num="(25)"> <text>“Transfer” means the physical transfer of custody or the transfer of title of motor fuel from one person to another, excluding the sale or dispensing of motor fuel at a retail outlet or wholesale purchaser-consumer facility for direct consumption in a motor vehicle.</text> </paragraph> <paragraph num="(26)"> <text>“Ultimate consumer” means a person who purchases or obtains motor fuel for direct consumption in an automotive engine and who does not transfer or offer to transfer the motor fuel to any other person following purchase or receipt.</text> </paragraph> <paragraph num="(27)"> <text>“Unleaded gasoline” means gasoline which is produced without the use of any lead additive and which contains not more than 0.013 gram of lead per liter (0.05 gram of lead per gallon) and not more than 0.0013 gram of phosphorus per liter (0.005 gram of phosphorus per gallon).</text> </paragraph> <paragraph num="(28)"> <text>“VOC control region 1” means all of the Maryland reformulated gasoline control area except for Cecil County.</text> </paragraph> <paragraph num="(29)"> <text>“VOC control region 2” means that portion of the Maryland reformulated gasoline control area consisting of Cecil County.</text> </paragraph> <paragraph num="(30)"> <text>“Wholesale purchaser-consumer” means an ultimate consumer who receives delivery of motor fuel solely intended for ultimate consumption into a storage tank with a capacity of at least 550 gallons which is substantially under the control of the ultimate consumer.</text> </paragraph> <paragraph num="(31)"> <text>“Wholesale purchaser-consumer facility” means an establishment at which a wholesale purchaser-consumer stores and dispenses motor fuel for direct consumption in a motor vehicle or an internal combustion engine.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".01-1" heading="Standard Specifications for Gasoline."> <paragraph num="A."> <text>Exemptions. Gasoline not sold or dispensed to an ultimate consumer may be exempted from the requirements of this regulation upon written approval of the Bureau and the Department. Exemption from vapor pressure requirements shall only be granted in instances where the applicant complies with the requirements of proposed 40 CFR §80.27(e), which is incorporated by reference as published in the October 18, 1991, Federal Register (56 FR 52321). Requests for exemption from oxygen content requirements shall comply with the requirements of 40 CFR §80.27(e), except that all data shall be applicable to oxygen content rather than vapor pressure.</text> </paragraph> <paragraph num="B."> <text>Unless the gasoline is segregated and clearly documented as noncomplying and not for sale or supply to an ultimate consumer in an applicable control area, a person may not produce, store, transport, supply, offer to supply, transfer or otherwise handle, sell, offer for sale, or dispense gasoline that does not meet the limits specified in §§C—N of this regulation when tested in accordance with the latest version of the specified test methods.</text> </paragraph> <paragraph num="C."> <text>Distillation. Except as provided in §C(5) of this regulation, the rates of evaporation under the ASTM D-86 standards for the stated months of the year are:</text> <paragraph num="(1)"> <text>Evaporation — during the months of, January, February, March, and December</text> <paragraph num="(a)"> <text>10 percent — 50°C (122°F) maximum</text> </paragraph> <paragraph num="(b)"> <text>Evaporation — during the months of, January, February, March, and December</text> </paragraph> <paragraph num="(c)"> <text>50 percent — 110°C (230°F) maximum</text> </paragraph> <paragraph num="(d)"> <text>90 percent — 185°C (365°F) maximum</text> </paragraph> <paragraph num="(e)"> <text>End Point — 225°C (437°F) maximum</text> </paragraph> <paragraph num="(f)"> <text>Residue — 2 percent maximum</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Evaporation — during the months of April, October, and November</text> <paragraph num="(a)"> <text>10 percent — 55°C (131°F) maximum</text> </paragraph> <paragraph num="(b)"> <text>50 percent — 62.8°C (145°F) minimum</text> </paragraph> <paragraph num="(c)"> <text>50 percent — 113°C (235°F) maximum</text> </paragraph> <paragraph num="(d)"> <text>90 percent — 185°C (365°F) maximum</text> </paragraph> <paragraph num="(e)"> <text>End Point — 225°C (437°F) maximum</text> </paragraph> <paragraph num="(f)"> <text>Residue — 2 percent maximum</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Evaporation — May through September 15</text> <paragraph num="(a)"> <text>10 percent — 70°C (158°F) maximum</text> </paragraph> <paragraph num="(b)"> <text>50 percent — 77°C (170°F) minimum</text> </paragraph> <paragraph num="(c)"> <text>50 percent — 121°C (250°F) maximum</text> </paragraph> <paragraph num="(d)"> <text>90 percent — 190°C (374°F) maximum</text> </paragraph> <paragraph num="(e)"> <text>End Point — 225°C (437°F) maximum</text> </paragraph> <paragraph num="(f)"> <text>Residue — 2 percent maximum</text> </paragraph> <paragraph num="(g)"> <text>An ethanol blend and an ethanol-enhanced oxygenated gasoline are subject to the following limit: 50 percent — 66°C (150°F) minimum</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Evaporation — September 16 through September 30</text> <paragraph num="(a)"> <text>10 percent — 60°C (140°F) maximum</text> </paragraph> <paragraph num="(b)"> <text>50 percent — 66°C (150°F) minimum</text> </paragraph> <paragraph num="(c)"> <text>50 percent — 116°C (240°F) maximum</text> </paragraph> <paragraph num="(d)"> <text>90 percent — 185°C (365°F) maximum</text> </paragraph> <paragraph num="(e)"> <text>End point — 225°C (437°F) maximum</text> </paragraph> <paragraph num="(f)"> <text>Residue — 2 percent maximum</text> </paragraph> <paragraph num="(g)"> <text>An ethanol blend and an ethanol-enhanced oxygenated gasoline are subject to the following limit: 50 percent — 66°C (150°F) minimum</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>To accommodate for the receipt of new product and disbursement of old stock, the following allowances are made from the fixed change-over date:</text> <paragraph num="(a)"> <text>Product complying with the specifications for the volatility period beginning May 1 is acceptable up to 45 days before May 1;</text> </paragraph> <paragraph num="(b)"> <text>Product complying with the specifications for the volatility period beginning September 16 is acceptable only on or after September 16; and</text> </paragraph> <paragraph num="(c)"> <text>Product complying with the specifications for any other volatility period is acceptable 15 days before or after the fixed change-over date.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>Vapor Pressure.</text> <paragraph num="(1)"> <text>The vapor pressure of gasoline may not exceed the following limits when tested in accordance with ASTM Test Method D-5191 or as otherwise required under COMAR 03.03.06:</text> <paragraph num="(a)"> <text>103 kPa (15.0 psi) during the months of January, February, and December;</text> </paragraph> <paragraph num="(b)"> <text>93 kPa (13.5 psi) during the months of March, April, October, and November;</text> </paragraph> <paragraph num="(c)"> <text>62 kPa (9.0 psi) during the month of May;</text> </paragraph> <paragraph num="(d)"> <text>During the months of June, July, and August and from September 1 through September 15:</text> <paragraph num="(i)"> <text>51 kPa (7.4 psi) for all gasoline sold, intended for sale, or supplied to an ultimate consumer in RFG VOC control region 1,</text> </paragraph> <paragraph num="(ii)"> <text>57.2 kPa (8.3 psi) for all gasoline sold, intended for sale, or supplied to an ultimate consumer in RFG VOC control region 2, and</text> </paragraph> <paragraph num="(iii)"> <text>62 kPa (9.0 psi) for all gasoline sold, intended for sale, or supplied to an ultimate consumer in ozone attainment areas; and</text> </paragraph> </paragraph> <paragraph num="(e)"> <text>79 kPa (11.5 psi) September 16 through September 30, inclusive.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Ethanol blend and ethanol-enhanced oxygenated gasoline are subject to the following conditions:</text> <paragraph num="(a)"> <text>An ethanol blend is considered to be in compliance with §D(1)(a), (b), (c), (d), and (e) of this regulation if its measured vapor pressure does not exceed the limit specified by more than 1.0 psi, the gasoline portion of the product was not produced and identified as VOC gasoline by the refiner, and the product is sold only for use or distribution outside a VOC control region;</text> </paragraph> <paragraph num="(b)"> <text>An ethanol-enhanced oxygenated gasoline is considered to be in compliance with §D(1)(a), (b), and (e) of this regulation if its measured vapor pressure does not exceed the limit specified by more than 1.0 psi from September 16—May 31, the gasoline portion of the product was not produced and identified as VOC gasoline by the refiner, and the product is sold only for use or distribution outside a VOC control region;</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>A 15-day transition period is allowed before and following each change in vapor pressure limits as specified in §D(1) of this regulation, except as follows:</text> <paragraph num="(a)"> <text>Gasoline complying with the April vapor pressure limit is allowed throughout May at retail outlets and wholesale purchaser-consumer facilities;</text> </paragraph> <paragraph num="(b)"> <text>Gasoline complying with the April vapor pressure limit is not allowed after April 30 at any location other than retail outlets or wholesale purchaser-consumer facilities, unless the gasoline also complies with the May vapor pressure limit;</text> </paragraph> <paragraph num="(c)"> <text>Gasoline complying with the May vapor pressure limit is not allowed after May 31, unless the gasoline also complies with the June vapor pressure limit; and</text> </paragraph> <paragraph num="(d)"> <text>Gasoline complying with the September 16 through September 30 vapor pressure limit is not allowed before September 16, unless the gasoline also complies with the September 1 through September 15 vapor pressure limit.</text> </paragraph> </paragraph> </paragraph> <paragraph num="E."> <text>V/L Ratio. Except as provided in §E(4) of this regulation, the V/L Ratio Temperature in °C (°F) for a Vapor-Liquid Ratio of 20 Minimum under ASTM-D5188 standards is:</text> <paragraph num="(1)"> <text>39°C (102°F) during the months of January, February, and December.</text> </paragraph> <paragraph num="(2)"> <text>42°C (107°F) during the months of March, April, October, and November.</text> </paragraph> <paragraph num="(3)"> <text>47°C (116°F) during the months of May, June, July, August, and September.</text> </paragraph> <paragraph num="(4)"> <text>To accommodate for the receipt of new product and disbursement of old stock, the following allowances are made from the fixed change-over date:</text> <paragraph num="(a)"> <text>Product complying with the specifications for the volatility period beginning May 1 is acceptable on or after March 16;</text> </paragraph> <paragraph num="(b)"> <text>Product complying with the specifications for the volatility period beginning September 16 is acceptable only on or after September 16; and</text> </paragraph> <paragraph num="(c)"> <text>Product complying with the specifications for any other volatility period is acceptable 15 days before or after the fixed change-over date for that volatility period.</text> </paragraph> </paragraph> </paragraph> <paragraph num="F."> <text>Corrosion (ASTM D-130). Copper Strip Scale, No. 1, maximum at 50°C (122°F).</text> </paragraph> <paragraph num="G."> <text>Sulfur (ASTM D-2622-21 or ASTM D-7039).</text> <paragraph num="(1)"> <text>Conventional gasoline — 0.0095 percent by mass, maximum.</text> </paragraph> <paragraph num="(2)"> <text>Reformulated gasoline — 0.0095 percent by mass, maximum.</text> </paragraph> </paragraph> <paragraph num="H."> <text>Existent Gum Content (ASTM D-381). 5 milligrams per 100 milliliters, maximum (after heptane wash).</text> </paragraph> <paragraph num="I."> <text>Visible Water and Sediment. Shall be visually free of undissolved water, sediment, and suspended matter and shall be clear and bright at the ambient temperature or 21°C (70°F), whichever is higher.</text> </paragraph> <paragraph num="J."> <text>Lead (ASTM D-3237).</text> <paragraph num="(1)"> <text>Unleaded — 0.013 gram per liter maximum (0.05 gram per U.S. gallon maximum).</text> </paragraph> <paragraph num="(2)"> <text>Leaded — Greater than 0.013 gram per liter (0.05 gram per U.S. gallon), except that after December 31, 1995, leaded gasoline may not be sold for or used as fuel in a highway motor vehicle.</text> </paragraph> </paragraph> <paragraph num="K."> <text>Octane Test. The octane rating shall be determined in accordance with Title II of the Petroleum Marketing Practices Act and regulations adopted under that title. In addition, gasoline with an anti-knock index of 87 shall have a motor octane number not less than 82.0.</text> </paragraph> <paragraph num="L."> <text>Phosphorus (ASTM D-3231). Unleaded — 0.0013 gram per liter maximum (0.005 gram per U.S. gallon maximum).</text> </paragraph> <paragraph num="M."> <text>Gasoline with a lead content of 0.013 gram per liter (0.05 gram per U.S. gallon) or less shall only be sold as unleaded.</text> </paragraph> <paragraph num="N."> <text>Oxygen Content.</text> <paragraph num="(1)"> <text>Gasoline shall meet the oxygen content requirements specified in §N(2)—(4) of this regulation when tested in accordance with ASTM Test Method D-4815-22 or as otherwise required under COMAR 03.03.06.</text> </paragraph> <paragraph num="(2)"> <text>Oxygenates used in gasoline shall be of a type and quality allowed under either the US EPA's substantially similar definition or under a bona fide US EPA oxygenate waiver.</text> </paragraph> <paragraph num="(3)"> <text>The maximum allowable oxygen content of gasoline shall be limited to that established under either the US EPA's substantially similar definition or that established under a bona fide US EPA oxygenate waiver.</text> </paragraph> <paragraph num="(4)"> <text>Phase Separation. Oxygenated gasoline shall consist of a single homogenous mixture, presenting no indication of phase separation when tested at the following temperatures in accordance with the test methods described in X8 of ASTM Specification D-4814-24a, as follows:</text> <paragraph num="(a)"> <text>-9°C (16°F) during the month of January;</text> </paragraph> <paragraph num="(b)"> <text>-8°C (17°F) during the month of February;</text> </paragraph> <paragraph num="(c)"> <text>-3°C (27°F) during the month of March;</text> </paragraph> <paragraph num="(d)"> <text>3°C (37°F) during the month of April;</text> </paragraph> <paragraph num="(e)"> <text>9°C (48°F) during the month of May;</text> </paragraph> <paragraph num="(f)"> <text>10°C (50°F) during the months of June, July, August, and September;</text> </paragraph> <paragraph num="(g)"> <text>4°C (39°F) during the month of October;</text> </paragraph> <paragraph num="(h)"> <text>-2°C (28°F) during the month of November; and</text> </paragraph> <paragraph num="(i)"> <text>-8°C (17°F) during the month of December.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Specifications for No. 1-D and No. 2-D Diesel Fuel (ASTM D-975)."> <text>All No.1-D diesel fuel and No. 2-D diesel fuel shall meet the requirements of the following specifications, when tested in accordance with the latest version of the American Society for Testing and Materials Methods of Tests:</text> <paragraph num="A."> <text>Cloud Point (ASTM D-2500) — -7°C (20°F) maximum.</text> </paragraph> <paragraph num="B."> <text>Flash Point (ASTM D-93).</text> <paragraph num="(1)"> <text>No. 1-D Diesel — 38°C (100°F) minimum.</text> </paragraph> <paragraph num="(2)"> <text>No. 2-D Diesel.</text> <paragraph num="(a)"> <text>52°C (125°F) minimum (May, June, July, August, September, October).</text> </paragraph> <paragraph num="(b)"> <text>43°C (110°F) minimum (November, December, January, February, March, April).</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Viscosity (ASTM D-445).</text> <paragraph num="(1)"> <text>No. 1-D Diesel.</text> <paragraph num="(a)"> <text>Kinematic at 40°C, 1.3 centistokes minimum, 2.4 centistokes maximum.</text> </paragraph> <paragraph num="(b)"> <text>Kinematic at 100°F, 1.4 centistokes minimum, 2.5 centistokes maximum.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>No. 2-D Diesel.</text> <paragraph num="(a)"> <text>Kinematic at 40°C, 1.9 centistokes minimum, 4.1 centistokes maximum.</text> </paragraph> <paragraph num="(b)"> <text>Kinematic at 100°F, 2.0 centistokes minimum, 4.3 centistokes maximum.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>Visible water and sediment (ASTM D-1796) — 0.05 percent maximum by volume.</text> </paragraph> <paragraph num="E."> <text>Carbon Residue on 10 percent Residuum (ASTM D-524).</text> <paragraph num="(1)"> <text>No. 1-D Diesel, 0.15 percent, maximum.</text> </paragraph> <paragraph num="(2)"> <text>No. 2-D Diesel, 0.35 percent, maximum.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Ash (ASTM D-482) — 0.01 percent, maximum.</text> </paragraph> <paragraph num="G."> <text>Cetane.</text> <paragraph num="(1)"> <text>Number method (ASTM D-613) 40, minimum.</text> </paragraph> <paragraph num="(2)"> <text>Index method (ASTM D-976) 40, minimum.</text> </paragraph> </paragraph> <paragraph num="H."> <text>Distillation (ASTM D-86).</text> <paragraph num="(1)"> <text>No. 1-D Diesel — 90 percent point, 288°C (550°F) maximum.</text> </paragraph> <paragraph num="(2)"> <text>No. 2-D Diesel — 90 percent point:</text> <paragraph num="(a)"> <text>282°C (540°F) minimum*;</text> </paragraph> <paragraph num="(b)"> <text>338°C (640°F) maximum.</text> </paragraph> </paragraph> <aftertext>* When cloud point less than -12°C (10°F) is specified, the minimum viscosity shall be 1.7 cSt (or mm2/s) and the 90 percent point shall be waived.</aftertext> </paragraph> <paragraph num="I."> <text>Corrosion (ASTM D-130). Copper Strip, 3 hours at 50°C (122°F), No. 3 maximum.</text> </paragraph> <paragraph num="J."> <text>Sulfur (ASTM D-2622 or ASTM D-7039) 0.0015 percent by mass, maximum.</text> </paragraph> <paragraph num="K."> <text>Color.</text> <paragraph num="(1)"> <text>On-highway diesel fuel may not contain any dyes or coloring agents.</text> </paragraph> <paragraph num="(2)"> <text>Non-highway diesel fuel shall be dyed with Solvent Red 164 at the concentration spectrally equivalent to at least 3.9 pounds of the solid dye Standard Red 26 per 1,000 barrels in accordance with the mandate of the US EPA and Internal Revenue Service (IRS). It may not be used in any vehicle designed for on-highway use.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".02-1" heading="Other Motor Fuels."> <text>A fuel other than those meeting the specifications detailed in Regulation .01-1 or .02 of this chapter may not be sold, offered for sale, or dispensed for use in motor vehicles unless approval for the sale or dispensation has been obtained in advance from the Bureau and the Department.</text> </regulation> <regulation prefix="Regulation" num=".03" heading="Specifications for Kerosene (ASTM D-3699)."> <text>Kerosene shall be a refined petroleum distillate consisting of a homogenous mixture of hydrocarbons essentially free from water, inorganic, acidic, or basic compounds, and excessive amounts of particulate contaminants. It shall meet the requirements of the following specifications when tested in accordance with the latest version of the American Society for Testing and Materials Methods of Tests:</text> <paragraph num="A."> <text>No. 1-K Kerosene.</text> <paragraph num="(1)"> <text>Color (ASTM D-156).</text> <paragraph num="(a)"> <text>The color may not be darker than +16 Saybolt Scale.</text> </paragraph> <paragraph num="(b)"> <text>Dyeing agents may not be used to change the naturally refined color except when required by the US EPA or IRS.</text> </paragraph> <paragraph num="(c)"> <text>When dyeing of 1-K kerosene is required, it shall be dyed with Solvent Red 164 at the concentration spectrally equivalent to at least 3.9 pounds of the solid dye Standard Red 26 per 1,000 barrels in accordance with federal mandates.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Flash Point (ASTM D-56)—38°C (100°F) minimum.</text> </paragraph> <paragraph num="(3)"> <text>Distillation (ASTM D-86)—End point 300°C (572°F) maximum.</text> </paragraph> <paragraph num="(4)"> <text>Sulfur (ASTM D-4045)—0.04 percent by mass, maximum.</text> </paragraph> </paragraph> <paragraph num="B."> <text>No. 2-K Kerosene.</text> <paragraph num="(1)"> <text>Color (ASTM D-156). The color, before dyeing, may not be darker than +16 Saybolt Scale. Additionally, 2-K kerosene shall be dyed with Solvent Red 164 at the concentration spectrally equivalent to at least 3.9 pounds of the solid dye Standard Red 26 per 1,000 barrels in accordance with federal mandate to indicate that it is illegal for use as a propelling fuel in a vehicle designed for on-highway use.</text> </paragraph> <paragraph num="(2)"> <text>Flash Point (ASTM D-56)—38°C (100°F) minimum.</text> </paragraph> <paragraph num="(3)"> <text>Distillation (ASTM D-86)—End point 300°C (572°F) maximum.</text> </paragraph> <paragraph num="(4)"> <text>Sulfur (ASTM D-4045)—0.30 percent by mass, maximum.</text> </paragraph> </paragraph> <paragraph num="C."> <text>A person acquiring kerosene for resale or redistribution as 1-K kerosene shall only acquire the product from a supplier who certifies to the purchaser that it is, in fact, 1-K kerosene.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Specifications for No. 1 and No. 2 Fuel Oil (ASTM D-396)."> <text>No. 1 fuel oil is a distillate oil intended for vaporizing pot-type and similar burners. No. 2 fuel oil is a distillate oil for general purpose domestic heating use in burners not requiring No. 1 fuel oil. Both shall meet the requirements of the following specifications, when tested in accordance with the latest version of the American Society for Testing and Materials Methods of Tests:</text> <text>No. 1 Fuel Oil No. 2 Fuel Oil A. Flash Point (ASTM D-93). 38°C (100°F) minimum 38°C (100°F) minimum B. Pour Point (ASTM D-97). -18°C (0°F) maximum -7°C(20°F) maximum C. Visible Water and Sediment (ASTM D-1796) percent by volume maximum. 0.05 0.05 D. Viscosity (ASTM D-445). (1) Kinematic at 40°C, centistokes. (a) Minimum 1.3 1.9* (b) Maximum 2.1 3.4 (2) Kinematic at 100°F, centistokes. (a) Minimum 1.4 2.0* (b) Maximum 2.2 3.6 E. Gravity (ASTM D-287). API minimum. 35° 30° F. Distillation (ASTM D-86). (1) 10 percent point maximum 216°C (420°F) (2) 90 percent point maximum 288°C (550°F) 338°C (640°F) G. Sulfur (ASTM D-1552) percent by mass shall not exceed the following maximums: (1) On and after July 1, 2016 0.05 0.05 (2) On and after July 1, 2019 0.0015 0.0015 (3) No. 1 and No. 2 Fuel Oil that was stored in this State by the ultimate final consumer prior to July 1, 2019, which met the applicable maximum allowable sulfur content for fuel oil before July 1, 2019, set forth in §G(1) of this regulation at the time it was stored, may be used by the ultimate consumer in the State on and after July 1, 2019, until the supply is depleted.</text> <paragraph num="H."> <text>Color. No. 1 and No. 2 fuel oil, containing greater than 0.0015 percent by mass sulfur, shall be dyed with Solvent Red 164 at the concentration spectrally equivalent to at least 3.9 pounds of the solid dye Standard Red 26 per 1,000 barrels in accordance with the mandates of the US EPA and IRS.</text> </paragraph> <paragraph num="I."> <text>Cetane. Unless sold specifically and documented on all transfer documents as a burner fuel only, off-highway No. 2 fuel oil shall meet the same cetane requirements as stated in Regulation .02G of this chapter.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Labeling of Pumps."> <paragraph num="A."> <text>The Bureau shall label all retail dispensing pumps.</text> </paragraph> <paragraph num="B."> <text>The label in §A of this regulation at the discretion of the Bureau, shall be placed as close as practical to the product dispensing nozzle or the money value display indicator.</text> </paragraph> <paragraph num="C."> <text>The retailer shall further identify and label all retail dispensing pumps with the following:</text> <paragraph num="(1)"> <text>The brand name and trade name of the product being sold except a trade name may not be used if it conflicts with one of the required grade names shown in §C(3) of this regulation;</text> </paragraph> <paragraph num="(2)"> <text>For gasoline, the octane rating in accordance with 15 U.S.C. §§2821—2824, Title II of the Petroleum Marketing Practices Act and regulations under the Act, 16 CFR §§306.0—306.11 for each grade dispensed;</text> </paragraph> <paragraph num="(3)"> <text>For gasoline, the grade name in accordance with one of the following for each grade dispensed:</text> <paragraph num="(a)"> <text>“Regular” if the certified octane is 87 or 88;</text> </paragraph> <paragraph num="(b)"> <text>“Mid-grade” or “Plus” if the certified octane is 89 or 90; and</text> </paragraph> <paragraph num="(c)"> <text>“Premium” if the certified octane is 91 and above, but less than 98;</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>For special fuel, the type of fuel which shall be either:</text> <paragraph num="(a)"> <text>1-K Kerosene;</text> </paragraph> <paragraph num="(b)"> <text>2-K kerosene;</text> </paragraph> <paragraph num="(c)"> <text>1-D diesel (if purchased or sold as same); or</text> </paragraph> <paragraph num="(d)"> <text>Diesel, as applicable; and</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>Identification as required under §C(3) and (4) of this regulation, which shall be in letters and numerals of uniform size, a minimum 2 inches high with a minimum 1/4 inch stroke.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Retention of Documents."> <paragraph num="A."> <text>A location registered under the Motor Fuel and Lubricants Law shall retain on the premises to which motor fuel has been delivered a loading ticket, a delivery ticket, or any other combination of documents that provides the following information:</text> <paragraph num="(1)"> <text>Date, terminal name, city of origin, shipper, consignee name, volume of each grade, and type of motor fuel loaded and delivered including the product cost and freight charges per gallon;</text> </paragraph> <paragraph num="(2)"> <text>For gasoline, including oxygenated fuels, the certified minimum octane rating;</text> </paragraph> <paragraph num="(3)"> <text>For oxygenated and reformulated gasolines, the maximum concentration of individual oxygenates; and</text> </paragraph> <paragraph num="(4)"> <text>Name of the petroleum transporter making the delivery.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Retention of documentation required by this regulation shall be limited to the four most recent deliveries of each grade of the product; however, all parties should be aware that federal retention requirements are for 5 years.</text> </paragraph> <paragraph num="C."> <text>All documents shall be readily available for inspection at the delivery site during normal business hours.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06-1" heading="Below Cost Compliance Verification."> <paragraph num="A."> <text>To determine compliance with Business Regulation Article, §10-304.1, Annotated Code of Maryland, the Comptroller shall inspect the documents specified in Regulation .06A(1) of this chapter at the site of the registered location about which the complaint was made. If the information required in Regulation .06 of this chapter is not immediately available upon request, the Comptroller shall promptly determine the:</text> <paragraph num="(1)"> <text>Product cost by type of motor fuel as specified in Business Regulation Article, §10-301(d)(1), Annotated Code of Maryland; and</text> </paragraph> <paragraph num="(2)"> <text>Freight charges referenced in Business Regulation Article, §10-301(d)(2), Annotated Code of Maryland, at the rate of 3 cents per gallon.</text> </paragraph> </paragraph> <paragraph num="B."> <text>If product cost and freight charges are determined in accordance with §A(1) and (2) of this regulation, and the price computed is not lower than the selling price, the retailer shall immediately adjust the current retail price of motor fuel so that it is not below the cost computed under §A(1) and (2) of this regulation.</text> </paragraph> <paragraph num="C."> <text>If required documents become available to review at the site during the inspection or are provided to the Comptroller within 3 business days from the date of inspection, and if the documents are determined by the Comptroller to be acceptable and show that the price computed is lower than or equal to the selling price, a violation may not be determined to have occurred and the Comptroller shall authorize appropriate price adjustments.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Registration."> <paragraph num="A."> <text>Definitions. As used in this regulation and for the purposes of the administration of Business Regulation Article, §10-303, Annotated Code of Maryland:</text> <paragraph num="(1)"> <text>“Company” means a sole proprietorship, partnership, corporation, or other business entity;</text> </paragraph> <paragraph num="(2)"> <text>“Enclosed work areas” means a service bay;</text> </paragraph> <paragraph num="(3)"> <text>“Jobber” means a company other than a wholesaler, that acquires possession of motor fuel for bulk resale;</text> </paragraph> <paragraph num="(4)"> <text>“Manufacturer” means producer;</text> </paragraph> <paragraph num="(5)"> <text>“Motor vehicle fuel” or “motor fuel” means gasoline, special fuels, or both;</text> </paragraph> <paragraph num="(6)"> <text>“Producer” means a company which engages (or which has an agent, a parent company, a subsidiary, or a joint venturer which engages) in extracting crude oil from the earth;</text> </paragraph> <paragraph num="(7)"> <text>“Refiner” means a company which engages (or which has an agent, a parent company, a subsidiary, or a joint venturer which engages) in refining crude oil into motor fuel;</text> </paragraph> <paragraph num="(8)"> <text>“Retail outlet” means the real property and its improvements from which motor fuel is sold at retail and delivered into the tanks of motor vehicles or vessels;</text> </paragraph> <paragraph num="(9)"> <text>“Retail service station dealer” means a company offering motor fuel for sale at retail;</text> </paragraph> <paragraph num="(10)"> <text>“Service of motor vehicles” means at least lubrication, oil change, tire repair, battery charge, and replacement of fan belts, radiator hoses, and wiper blades;</text> </paragraph> <paragraph num="(11)"> <text>“Subsidiary” means a company which has more than 50 percent of its assets, capital stock, or voting securities held directly or through attribution by another company or which as a practical matter is controlled by another company. Practical control shall be presumed to exist if 15 percent or more of the assets, capital stock, or voting securities of a company are held directly or through attribution by another company;</text> </paragraph> <paragraph num="(12)"> <text>“Wholesaler” means a “dealer” or “distributor” as defined in Tax-General Article, §9-301, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Registration. Each company proposing to sell motor fuel in Maryland as a wholesaler, diesel fuel seller, heating oil distributor, manufacturer, refiner, jobber, or retail service station dealer, shall:</text> <paragraph num="(1)"> <text>Obtain a Certificate of Registration from the Bureau before initially selling or exposing or offering for sale any motor fuel;</text> </paragraph> <paragraph num="(2)"> <text>Obtain a renewal Certificate of Registration from the Bureau before June 1 before selling or exposing or offering for sale motor fuel during each State fiscal year after initial registration; and</text> </paragraph> <paragraph num="(3)"> <text>Display prominently a current Certificate of Registration at the location from which the motor fuel is sold.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Form of Application. Applications for Certificates of Registration for each class of motor fuel seller shall be in such form and require such information that is not inconsistent with these regulations and the Motor Fuel and Lubricants Law, as required by the Comptroller for enforcement of these regulations and that law.</text> </paragraph> <paragraph num="D."> <text>Restriction on Issuance of Certificates of Registration to the Retail Service Station Dealer Class.</text> <paragraph num="(1)"> <text>A Certificate of Registration may not be issued to a company whose retail outlet has been physically changed in any manner, excepting normal maintenance, after July 1, 1977, and before October 1, 2000, unless the retail outlet contains enclosed work areas from which the applicant offers or will offer the service of motor vehicles, irrespective of whether motor vehicle fuel is purchased.</text> </paragraph> <paragraph num="(2)"> <text>Exceptions. This restriction does not apply to the following applications:</text> <paragraph num="(a)"> <text>An applicant whose retail outlet did not have enclosed work areas immediately before being physically changed in any manner, excepting normal maintenance; or</text> </paragraph> <paragraph num="(b)"> <text>An applicant at whose retail outlet motor fuel was not previously sold or exposed or offered for sale.</text> </paragraph> </paragraph> </paragraph> <paragraph num="E."> <text>Issuance of Temporary Retail Service Station Dealer Certificates of Registration to Producers or Refiners.</text> <paragraph num="(1)"> <text>Subject to §D of this regulation, a producer or refiner which satisfies the criteria specified in Regulation .25A will be issued upon application a 90-day retail service station dealer Certificate of Registration.</text> </paragraph> <paragraph num="(2)"> <text>Subject to §D of this regulation, a producer or refiner entitled, under Regulation .25E of this chapter, temporarily to operate a retail service station will be issued upon application a temporary retail service station dealer Certificate of Registration, the term of which will be coextensive with the period of entitlement. For the purposes of this subsection an authorization which expires due to the grant of an extension under Regulation .25 of this chapter will constitute an enlargement of the original period of entitlement.</text> </paragraph> <paragraph num="(3)"> <text>A Certificate of Registration issued under these regulations does not authorize the operation of a retail service station in violation of the provisions of Business Regulation Article, Title 10, Subtitle 3, Annotated Code of Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Samples and Test Tolerances."> <paragraph num="A."> <text>A sample taken to determine compliance with the provisions of this chapter and COMAR 03.03.06 may not exceed 4 liters.</text> </paragraph> <paragraph num="B."> <text>Unless otherwise indicated, all samples necessary to determine compliance with this chapter and COMAR 03.03.06 shall be taken in accordance with the methodologies detailed in 40 CFR Part 80, Appendix D, which is incorporated by reference.</text> </paragraph> <paragraph num="C."> <text>Tolerances.</text> <paragraph num="(1)"> <text>A producer of motor fuels shall formulate, blend, and store fuels in such a manner that consideration is given for testing tolerances.</text> </paragraph> <paragraph num="(2)"> <text>Gasoline samples obtained for analysis shall meet:</text> <paragraph num="(a)"> <text>Vapor pressure specifications within a tolerance limit equal to +0.3 psi; and</text> </paragraph> <paragraph num="(b)"> <text>Oxygen content specifications within a tolerance limit equal to +/-0.30 percent oxygen by weight.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Excluding gasoline vapor pressure and oxygen content analyses, the tolerance limits for motor fuel analyses shall be as determined by the Bureau.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Repealed." /> <regulation prefix="Regulation" num=".10" heading="“Stop Sale” at Retail Service Stations."> <text>A “Stop Sale” notice will be issued to retail service station dealers for gasoline and special fuels failing to meet established specifications. The supplier shall be notified accordingly by the retail service station dealer, and a release will be awarded only after final disposition has been agreed upon by the Bureau. Confirmation of disposition shall be submitted in writing and contain an explanation for its failure to meet specification. The “Stop Sale” applies only to the location where sample analysis indicates specification violation. Upon discovery of fuels failing to meet established specifications, physical inventory shall be taken and reported in the confirmation of disposition.</text> </regulation> <regulation prefix="Regulation" num=".11" heading="“Stop Sale” at Bulk Storage Plants."> <text>A “Stop Sale” notice will be issued when petroleum products maintained in bulk plant facilities fail to meet specifications. Confirmation of disposition of “Stop Sale” product in the bulk plant and all such products returned to that bulk plant shall be submitted in writing and contain an explanation for its failure to meet specification. The registrant shall immediately notify all customers that have received inferior product of the Bureau's findings and make any arrangements necessary to replace or adjust to specifications all products failing the specification. All records showing the delivery, notification, return, replacement, or adjustment of product shall be made available to the motor fuel agents upon request.</text> </regulation> <regulation prefix="Regulation" num=".12" heading="Warning for Water."> <text>A warning shall be issued to the retail service station dealer whenever an underground storage tank is found to contain 2 inches or more of water as determined by the use of water-finding paste on a gauge stick. A “Stop Sale” order will be issued if the water is not removed within the time period prescribed by the Bureau.</text> </regulation> <regulation prefix="Regulation" num=".13" heading="Meter Requirements."> <text>All tank trucks, tank trailers, and tank semitrailers making metered sales or deliveries of gasoline or special fuels shall maintain a meter calibrated for that specific fuel being dispensed. Whenever a vehicle is utilized to deliver both gasoline and special fuels, separate meters shall be maintained and calibrated for gasoline and special fuels respectively, unless a National Type Evaluation Program (NTEP) approved multi-product metering system is utilized.</text> </regulation> <regulation prefix="Regulation" num=".14" heading="Color Coding for Bulk Storage Facilities."> <paragraph num="A."> <text>A facility in this State required to register under the Motor Fuel and Lubricants law and used to store motor fuel in fixed bulk storage tanks shall implement the American Petroleum Institute (API) recommended system of color coding equipment which is set out as follows:</text> <paragraph num="(1)"> <text>Gasoline — unleaded:</text> <paragraph num="(a)"> <text>E10 Regular — white;</text> </paragraph> <paragraph num="(b)"> <text>E10 Midgrade — blue;</text> </paragraph> <paragraph num="(c)"> <text>E10 Premium — red;</text> </paragraph> <paragraph num="(d)"> <text>E0 Regular — white with black "0";</text> </paragraph> <paragraph num="(e)"> <text>E0 Midgrade — blue with white "0";</text> </paragraph> <paragraph num="(f)"> <text>E0 Premium — red with white "0";</text> </paragraph> <paragraph num="(g)"> <text>Isobutanol blend — blue with yellow “IB”;</text> </paragraph> <paragraph num="(h)"> <text>E15 — copper with black “E15”;</text> </paragraph> <paragraph num="(i)"> <text>E85 — copper with black “E85”;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Diesel:</text> <paragraph num="(a)"> <text>On-Road (USLD) — yellow;</text> </paragraph> <paragraph num="(b)"> <text>On-Road (USLD) >5 percent biodiesel — yellow with black “BXX” (where “XX” is the biodiesel percentage);</text> </paragraph> <paragraph num="(c)"> <text>Off-Road (Dyed Red) — yellow with red “OFF”;</text> </paragraph> <paragraph num="(d)"> <text>Off-Road (Dyed Red) >5 percent biodiesel — yellow with red “OFF” and black “BXX” (where “XX” is the biodiesel percentage);</text> </paragraph> <paragraph num="(e)"> <text>Biodiesel — light blue;</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Fuel Oil:</text> <paragraph num="(a)"> <text>No. 1 — dark green with black "1";</text> </paragraph> <paragraph num="(b)"> <text>No. 2 — dark green with black "2";</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Kerosene — brown;</text> </paragraph> <paragraph num="(5)"> <text>Vapor recovery — orange;</text> </paragraph> <paragraph num="(6)"> <text>Observation or Monitoring Wells — white with black triangle in the center.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Methods of Coloring.</text> <paragraph num="(1)"> <text>Facilities Except Bulk Plants, Terminals, and Distribution Points.</text> <paragraph num="(a)"> <text>The required color scheme shall be applied to all fillbox (manhole) covers and shall extend at least 3 inches beyond the fillbox cover to prevent mismatching of fillboxes with the appropriate cover.</text> </paragraph> <paragraph num="(b)"> <text>If the bulk storage tank is an above-ground tank, the required color coding shall be affixed to the tank close to the fill and to the draw-off point and be at least 8 inches in overall diameter.</text> </paragraph> <paragraph num="(c)"> <text>Other methods of identification such as tagging fillbox adapters, rims, or the use of plastic inserts inside the fillbox rim may be used in addition to the required coloring, but not as a substitute, for underground storage tanks.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Bulk Plants, Terminals, and Distribution Points.</text> <paragraph num="(a)"> <text>The required color scheme shall be prominently placed on all rack-loading and vapor recovery equipment, as close as possible to the point of product or vapor transfer.</text> </paragraph> <paragraph num="(b)"> <text>Storage tanks may be labeled using the appropriate color scheme when operating conditions permit.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Required color coding shall be maintained clean and clearly legible at all times.</text> </paragraph> </paragraph> <paragraph num="C."> <text>A facility required to use the color coding system in this regulation shall post a sign or signs in a prominent location on the premises indicating the color scheme.</text> </paragraph> <paragraph num="D."> <text>Product Transfer — Prohibition. Motor fuel may not be transferred from a shipping facility or delivered to a receiving facility in this State unless the:</text> <paragraph num="(1)"> <text>Shipping and receiving facilities are in compliance with this regulation; and</text> </paragraph> <paragraph num="(2)"> <text>Petroleum transporter is in compliance with COMAR 03.03.03.15.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".15" heading="Commingled Products."> <paragraph num="A."> <text>For the specific purpose of this regulation, “commingled products” means:</text> <paragraph num="(1)"> <text>Pipeline interface or transmix; or</text> </paragraph> <paragraph num="(2)"> <text>A mixture of gasoline and light distillates.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Commingled products may be blended into gasoline for redistribution, provided the:</text> <paragraph num="(1)"> <text>Person blending is a common carrier pipeline or holds a valid Class A dealer license issued by this State, and has obtained written approval from this State to blend; and</text> </paragraph> <paragraph num="(2)"> <text>Resultant product, after blending, at the time of the first sale or delivery, meets the specifications for the particular grade as prescribed by Regulation 01-1 of this chapter.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Addition of Commingled Products.</text> <paragraph num="(1)"> <text>A common carrier pipeline may add commingled products only once to a particular batch of product between the point of origin and the final receiving terminal.</text> </paragraph> <paragraph num="(2)"> <text>If a commingled product is added to a batch, the:</text> <paragraph num="(a)"> <text>Quantity of the commingled product may not exceed 0.25 percent by volume of the batch movement and shall be dispersed throughout the batch; and</text> </paragraph> <paragraph num="(b)"> <text>Common carrier pipeline shall:</text> <paragraph num="(i)"> <text>Notify the receiving terminal, in advance of receipt, of the quantity added, and</text> </paragraph> <paragraph num="(ii)"> <text>Indicate the volume of the commingled product added on the delivery ticket.</text> </paragraph> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>A receiving or shipping terminal may “line blend” its own commingled product into a receipt or shipment, provided the:</text> <paragraph num="(1)"> <text>Finished blend meets all applicable specifications of Regulation .01-1 of this chapter and the specifications for the product as registered with this State by the Class A dealer; and</text> </paragraph> <paragraph num="(2)"> <text>Volume of the commingled product does not exceed 0.25 percent of the product being shipped or received, and is dispersed throughout the batch.</text> </paragraph> </paragraph> <paragraph num="E."> <text>A Class A dealer may “tank blend” commingled products with gasoline, provided the:</text> <paragraph num="(1)"> <text>Class A dealer can demonstrate the blending does not result in stratification;</text> </paragraph> <paragraph num="(2)"> <text>Volume of the commingled product does not exceed 0.25 percent of the tank volume at any time; and</text> </paragraph> <paragraph num="(3)"> <text>Finished blend meets all applicable Maryland specifications and the minimum specifications for the product as registered by the Class A dealer.</text> </paragraph> </paragraph> <paragraph num="F."> <text>A Class A dealer shall routinely accept, when possible, drainages of small quantities of commingled products from tank vehicles. Quantities over 5 gallons may be accepted at the discretion of the terminal.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".16" heading="Annual Terminal Agreements."> <paragraph num="A."> <text>Before a terminal owner/operator stores product for another product owner, a terminal agreement shall be filed with the Bureau.</text> </paragraph> <paragraph num="B."> <text>Forms.</text> <paragraph num="(1)"> <text>Terminal agreements shall be filed annually during the month of December for the anticipated succeeding calendar year's activity, on forms provided by the Bureau.</text> </paragraph> <paragraph num="(2)"> <text>A separate form shall be completed for each terminal location.</text> </paragraph> <paragraph num="(3)"> <text>A form required by this section shall:</text> <paragraph num="(a)"> <text>Address only the specific type and grade of product being stored for the product owner; and</text> </paragraph> <paragraph num="(b)"> <text>Contain original signatures of persons authorized to represent the terminal owner/operator and the product owner.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Additional terminal agreements which may be entered into during the calendar year shall be filed with the Bureau before the start of new activity.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".17" heading="Annual Exchange Agreements."> <paragraph num="A."> <text>A person receiving for distribution within the State a product containing a unique, advertised additive shall file an exchange agreement with the Bureau.</text> </paragraph> <paragraph num="B."> <text>Forms.</text> <paragraph num="(1)"> <text>Exchange agreements shall be filed annually during the month of December for the succeeding calendar year's activity, on forms provided by the Bureau.</text> </paragraph> <paragraph num="(2)"> <text>A form required by this section shall:</text> <paragraph num="(a)"> <text>Address only the specific product to be acquired at each point of acquisition; and</text> </paragraph> <paragraph num="(b)"> <text>Contain original signatures of persons authorized to represent the receiver and the supplier.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Additional exchange agreements which may be entered into during the calendar year shall be filed with the Bureau within 10 days of initial product receipt.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".18" heading="Refinery Specifications."> <paragraph num="A."> <text>Refinery specifications mean typical specifications and the designation of any unique additives placed into any grade of product marketed within the State. For proper identification, the refinery specification shall include the trade name and, for gasoline, the certified octane number determined in accordance with 15 U.S.C. §§2821—2824, Title II of the Petroleum Marketing Practices Act and regulations under the Act, 16 CFR §306.0—306.11. Refinery specifications shall be filed annually in December for the succeeding calendar year and at least 10 days before any change occurs after the annual filing.</text> </paragraph> <paragraph num="B."> <text>Pipeline specifications instead of typical refinery specifications will be accepted only if the:</text> <paragraph num="(1)"> <text>Pipeline company makes direct terminal deliveries in Maryland; and</text> </paragraph> <paragraph num="(2)"> <text>Importer of the product is not a refiner.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".19" heading="Additive Specifications."> <text>Additive specifications may be filed in detail or by means of an acceptable analytical method to be used to determine the presence or absence of any unique additive.</text> </regulation> <regulation prefix="Regulation" num=".20" heading="Trade Secrets."> <text>Refinery or additive specifications considered to be a trade secret should be so indicated and shall meet with the concurrence of the Comptroller.</text> </regulation> <regulation prefix="Regulation" num=".21" heading="Inventory of Refined Products."> <text>Under normal operating procedures, all petroleum products refined and imported into Maryland shall be inventoried by the refined product identification used on the shipping or delivery manifest.</text> </regulation> <regulation prefix="Regulation" num=".22" heading="Violations for Which a Warning Will Be Issued."> <text>Warnings will be issued at the discretion of the motor fuel agent for violations such as, but not limited to, price sign violations, failure to register, and unposted certificate of registration. If, after the time prescribed by the agent, the violation still exists, a “Stop Sale” notice will be issued.</text> </regulation> <regulation prefix="Regulation" num=".23" heading="Foreign Imports and Waterborne Transfers."> <paragraph num="A."> <text>Motor fuel, as defined in Tax-General Article, §9-101, Annotated Code of Maryland, imported into the State or transported within the State via a vessel, shall be considered to be under a “Stop Sale” order until after it has been inspected, sampled, analyzed, and approved for sale or use by the Bureau.</text> </paragraph> <paragraph num="B."> <text>Exceptions. Section A of this regulation does not apply under the following conditions:</text> <paragraph num="(1)"> <text>Motor fuel imported from sources outside the State (foreign or domestic) may be placed directly into working tanks for immediate sale and distribution, providing the:</text> <paragraph num="(a)"> <text>Cargo manifest and specifications are available at time of inspection and those specifications meet or exceed State minimum requirements; and</text> </paragraph> <paragraph num="(b)"> <text>Bureau is notified by the receiving terminal operator at least 24 hours before the vessel's arrival.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Motor fuel transported intrastate may be placed directly into working tanks for immediate sale, use, and distribution providing the:</text> <paragraph num="(a)"> <text>Shipper holds a valid dealer, special fuel seller, or special fuel user license issued pursuant to Tax-General Article, §9-318, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(b)"> <text>Shipper of product for resale or distribution has on file with the Bureau specifications for that grade of motor fuel; and</text> </paragraph> <paragraph num="(c)"> <text>Bureau is notified by the receiving terminal operator at least 24 hours before the vessel's arrival.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Terminal operators shipping motor fuel for export to another state shall notify the Bureau at least 24 hours before the vessel's scheduled departure.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".24" heading="Ban Against Operation of Service Stations by Producers or Refiners."> <paragraph num="A."> <text>In this regulation and Regulation .25 of this chapter, and for the purposes of the administration of Business Regulation Article, §10-311, Annotated Code of Maryland, the following terms have the meanings indicated:</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Commissioned agent” means a company (or any of its officers, directors, agents, or employees) which directly or indirectly receives, from a producer or refiner and for participation in the operation of a station, compensation determined by reference to the profits earned or revenues generated at a station.</text> </paragraph> <paragraph num="(2)"> <text>“Company” means a sole proprietorship, partnership, corporation, or other business entity.</text> </paragraph> <paragraph num="(3)"> <text>“Company personnel” means one or more employees, servants, or agents of a producer, a refiner, or a subsidiary of a producer or refiner.</text> </paragraph> <paragraph num="(4)"> <text>“Fee arrangement” means any agreement whereby a company (or any of its officers, directors, agents, or employees) directly or indirectly receives, from a producer or refiner and for participation in the operation of a station, compensation determined other than by reference to the profits earned or revenues generated at a station.</text> </paragraph> <paragraph num="(5)"> <text>“Motor vehicle fuel” or “motor fuel” means gasoline, special fuels, or both.</text> </paragraph> <paragraph num="(6)"> <text>“Producer” means a company which engages (or which has an agent, a parent company, a subsidiary, or a joint venturer which engages) in extracting crude oil from the earth.</text> </paragraph> <paragraph num="(7)"> <text>“Refiner” means a company which engages (or which has an agent, a parent company, a subsidiary, or a joint venturer which engages) in refining crude oil into motor fuel.</text> </paragraph> <paragraph num="(8)"> <text>“Retail service station” or “station” means the real property and its improvements from which motor fuel is sold at retail and delivered into the tanks of motor vehicles.</text> </paragraph> <paragraph num="(9)"> <text>“Retail service station dealer” or “dealer” means a company engaged in the operation of a station, which company (and its officers, directors, agents, and employees) is neither a producer, refiner, commission agent, party to a fee arrangement, subsidiary of a producer or refiner, nor operated by company personnel.</text> </paragraph> <paragraph num="(10)"> <text>“Subsidiary” means a company which has more than 50 percent of its assets, capital stock, or voting securities held directly or through attribution by another company or which as a practical matter is controlled by another company. Practical control shall be presumed to exist if 15 percent or more of the assets, capital stock, or voting securities of a company are held directly or through attribution by another company.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".25" heading="Temporary Operation of Station by Producer or Refiner."> <paragraph num="A."> <text>Applicability.</text> <paragraph num="(1)"> <text>After July 13, 1979, a producer or refiner may operate a retail service station previously dealer-operated for a period not to exceed 90 days and pursuant to a Certificate of Registration issued under Regulation .07E(1) of this chapter if the:</text> <paragraph num="(a)"> <text>Dealer has died (if a sole proprietor);</text> </paragraph> <paragraph num="(b)"> <text>Dealer has vacated the station in breach of the lease;</text> </paragraph> <paragraph num="(c)"> <text>Dealer has been evicted by the producer or refiner for cause;</text> </paragraph> <paragraph num="(d)"> <text>Producer or refiner has notified all of its dealers in the State of its intent to withdraw from the Maryland market in compliance with Title 1 of the Petroleum Marketing Practices Act (15 U.S.C. §2801 et seq.) and the dealer has agreed to vacate the station before the announced market withdrawal date; or</text> </paragraph> <paragraph num="(e)"> <text>Producer or refiner has acquired the retail service station from the dealer as a result of a:</text> <paragraph num="(i)"> <text>Purchase of the retail service station property from the dealer, or</text> </paragraph> <paragraph num="(ii)"> <text>Merger or acquisition of stock in the dealer or its parent corporation by a producer or refiner.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(2)"> <text>Pursuant to this section, the producer or refiner may immediately commence operation of the retail service station and operate it for 5 business days under the Certificate of Registration issued to the prior dealer if, during that period, the producer or refiner notifies the Bureau in writing of its commencement. The notification shall set forth the date operation by the producer or refiner commenced, the address of the retail service station, and a statement of the reason for the operation by the producer or refiner. The date of commencement shall constitute the initial day of the 90-day temporary operation period.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Applications for Extensions.</text> <paragraph num="(1)"> <text>Applications to the Comptroller for an extension of the time period specified in §A of this regulation will be considered only if they are submitted in writing and, with regard to each station specified therein, contain:</text> <paragraph num="(a)"> <text>The station address;</text> </paragraph> <paragraph num="(b)"> <text>The basis for the applicability of §A of this regulation;</text> </paragraph> <paragraph num="(c)"> <text>The name and address of the previous dealer;</text> </paragraph> <paragraph num="(d)"> <text>The reason why the extension is sought;</text> </paragraph> <paragraph num="(e)"> <text>The duration of the extension sought; and</text> </paragraph> <paragraph num="(f)"> <text>A complete description of the actions being taken to locate a new dealer.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Applicants shall promptly provide additional information when requested by the Comptroller.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Action by Comptroller on Applications.</text> <paragraph num="(1)"> <text>Decisions by the Comptroller on applications made pursuant to §B of this regulation will be written and sent by certified mail to the applicant at the return address appearing on the application.</text> </paragraph> <paragraph num="(2)"> <text>The Comptroller may grant or deny the extension sought or may grant an extension for a period of time less than that sought in the application.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Operation Pending Action by Comptroller. Operation of a previously dealer-operated station by a producer or refiner in excess of the time period specified in §A of this regulation and during the pendency of an application made pursuant to §B of this regulation will not be allowed unless the contrary has been authorized in writing by the Comptroller.</text> </paragraph> <paragraph num="E."> <text>Entitlement to Temporary Certificate of Registration. A decision granting an extension to the time period specified in §A of this regulation or an authorization issued under §D of this regulation entitles the recipient to a temporary retail service station dealer Certificate of Registration pursuant to Regulation .07E(2) of this chapter.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".26" heading="Seasonal Retail Product Changes."> <paragraph num="A."> <text>The storage and sale of diesel fuel and kerosene at retail may be alternated seasonally from the same storage or dispensing system, under the following conditions:</text> <paragraph num="(1)"> <text>The retailer or the supplier notifies the Bureau at least 10 days before the change;</text> </paragraph> <paragraph num="(2)"> <text>The notification includes the registered name and specific locations of the facility along with the product change date; and</text> </paragraph> <paragraph num="(3)"> <text>Dispensing equipment is properly identified as required under Regulation .05 of this chapter to reflect the new type of fuel actually being dispensed.</text> </paragraph> </paragraph> <paragraph num="B."> <text>A motor fuel agent shall visit the specific location before the newly alternated fuel is sold to verify that, when changing from:</text> <paragraph num="(1)"> <text>Diesel fuel to kerosene, the:</text> <paragraph num="(a)"> <text>Storage tanks are reasonably dry before the receipt of kerosene into storage,</text> </paragraph> <paragraph num="(b)"> <text>Delivery of kerosene and adequate purging of affected lines and dispensing equipment have taken place, and</text> </paragraph> <paragraph num="(c)"> <text>Proper identification of dispensers as to the type and grade of fuel has been made;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>A kerosene to diesel fuel:</text> <paragraph num="(a)"> <text>Current sales records, meter readings, and inventory are reconciled to the last day of kerosene sales,</text> </paragraph> <paragraph num="(b)"> <text>The Maryland motor fuel tax on any remaining inventory of kerosene is promptly paid, when applicable, as required under Tax-General Article, §9-314, Annotated Code of Maryland,</text> </paragraph> <paragraph num="(c)"> <text>Any bulk transfer to another location of unsold kerosene is properly documented, and</text> </paragraph> <paragraph num="(d)"> <text>The proper identification of dispensers as to the type and grade of fuel has been made.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Under no circumstances will a seasonal switch between gasoline and any other type of motor fuel be permitted.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".27" heading="Brand Integrity."> <paragraph num="A."> <text>“Brand integrity” means that the purchaser of a major brand product does not mix or commingle that product with any other major brand, secondary brand, or unbranded products for resale or distribution as the major brand.</text> </paragraph> <paragraph num="B."> <text>When Applicable.</text> <paragraph num="(1)"> <text>Brand integrity is applicable whenever a refiner files refinery specifications and trade name for a product to be marketed in this State.</text> </paragraph> <paragraph num="(2)"> <text>The branded product in §B(1) of this regulation may only be acquired from:</text> <paragraph num="(a)"> <text>Terminal source points designated by the refiner; or</text> </paragraph> <paragraph num="(b)"> <text>Distributors, as authorized by the refiner, who make:</text> <paragraph num="(i)"> <text>Direct deliveries of the product from the refiner's designated terminal to the distributor's customers, or</text> </paragraph> <paragraph num="(ii)"> <text>Deliveries of the product from the distributor's segregated storage to the customer's storage tanks.</text> </paragraph> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".28" heading="Blending."> <paragraph num="A."> <text>For the purpose of this regulation, “blending” means to combine for resale or distribution two grades of motor fuel, previously registered with the Comptroller, to create another grade. Blending does not include the addition of any additive.</text> </paragraph> <paragraph num="B."> <text>Blending at retail service stations shall be allowed only when:</text> <paragraph num="(1)"> <text>Brand integrity, when applicable, is maintained;</text> </paragraph> <paragraph num="(2)"> <text>A fixed blender or variable-blending retail dispensing device, meeting all requirements of the most current edition of the National Institute of Standards and Technology Handbook 44, as specified by Agriculture Article, §11-203(c), Annotated Code of Maryland, is used;</text> </paragraph> <paragraph num="(3)"> <text>The dispensing device is manufactured by a nationally recognized manufacturer;</text> </paragraph> <paragraph num="(4)"> <text>The dispensing device contains adequate security devices to prevent the change of any blend ratio except by personnel authorized by the dispenser manufacturer; and</text> </paragraph> <paragraph num="(5)"> <text>The blended product is registered with the Comptroller and, in the case of a major brand, does not conflict with the annual registration of the brand owner and is done with the written concurrence of the brand owner.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Blending at bulk storage/terminal facilities shall be allowed only when:</text> <paragraph num="(1)"> <text>In the case of gasoline, the blending is done by the holder of a valid Class A dealer license who:</text> <paragraph num="(a)"> <text>Except in the case of ethanol flex fuel, uses an “inline blending” system between the bulk storage tanks and loading rack or under short-term emergency conditions and with the prior approval of the Comptroller, directly supervises the loading of blended product;</text> </paragraph> <paragraph num="(b)"> <text>Registers the resultant blend with the Comptroller before making a sale and on an annual basis after that; and</text> </paragraph> <paragraph num="(c)"> <text>Furnishes the petroleum transporter, at the time of loading, with sufficient documentation for compliance with COMAR 03.03.03.05.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>In the case of special fuel, the blending is done by the holder of a valid Class S special fuel seller license who:</text> <paragraph num="(a)"> <text>Blends previously registered special fuel products with the resulting blend conforming to specifications contained in Regulations .02 and .04 of this chapter; and</text> </paragraph> <paragraph num="(b)"> <text>Furnishes the petroleum transporter, at the time of loading, with sufficient documentation for compliance with COMAR 03.03.03.05.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".29" heading="Additives — Special Fuel."> <paragraph num="A."> <text>Under certain approved conditions by the Comptroller, additives may be added to special fuel, if they do not contain any dyes or coloring agents when used in on-highway diesel fuel.</text> </paragraph> <paragraph num="B."> <text>Additives that have been properly registered with and approved by the Comptroller may be added to special fuel by a bulk supplier licensed as a special fuel seller, provided the:</text> <paragraph num="(1)"> <text>Introduction of any additive to branded special fuel products is done with the prior written concurrence of the brand owner on an annual basis, with a copy of the concurrence forwarded to the Comptroller;</text> </paragraph> <paragraph num="(2)"> <text>Additive manufacturer has no restrictions on the use of the additive in any type of special fuel application; and</text> </paragraph> <paragraph num="(3)"> <text>Additive is introduced by an automatic metering pump or injection system at the:</text> <paragraph num="(a)"> <text>Time of product receipt, into a bulk storage tank of the special fuel seller;</text> </paragraph> <paragraph num="(b)"> <text>Loading rack of the special fuel seller at the time of filling a delivery truck; or</text> </paragraph> <paragraph num="(c)"> <text>Retail service station or fueling site in a manner approved by the Comptroller.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".30" heading="Reporting of End-of-Month Inventories."> <paragraph num="A."> <text>Who Shall Report. Each person maintaining fixed bulk storage in Maryland for resale or redistribution (retail service stations are exempt), shall file an inventory report when required by the Comptroller.</text> </paragraph> <paragraph num="B."> <text>What to Report. The report shall state the exact location and the amount in gallons of the month-end inventory of gasoline, kerosene, No. 1-D diesel fuel, No. 2-D diesel fuel, No. 1 fuel oil, No. 2 fuel oil, and propane (LPG). Inventories not physically located in Maryland may not be reported.</text> </paragraph> <paragraph num="C."> <text>How to Report.</text> <paragraph num="(1)"> <text>Each person required to file an inventory report shall file the report on forms provided by the Bureau.</text> </paragraph> <paragraph num="(2)"> <text>All inventories shall be reported in actual physical gallons. Book inventories are not acceptable.</text> </paragraph> <paragraph num="(3)"> <text>A report shall be filed regardless of whether there is end-of-month inventory. If there is no end-of-month inventory, the report shall so state.</text> </paragraph> </paragraph> <paragraph num="D."> <text>When and Where to File a Report. An inventory report shall be received by the Comptroller within 5 working days following the end of the month for which inventory is being reported. If the report is mailed, it shall be postmarked within 3 days following the end of the month. This report is in addition to any other report required by the Comptroller.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".31" heading="Report—Tax-Free Sales to End Users."> <paragraph num="A."> <text>A motor fuel seller registered under Business Regulation Article, Title 10, Annotated Code of Maryland, shall report the volume of sales for each type of motor fuel sold to end users in the State exclusive of the motor fuel tax. Tax-free sales to a reseller are not to be included in this report.</text> </paragraph> <paragraph num="B."> <text>A report shall be filed for each fiscal year ending June 30. A completed annual report shall be forwarded to and received by the Comptroller by July 15.</text> </paragraph> <paragraph num="C."> <text>The Comptroller shall furnish the report form.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".32" heading="Additives for Gasoline."> <paragraph num="A."> <text>Additives may be injected by a licensed dealer, other than a Class A dealer, with an “in-line blending” process or an equivalent or superior to in-line blending system to ensure proper additization of gasoline and only with prior approval from the Comptroller.</text> </paragraph> <paragraph num="B."> <text>Form of Applications. Applications shall include the following:</text> <paragraph num="(1)"> <text>A description of the system used to inject the additive into fuel, including a detailed summary of the additive injection and delivery process, verifiable identification that the process is “in-line blending” or equivalent to or superior to in-line blending, and any security systems to ensure proper additization of gasoline;</text> </paragraph> <paragraph num="(2)"> <text>Detailed system schematics and manufacturer information describing the equipment used in the system; and</text> </paragraph> <paragraph num="(3)"> <text>The EPA registration for the additive which shall be approved by the Comptroller.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The Comptroller reserves the right to rescind any prior approval of additive introduction into gasoline by a dealer other than a licensed Class A dealer, or issue a stop sale to said dealer, for failure to comply with any statute, regulation or licensing requirements, or for product failure after the Comptroller’s laboratory analysis.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Business Regulation Article, §§10-202, 10-308, 10-309, and 10-323.1; Tax-General Article, §2-103; Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: June 30, 1975 (2:14 Md. R. 1010)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 amended effective February 22, 1988 (15:4 Md. R. 470)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01A amended effective February 9, 1979 (6:3 Md. R. 148)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01B amended effective February 9, 1979 (6:3 Md. R. 148); November 24, 1979 (6:21 Md. R. 1706); October 3, 1980 (7:20 Md. R. 1876)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01C amended effective February 9, 1979 (6:3 Md. R. 148)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01F amended effective May 21, 1984 (11:10 Md. R. 862)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01G amended effective February 9, 1979 (6:3 Md. R. 148)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01H amended effective December 16, 1977 (4:26 Md. R. 2022); August 10, 1979 (6:16 Md. R. 1329); October 3, 1980 (7:20 Md. R. 1876)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01I amended effective February 9, 1979 (6:3 Md. R. 148)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02 amended effective February 22, 1988 (15:4 Md. R. 470)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02A amended effective February 9, 1979 (6:3 Md. R. 148); November 24, 1979 (6:21 Md. R. 1706)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective February 9, 1979 (6:3 Md. R. 148); November 24, 1979 (6:21 Md. R. 1706); October 3, 1980 (7:20 Md. R. 1876)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02C amended effective February 9, 1979 (6:3 Md. R. 148)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02D amended effective February 9, 1979 (6:3 Md. R. 148)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02F amended effective May 21, 1984 (11:10 Md. R. 862)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02H amended effective December 16, 1977 (4:26 Md. R. 2022); August 10, 1979 (6:16 Md. R. 1329); September 14, 1981 (8:18 Md. R. 1477)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03 amended effective February 22, 1988 (15:4 Md. R. 470)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03A—C amended effective February 9, 1979 (6:3 Md. R. 148)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03H amended effective February 9, 1979 (6:3 Md. R. 148)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03I amended effective February 9, 1979 (6:3 Md. R. 148)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04 amended effective February 22, 1988 (15:4 Md. R. 470)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04A—C amended effective February 9, 1979 (6:3 Md. R. 148)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04H amended effective February 9, 1979 (6:3 Md. R. 148)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04I amended effective February 9, 1979 (6:3 Md. R. 148)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05 amended effective February 9, 1979 (6:3 Md. R. 148); March 15, 1982 (9:5 Md. R. 525); November 22, 1982 (9:23 Md. R. 2258); February 22, 1988 (15:4 Md. R. 470)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06 amended effective February 22, 1988 (15:4 Md. R. 470)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06A amended effective February 9, 1979 (6:3 Md. R. 148)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06B amended effective February 9, 1979 (6:3 Md. R. 148)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06D amended effective February 9, 1979 (6:3 Md. R. 148)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06F amended effective February 9, 1979 (6:3 Md. R. 148)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07 amended effective February 22, 1988 (15:4 Md. R. 470)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07A amended effective February 9, 1979 (6:3 Md. R. 148)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07B amended effective February 9, 1979 (6:3 Md. R. 148); September 14, 1981 (8:18 Md. R. 1477)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07D amended effective February 9, 1979 (6:3 Md. R. 148)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07F amended effective February 9, 1979 (6:3 Md. R. 148)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08 amended effective August 10, 1979 (6:16 Md. R. 1329)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08D adopted effective November 22, 1982 (9:23 Md. R. 2258)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08D amended effective May 21, 1984 (11:10 Md. R. 862)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09 repealed and new Regulation .09 adopted effective May 21, 1984 (11:10 Md. R. 862)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09A amended effective February 22, 1988 (15:4 Md. R. 470)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10 amended effective April 7, 1978 (5:7 Md. R. 520); April 20, 1979 (6:8 Md. R. 650)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10A amended effective December 12, 1980 (7:25 Md. R. 2332)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10B amended effective May 21, 1984 (11:10 Md. R. 862)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10D amended effective October 3, 1980 (7:20 Md. R. 1876); September 14, 1981 (8:18 Md. R. 1477); February 22, 1988 (15:4 Md. R. 470)</annotation> <annotation type="History" subtype="Administrative History">Regulation .11 amended effective February 9, 1979 (6:3 Md. R. 148)</annotation> <annotation type="History" subtype="Administrative History">Regulation .12 repealed effective February 9, 1979 (6:3 Md. R. 148)</annotation> <annotation type="History" subtype="Administrative History">Regulation .12 adopted effective August 10, 1979 (6:16 Md. R. 1329)</annotation> <annotation type="History" subtype="Administrative History">Regulation .12F—J adopted effective October 3, 1980 (7:20 Md. R. 1876)</annotation> <annotation type="History" subtype="Administrative History">Regulation .12 repealed and new Regulation .12 adopted effective May 21, 1984 (11:10 Md. R. 862)</annotation> <annotation type="History" subtype="Administrative History">Regulation .12 amended effective December 30, 1985 (12:26 Md. R. 2542)</annotation> <annotation type="History" subtype="Administrative History">Regulation .12G amended as an emergency provision effective February 21, 1986 (13:6 Md. R. 667) (Emergency provisions are temporary and are not printed in COMAR)</annotation> <annotation type="History" subtype="Administrative History">Regulation .18 amended effective February 9, 1979 (6:3 Md. R. 148)</annotation> <annotation type="History" subtype="Administrative History">Regulation .24 amended effective October 3, 1980 (7:20 Md. R. 1876)</annotation> <annotation type="History" subtype="Administrative History">Regulation .28 amended effective September 14, 1981 (8:18 Md. R. 1477)</annotation> <annotation type="History" subtype="Administrative History">Regulation .28 repealed effective February 22, 1988 (15:4 Md. R. 470)</annotation> <annotation type="History" subtype="Administrative History">Regulation .30 amended effective February 9, 1979 (6:3 Md. R. 148)</annotation> <annotation type="History" subtype="Administrative History">Regulation .31 repealed effective February 9, 1979 (6:3 Md. R. 148)</annotation> <annotation type="History" subtype="Administrative History">Regulation .31 adopted effective May 21, 1984 (11:10 Md. R. 862)</annotation> <annotation type="History" subtype="Administrative History">Regulation .31 repealed and new Regulation .31 adopted effective February 22, 1988 (15:4 Md. R. 470)</annotation> <annotation type="History" subtype="Administrative History">Regulations .32—.34 originally adopted as Regulations .34—.36, respectively</annotation> <annotation type="History" subtype="Administrative History">Regulation .32 adopted effective July 20, 1977 (4:15 Md. R. 1145)</annotation> <annotation type="History" subtype="Administrative History">Regulation .32 amended effective April 20, 1979 (6:8 Md. R. 650)</annotation> <annotation type="History" subtype="Administrative History">Regulation .32A amended effective December 12, 1980 (7:25 Md. R. 2332)</annotation> <annotation type="History" subtype="Administrative History">Regulation .32B amended effective December 12, 1980 (7:25 Md. R. 2332); March 14, 1983 (10:5 Md. R. 463)</annotation> <annotation type="History" subtype="Administrative History">Regulation .32D amended effective February 10, 1978 (5:3 Md. R. 135)</annotation> <annotation type="History" subtype="Administrative History">Regulation .33 adopted effective July 20, 1977 (4:15 Md. R. 1145)</annotation> <annotation type="History" subtype="Administrative History">Regulation .33 amended effective April 20, 1979 (6:8 Md. R. 650)</annotation> <annotation type="History" subtype="Administrative History">Regulation .33A amended as an emergency provision effective June 24, 1985 (12:14 Md. R. 1428); adopted permanently effective November 4, 1985 (12:22 Md. R. 2103)</annotation> <annotation type="History" subtype="Administrative History">Regulation .34 adopted effective July 20, 1977 (4:15 Md. R. 1145)</annotation> <annotation type="History" subtype="Administrative History">Regulation .34 amended effective April 20, 1979 (6:8 Md. R. 650)</annotation> <annotation type="History" subtype="Administrative History">Regulation .34 repealed effective August 6, 1990 (17:15 Md. R. 1853)</annotation> <annotation type="History" subtype="Administrative History">Regulations .35 and .36 adopted as an emergency provision effective July 10, 1979 (6:15 Md. R. 1268); adopted permanently effective November 24, 1979 (6:21 Md. R. 1706); repealed effective February 22, 1988 (15:4 Md. R. 470)</annotation> <annotation type="History" subtype="Administrative History">Annotation: COMAR 03.03.07.32 discussed in Comptroller of the Treasury v. Crown Central Petroleum Corporation, 52 Md. App. 581 (1982)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised and recodified from COMAR 03.03.07 to COMAR 03.03.05 effective August 20, 1990 (17:16 Md. R. 1988)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 recodified to Regulation .01-1 and amended effective October 26, 1992 (19:21 Md. R. 1894) (19:22 Md. R. 1986)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 adopted effective October 26, 1992 (19:21 Md. R. 1894) (19:22 Md. R. 1986)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01B amended as an emergency provision effective January 31, 1994 (21:5 Md. R. 400); emergency status expired March 1, 1994</annotation> <annotation type="History" subtype="Administrative History">Regulation .01B amended effective July 5, 1994 (21:13 Md. R. 1154)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01B amended as an emergency provision effective September 13, 1995 (22:20 Md. R. 1536); amended permanently effective December 18, 1995 (22:25 Md. R. 1960)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01-1C, D amended as an emergency provision effective January 31, 1994 (21:5 Md. R. 400); emergency status expired March 1, 1994</annotation> <annotation type="History" subtype="Administrative History">Regulation .01-1C, D amended effective July 5, 1994 (21:13 Md. R. 1154)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01-1N amended as an emergency provision effective September 13, 1995 (22:20 Md. R. 1536); amended permanently effective December 18, 1995 (22:25 Md. R. 1960)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02-1 adopted effective October 26, 1992 (19:21 Md. R. 1894) (19:22 Md. R. 1986)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05D amended effective October 26, 1992 (19:21 Md. R. 1894) (19:22 Md. R. 1986)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05D amended as an emergency provision effective September 13, 1995 (22:20 Md. R. 1536); amended permanently effective December 18, 1995 (22:25 Md. R. 1960) Regulation .06A amended as an emergency provision effective January 31, 1994 (21:5 Md. R. 400); emergency status expired March 1, 1994</annotation> <annotation type="History" subtype="Administrative History">Regulation .06A amended effective July 5, 1994 (21:13 Md. R. 1154)</annotation> <annotation type="History" subtype="Administrative History">Regulations .08 and .09 repealed effective October 26, 1992 (19:21 Md. R. 1984) (19:22 Md. R. 1986)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08 adopted effective October 26, 1992 (19:21 Md. R. 1894) (19:22 Md. R. 1986)</annotation> <annotation type="History" subtype="Administrative History">Regulation .15 amended effective October 26, 1992 (19:21 Md. R. 1894) (19:22 Md. R. 1986)</annotation> <annotation type="History" subtype="Administrative History">Regulation .30 adopted as an emergency provision effective August 28, 1990 (17:19 Md. R. 2318) (Emergency provisions are temporary and not printed in COMAR)</annotation> <annotation type="History" subtype="Administrative History">Regulation .30 adopted effective December 10, 1990 (17:24 Md. R. 2836)</annotation> <annotation type="History" subtype="Administrative History">Regulation .31 adopted effective April 26, 1993 (20:8 Md. R. 722)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective January 14, 1999 (26:1 Md. R. 20)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01B amended effective March 3, 2014 (41:4 Md. R. 299); May 16, 2022 (49:10 Md. R. 562)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01-1 amended effective April 20, 2009 (36:8 Md. R. 594); May 16, 2022 (49:10 Md. R. 562); March 3, 2025 (52:4 Md. R. 218)</annotation> <annotation type="History" subtype="Administrative History">Regulations .02J amended effective May 16, 2022 (49:10 Md. R. 562)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04 amended effective December 6, 2018 (45:24 Md. R. 1162)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04G amended effective October 13, 2014 (41:20 Md. R. 1111)</annotation> <annotation type="History" subtype="Administrative History">Regulations .04H amended effective May 16, 2022 (49:10 Md. R. 562)</annotation> <annotation type="History" subtype="Administrative History">Regulations .05C amended effective May 16, 2022 (49:10 Md. R. 562)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06A amended effective December 22, 2003 (30:25 Md. R. 1844)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06-1 adopted effective December 22, 2003 (30:25 Md. R. 1844)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06-1B, C amended effective June 16, 2008 (35:12 Md. R. 1120)</annotation> <annotation type="History" subtype="Administrative History">Regulations .10 amended effective May 16, 2022 (49:10 Md. R. 562)</annotation> <annotation type="History" subtype="Administrative History">Regulation .11 amended effective June 19, 2006 (33:12 Md. R. 996); May 16, 2022 (49:10 Md. R. 562)</annotation> <annotation type="History" subtype="Administrative History">Regulations .13 amended effective May 16, 2022 (49:10 Md. R. 562)</annotation> <annotation type="History" subtype="Administrative History">Regulations .14 amended effective May 16, 2022 (49:10 Md. R. 562)</annotation> <annotation type="History" subtype="Administrative History">Regulation .25A amended as an emergency provision effective May 15, 2000 (27:12 Md. R. 1136); emergency status expired November 10, 2000; adopted permanently effective November 27, 2000 (27:23 Md. R. 2146)</annotation> <annotation type="History" subtype="Administrative History">Regulation .28C amended effective May 12, 2014 (41:9 Md. R. 519)</annotation> <annotation type="History" subtype="Administrative History">Regulation .29 amended effective December 2, 2019 (46:24 Md. R. 1104)</annotation> <annotation type="History" subtype="Administrative History">Regulations .30D amended effective May 16, 2022 (49:10 Md. R. 562)</annotation> <annotation type="History" subtype="Administrative History">Regulations .31B amended effective May 16, 2022 (49:10 Md. R. 562)</annotation> <annotation type="History" subtype="Administrative History">Regulation .32 adopted effective May 12, 2014 (41:9 Md. R. 519)</annotation> </annotations> </chapter> <chapter num="06" heading="Emissions Control Compliance"> <regulation prefix="Regulation" num=".01" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated. The definitions in COMAR 03.03.05.01 also apply to this chapter.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Blender” means a person who owns, leases, operates, controls, or supervises an oxygenate blending facility.</text> </paragraph> <paragraph num="(2)"> <text>“Bureau” means the Field Enforcement Bureau of the Comptroller of the Treasury.</text> </paragraph> <paragraph num="(3)"> <text>“Carrier” means a distributor who transports, stores, or is responsible for the transportation or storage of motor fuel without taking title to or otherwise having any ownership of the motor fuel, and without altering either the quality or quantity of the motor fuel.</text> </paragraph> <paragraph num="(4)"> <text>“Control area” means an oxygenated gasoline control area as defined in COMAR 03.03.05.01.</text> </paragraph> <paragraph num="(5)"> <text>“Control period” means an oxygenated gasoline control period as defined in COMAR 03.03.05.01.</text> </paragraph> <paragraph num="(6)"> <text>“CO standard” means the primary national ambient air quality standard for carbon monoxide, as specified at 40 CFR §50.8, of:</text> <paragraph num="(a)"> <text>9 parts per million (10 milligrams per cubic meter) for an average 8-hour concentration not to be exceeded more than once per year; or</text> </paragraph> <paragraph num="(b)"> <text>35 parts per million (40 milligrams per cubic meter) for a 1-hour average concentration not to be exceeded more than once per year.</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>“Distributor” means a person who transports, stores, or is responsible for the transportation or storage of motor fuel at any point between any refiner or importer facility and any retail outlet or wholesale purchaser-consumer facility.</text> </paragraph> <paragraph num="(8)"> <text>“Importer” means any person who imports motor fuel from a foreign country into the United States.</text> </paragraph> <paragraph num="(9)"> <text>“Monitored violation” means two or more exceedances as measured at a State CO monitor within a 1-year period, as specified at 40 CFR §50.8, of either the:</text> <paragraph num="(a)"> <text>8-hour CO standard; or</text> </paragraph> <paragraph num="(b)"> <text>1-hour CO standard.</text> </paragraph> </paragraph> <paragraph num="(10)"> <text>“Oxygen content” means the percentage of oxygen by weight in gasoline, based upon the percentage by volume of component oxygenates exclusive of denaturants and other non-oxygen-containing components, the mass fraction of oxygen in each component oxygenate, and the density of each component oxygenate.</text> </paragraph> <paragraph num="(11)"> <text>“Oxygenate blending facility” means a facility at which oxygenate is added to gasoline or gasoline blendstocks to produce a finished oxygenated gasoline, and at which the quality or quantity of gasoline is not altered in any other manner except through the addition of deposit control additives.</text> </paragraph> <paragraph num="(12)"> <text>“Refiner” means any person who owns, leases, operates, controls, or supervises a plant where motor fuel is produced.</text> </paragraph> <paragraph num="(13)"> <text>“Reseller” means a person who purchases motor fuel and resells or transfers the motor fuel to retailers or wholesale purchaser-consumers.</text> </paragraph> <paragraph num="(14)"> <text>“Terminal” means a facility capable of receiving motor fuel in bulk or where motor fuel is altered in quantity or quality, or both, and where motor fuel is sold or supplied for transportation to a retail outlet or wholesale purchaser-consumer facility.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Vapor Pressure Determination."> <text>During the period from May 1 through September 15, inclusive, the Bureau and the Department shall, until such time as the United States Environmental Protection Agency approves the use of ASTM Test Method D-5191, determine the vapor pressure of gasoline in accordance with the test methods described in 40 CFR Part 80, Appendix E, which is incorporated by reference. Following approval by the United States Environmental Protection Agency, ASTM Test Method D-5191 shall be used. Regulated parties are free to use other accepted test methods for quality assurance programs. However, these programs do not exempt regulated parties from enforcement action. Regulated parties are encouraged to develop a correlation program with the Bureau and the Department to reduce the probability of inconsistent test results. The Bureau may grant a 1-pound waiver for ethanol blend gasoline in an ozone attainment area, as defined in COMAR 03.03.05.01B(18), in writing.</text> </regulation> <regulation prefix="Regulation" num=".03" heading="Oxygen Content Determination."> <paragraph num="A."> <text>The requirements of §§B—D of this regulation apply only in a control area and for control periods after:</text> <paragraph num="(1)"> <text>A monitored violation of the CO standard for that control area or in a larger area of which the control area is required by federal law to be treated as a unit; and</text> </paragraph> <paragraph num="(2)"> <text>Notice has been published in the Maryland Register not later than July 1 of the year in which §§B—D of this regulation become applicable that the requirements apply to the control area, and that §§B—D of this regulation remain applicable in that control area until a notice is published in the Maryland Register stating that the sections no longer apply.</text> </paragraph> </paragraph> <paragraph num="B."> <text>During the period from November 1 through the following February 28 or, in leap years, the following February 29, the Bureau and the Department shall determine the oxygen content of gasoline in accordance with the requirements specified in §§C—D of this regulation. Regulated parties are free to use other accepted test methods for quality assurance programs. However, these programs do not exempt regulated parties from enforcement action. Regulated parties are encouraged to develop a correlation program with the Bureau and the Department to reduce the probability of inconsistent test results.</text> </paragraph> <paragraph num="C."> <text>Test Methods.</text> <paragraph num="(1)"> <text>Throughout each control period beginning before January 1, 1994, the percent by volume of component oxygenates in gasoline shall be determined in accordance with:</text> <paragraph num="(a)"> <text>For single-carbon through four-carbon alcohols and methyl tertiary butyl ether, ASTM Test Method D-4815-89;</text> </paragraph> <paragraph num="(b)"> <text>For ethyl tertiary butyl ether, ASTM Test Method D-4815-89 with an appropriate internal standard; and</text> </paragraph> <paragraph num="(c)"> <text>For other oxygenates, a method developed by the Bureau and the Department in consultation with refiners, importers, and blenders registered under Regulation .04 of this chapter, and approved by the United States Environmental Protection Agency.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Throughout each control period beginning on or after January 1, 1994, the percent by volume of component oxygenates in gasoline shall be determined in accordance with Regulation .03C(1) of this chapter or the methodology described in Appendix C of the United States Environmental Protection Agency's Supplemental Notice of Proposed Guidelines for Oxygenated Gasoline Credit Programs as published in the February 5, 1992 Federal Register (57 FR 4413).</text> </paragraph> </paragraph> <paragraph num="D."> <text>Oxygen Calculation.</text> <paragraph num="(1)"> <text>The oxygen content of gasoline shall equal the sum of the density-corrected oxygen weight fractions of all component oxygenates divided by the sum of the density-corrected volumes of gasoline and all component oxygenates. The density-corrected oxygen weight fraction of each component oxygenate shall be calculated by multiplying the percent by volume of each oxygenate, as measured in accordance with §C of this regulation, by the oxygen weight fraction and specific gravity of the oxygenate. The density-corrected volume of gasoline and component oxygenates shall be calculated by multiplying the percent by volume of gasoline or oxygenate, as applicable, by the specific gravity of the gasoline or oxygenate.</text> </paragraph> <paragraph num="(2)"> <text>The oxygen weight fraction of oxygenates is as follows:</text> <paragraph num="(a)"> <text>0.4993 for methyl alcohol;</text> </paragraph> <paragraph num="(b)"> <text>0.3473 for ethyl alcohol;</text> </paragraph> <paragraph num="(c)"> <text>0.2662 for propyl alcohols;</text> </paragraph> <paragraph num="(d)"> <text>0.2158 for butyl alcohols;</text> </paragraph> <paragraph num="(e)"> <text>0.1815 for methyl tertiary butyl ether (MTBE);</text> </paragraph> <paragraph num="(f)"> <text>0.1566 for tertiary amyl methyl ether (TAME);</text> </paragraph> <paragraph num="(g)"> <text>0.1566 for ethyl tertiary butyl ether (ETBE); and</text> </paragraph> <paragraph num="(h)"> <text>0.1566 for diisopropyl ether (DIPE).</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>For purposes of this chapter, the specific gravity of oxygenates is as follows:</text> <paragraph num="(a)"> <text>0.7963 for methyl alcohol;</text> </paragraph> <paragraph num="(b)"> <text>0.7939 for ethyl alcohol;</text> </paragraph> <paragraph num="(c)"> <text>0.8080 for n-propyl alcohol;</text> </paragraph> <paragraph num="(d)"> <text>0.7899 for isopropyl alcohol;</text> </paragraph> <paragraph num="(e)"> <text>0.8137 for n-butyl alcohol;</text> </paragraph> <paragraph num="(f)"> <text>0.8058 for isobutyl alcohol;</text> </paragraph> <paragraph num="(g)"> <text>0.8114 for sec-butyl alcohol;</text> </paragraph> <paragraph num="(h)"> <text>0.7922 for tert-butyl alcohol;</text> </paragraph> <paragraph num="(i)"> <text>0.7460 for methyl tertiary butyl ether (MTBE);</text> </paragraph> <paragraph num="(j)"> <text>0.7752 for tertiary amyl methyl ether (TAME);</text> </paragraph> <paragraph num="(k)"> <text>0.7452 for ethyl tertiary butyl ether (ETBE); and</text> </paragraph> <paragraph num="(l)"> <text>0.7257 for diisopropyl ether (DIPE).</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>For purposes of this chapter, the specific gravity of gasoline is 0.7420.</text> </paragraph> <paragraph num="(5)"> <text>For purposes of this chapter, the oxygen weight fraction of oxygenates not included in §D(2) of this regulation and the specific gravity of oxygenates not included in §D(3) of this regulation shall be specified by the Bureau and the Department.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Registration."> <text>For control periods beginning before January 1, 1994, refiners, importers, and blenders that intend to use oxygenates other than single-carbon through four-carbon alcohols or methyl tertiary butyl ether to comply with control period oxygen requirements shall register their intent with the Bureau and the Department at least 30 days before the beginning of each control period.</text> </regulation> <regulation prefix="Regulation" num=".05" heading="Record Keeping."> <paragraph num="A."> <text>A person described in this regulation shall generate and maintain, for a period of not less than 2 years, records detailing compliance information as required by this regulation. Records pertaining to vapor pressure are required only for gasoline produced, stored, transported, supplied, offered for supply, transferred or otherwise handled, sold, offered for sale, or dispensed during the period from May 1 through September 15, inclusive, and records pertaining to oxygen content are required only for gasoline produced, stored, transported, supplied, offered for supply, transferred or otherwise handled, sold, offered for sale, or dispensed during an oxygenated gasoline control period. However, a person should consider that gasoline produced before May 1 for vapor pressure and before the beginning of an oxygenated gasoline control period for oxygen content will remain in the distribution system after the applicable control begins, and therefore should consider keeping appropriate records before the required dates in order to facilitate a defense in instances when violations are detected. All records shall be made available for review by the Bureau or the Department during normal business hours or submitted to the Bureau or the Department for review upon request. These record-keeping requirements are in addition to any motor fuel record keeping required under Tax-General Article, Annotated Code of Maryland.</text> </paragraph> <paragraph num="B."> <text>Refiners, Importers, and Blenders. Refiners, importers, and blenders shall, for each separate quantity of gasoline produced or imported, generate and maintain records containing the following information:</text> <paragraph num="(1)"> <text>The results of the tests, conducted in accordance with Regulations .02 and .03 of this chapter, used to determine the vapor pressure and types and percentages by volume of component oxygenates;</text> </paragraph> <paragraph num="(2)"> <text>The oxygen content of the gasoline;</text> </paragraph> <paragraph num="(3)"> <text>The volume of the gasoline; and</text> </paragraph> <paragraph num="(4)"> <text>The name and address of the person to whom the gasoline was sold or transferred.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Terminal Operators. A person who owns, leases, operates, or controls a gasoline terminal shall, for each separate quantity of gasoline handled, generate and maintain records containing the following information:</text> <paragraph num="(1)"> <text>The owner of the gasoline;</text> </paragraph> <paragraph num="(2)"> <text>The volume of gasoline;</text> </paragraph> <paragraph num="(3)"> <text>For gasoline obtained from a refiner or importer and, if available, for gasoline obtained from other sources, the stated vapor pressure, type and percentage by volume of component oxygenates, and oxygen content of the gasoline;</text> </paragraph> <paragraph num="(4)"> <text>The results of any quality assurance tests performed; and</text> </paragraph> <paragraph num="(5)"> <text>As applicable, the name and address of the person from whom the gasoline was purchased or acquired or to whom the gasoline was sold or transferred.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Retailers, wholesale purchaser-consumers, carriers, resellers, and distributors shall generate and maintain records containing the following information:</text> <paragraph num="(1)"> <text>The name and address of the person from whom each separate quantity of gasoline was received and the date of receipt; and</text> </paragraph> <paragraph num="(2)"> <text>Data on each separate quantity of gasoline received, sold, or transported, including:</text> <paragraph num="(a)"> <text>The volume of gasoline;</text> </paragraph> <paragraph num="(b)"> <text>If available, the vapor pressure of the gasoline;</text> </paragraph> <paragraph num="(c)"> <text>If available, the types and percent by volume of component oxygenates;</text> </paragraph> <paragraph num="(d)"> <text>If available, the oxygen content of the gasoline;</text> </paragraph> <paragraph num="(e)"> <text>The results of any quality assurance tests performed; and</text> </paragraph> <paragraph num="(f)"> <text>If applicable, the destination of the gasoline.</text> </paragraph> </paragraph> </paragraph> <paragraph num="E."> <text>The documentation addressed by this regulation may be kept in electronic format and shall be available to the Comptroller upon demand.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Transfer Documentation."> <paragraph num="A."> <text>Each time gasoline is transferred between May 1 and September 15, inclusive, or during a control period, as provided for under Regulation .03 of this chapter, the transferor shall provide the transferee a transfer document which shall legibly and conspicuously contain the following information:</text> <paragraph num="(1)"> <text>The date of the transfer;</text> </paragraph> <paragraph num="(2)"> <text>The name and address of the transferor;</text> </paragraph> <paragraph num="(3)"> <text>The name and address of the transferee;</text> </paragraph> <paragraph num="(4)"> <text>The location of the gasoline at the time of the transfer;</text> </paragraph> <paragraph num="(5)"> <text>The volume of gasoline transferred;</text> </paragraph> <paragraph num="(6)"> <text>For all gasoline transferred between May 1 and September 15, inclusive, the proper identification of the gasoline as complying or noncomplying with vapor pressure requirements;</text> </paragraph> <paragraph num="(7)"> <text>For all gasoline transferred from a refiner, importer, or blender between May 1 and September 15, inclusive, the vapor pressure of the gasoline and the test method used for determination;</text> </paragraph> <paragraph num="(8)"> <text>For all gasoline transferred during a control period, the proper identification of the gasoline as oxygenated or nonoxygenated and complying or noncomplying with oxygen requirements; and</text> </paragraph> <paragraph num="(9)"> <text>For all gasoline transferred from a refiner, importer, or blender during a control period, and for all transfers during a control period of oxygenated gasoline containing less than 2.7 percent oxygen by weight, the type and volume of component oxygenates and the oxygen content of the gasoline.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The information required in §A of this regulation is in addition to any other information, such as bills of lading or invoices, which would otherwise accompany gasoline transfer, and may be incorporated into existing documentation or provided as a separate document.</text> </paragraph> <paragraph num="C."> <text>While the transfer documentation detailed in §A of this regulation is only required during the period indicated, a person should consider that gasoline produced before May 1 for vapor pressure and before the beginning of an oxygenated gasoline control period for oxygen content will remain in the distribution system after the applicable control begins, and therefore should consider documenting transfers before the required dates in order to facilitate a defense in instances when violations are detected.</text> </paragraph> <paragraph num="D."> <text>The documentation addressed by this regulation may be kept in electronic format and shall be available to the Comptroller upon demand.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Tax-General Article, §2-103; Business Regulation Article, §10-202; Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: October 26, 1992 (19:21 Md. R. 1894) (19:22 Md. R. 1986)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 amended as an emergency provision effective September 13, 1995 (22:20 Md. R. 1536); amended permanently effective December 18, 1995 (22:25 Md. R. 1960)</annotation> <annotation type="History" subtype="Administrative History">Regulations .01B amended effective May 16, 2022 (49:10 Md. R. 562)</annotation> <annotation type="History" subtype="Administrative History">Regulations .02 amended effective May 16, 2022 (49:10 Md. R. 562)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03 amended as an emergency provision effective September 13, 1995 (22:20 Md. R. 1536); amended permanently effective December 18, 1995 (22:25 Md. R. 1960)</annotation> <annotation type="History" subtype="Administrative History">Regulations .05E adopted effective May 16, 2022 (49:10 Md. R. 562)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06A amended as an emergency provision effective September 13, 1995 (22:20 Md. R. 1536); amended permanently effective December 18, 1995 (22:25 Md. R. 1960)</annotation> <annotation type="History" subtype="Administrative History">Regulations .06D adopted effective May 16, 2022 (49:10 Md. R. 562)</annotation> </annotations> </chapter> </subtitle> <subtitle num="04" heading="Income Tax"> <chapter num="01" heading="General Regulations"> <regulation prefix="Regulation" num=".01" heading="Withholding of Tax at Source."> <paragraph num="A."> <text>Withholding Required.</text> <paragraph num="(1)"> <text>Every employer subject to the jurisdiction of this State making payment to resident individuals of this State of salaries, wages, or compensation for personal services, and every employer making payment to nonresident individuals of salary, wages, or compensation for personal services rendered in this State, shall withhold from payments subject to withholding and transmit to the Comptroller the tax, taking into consideration:</text> <paragraph num="(a)"> <text>The personal exemption claimed by a resident or a nonresident on Form MW 507 or other approved form; and</text> </paragraph> <paragraph num="(b)"> <text>For organizations that are exempt from taxation under §501(c)(3) or (4) of the Internal Revenue Code, the credit against the amount of tax withheld and required to be paid to the Comptroller under Tax-General Article, §§10-704.7, 10-704.10, and 10-715, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The credit under §A(1)(b) of this regulation does not affect the calculation of the tax to be withheld from payments subject to withholding and the resident or nonresident shall receive credit for the full amount of tax withheld.</text> </paragraph> <paragraph num="(3)"> <text>Every payor of a payment subject to withholding as provided in Tax-General Article, §10-908, Annotated Code of Maryland, shall withhold and remit to the Comptroller the tax.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Withholding Exemption Certificate.</text> <paragraph num="(1)"> <text>Who Shall File. Except as provided for in §C(1)—(4) of this regulation, an employee shall file with the employer at the time of employment, a withholding exemption certificate if:</text> <paragraph num="(a)"> <text>The employee's salary, wages, or compensation is subject to withholding; or</text> </paragraph> <paragraph num="(b)"> <text>The employee satisfies the conditions for tax exempt status as set forth in §C(2), (3), or (4) of this regulation, and the employee wants to claim exemption from the withholding taxes.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Form to be Filed. An employee who is required to file a withholding exemption certificate shall file with the employer a Form MW 507 or other approved form.</text> </paragraph> <paragraph num="(3)"> <text>Information Required.</text> <paragraph num="(a)"> <text>An employee filing a Form MW 507 with the employer shall supply the following information:</text> <paragraph num="(i)"> <text>Name;</text> </paragraph> <paragraph num="(ii)"> <text>Home address;</text> </paragraph> <paragraph num="(iii)"> <text>Social Security number;</text> </paragraph> <paragraph num="(iv)"> <text>Number of exemptions and allowances claimed;</text> </paragraph> <paragraph num="(v)"> <text>Signature under oath; and</text> </paragraph> <paragraph num="(vi)"> <text>Date.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>In addition to the general information provided by §B(3)(a) of this regulation, an employee claiming exemption from withholding under §C(2) shall certify under oath that he or she is not domiciled and does not maintain a place of abode in the State and shall list his or her permanent address.</text> </paragraph> <paragraph num="(c)"> <text>In addition to the general information required by §§B(3)(a) and C(3) or (4), an employee claiming exemption from withholding under §C(3) or (4) shall file Form MW 507 annually with the employer not later than:</text> <paragraph num="(i)"> <text>The 15th day of February of the following year if the employee's income tax liability is determined on a calendar year basis; or</text> </paragraph> <paragraph num="(ii)"> <text>The 15th day of the second calendar month following the last day of the employee's tax year if §B(3)(c)(i) does not apply.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(4)"> <text>Exemptions Allowed. An employee may claim on the withholding exemption certificate those personal and dependent exemptions provided for under Tax-General Article, §10-211, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(5)"> <text>Additional Exemptions. An employee may claim an additional exemption for each exemption amount allowed for a taxable year under Tax-General Article, §10-211, Annotated Code of Maryland, of the excess of the total of estimated itemized deductions, alimony payments, allowable child care expenses, qualified retirement contributions, and business losses, over the standard deduction allowance.</text> </paragraph> <paragraph num="(6)"> <text>Lesser Number Allowed. An employee may claim on a withholding exemption certificate a lesser number of exemptions than that to which the employee is legally entitled but shall not claim a greater number of exemptions than those to which he or she is legally entitled.</text> </paragraph> <paragraph num="(7)"> <text>Additional Withholding. In addition to the tax required to be deducted and withheld, the employer and employee may agree that an additional amount be withheld from the employee's wages. The additional amount agreed upon shall be considered as tax required to be deducted and withheld.</text> </paragraph> <paragraph num="(8)"> <text>Increase in Exemptions. An employee may file a new withholding exemption certificate with the employer at any time if there is an increase in the number of exemptions to which the employee is entitled.</text> </paragraph> <paragraph num="(9)"> <text>Decrease in Exemptions. If, on any day during the calendar year, the number of withholding exemptions to which the employee is entitled is less than the number of exemptions claimed in the withholding exemption certificate then in effect, the employee shall file a new withholding exemption certificate with the employer within 10 days after the change occurs.</text> </paragraph> <paragraph num="(10)"> <text>More than One Employer. If a withholding exemption certificate is in effect with one employer, an employee is not entitled to claim the same withholding exemptions on any other certificate filed with another employer.</text> </paragraph> <paragraph num="(11)"> <text>Failure to File. If an employee does not file a withholding exemption certificate with the employer when required, the employer shall compute the amount of withholding on the basis of one exemption, the employee's personal exemption.</text> </paragraph> <paragraph num="(12)"> <text>Unpaid Tax Liability and Refund Intercept Request. The Comptroller may notify an individual's employer in writing that the individual employee has an unpaid tax liability or that the employee is subject to a tax refund intercept request. The employer shall compute the amount of withholding on the number of exemptions set forth in the notice. The number of exemptions is limited to the exemption allowed on the employee's prior year's return.</text> </paragraph> <paragraph num="(13)"> <text>Failure to File Income Tax Returns. The Comptroller may notify an individual's employer in writing that an individual employee has failed to file a required income tax return. The employer shall compute the amount of withholding on the basis of one exemption.</text> </paragraph> <paragraph num="(14)"> <text>Invalid Certificate. A withholding exemption certificate is invalid if:</text> <paragraph num="(a)"> <text>The withholding exemption certificate does not contain the information required in §B(3) of this regulation.</text> </paragraph> <paragraph num="(b)"> <text>The withholding exemption certificate contains false or fraudulent information; however, claiming a lesser number of exemptions than allowed may not be considered false or fraudulent.</text> </paragraph> <paragraph num="(c)"> <text>There is any alteration of, or unauthorized addition to, the withholding exemption certificate. An alteration is taking out any language by which the employee certifies the correctness of the certificate. An unauthorized addition is any writing on the certificate other than the entries required.</text> </paragraph> <paragraph num="(d)"> <text>The Comptroller notifies the employer in writing that the withholding exemption certificate is invalid.</text> </paragraph> <paragraph num="(e)"> <text>The withholding exemption certificate claiming exemption from withholding under §C(3) of this regulation has not been renewed annually as required under §B(3)(c) of this regulation.</text> </paragraph> <paragraph num="(f)"> <text>The withholding exemption certificate claiming exemption from withholding under §C(4) of this regulation is not accompanied by the Comptroller-required documentation showing your spousal status under the Servicemembers Civil Relief Act, as amended by the Military Spouses Residency Relief Act, or has not been renewed annually as required under §B(3)(c) of this regulation.</text> </paragraph> </paragraph> <paragraph num="(15)"> <text>Effect of Invalid Certificate. An employer receiving an invalid withholding exemption certificate shall consider it a nullity for the purposes of withholding, and the employer shall compute the amount of withholding on the basis of a single person claiming only the employee's personal exemption.</text> </paragraph> <paragraph num="(16)"> <text>Submission of Withholding Certificate.</text> <paragraph num="(a)"> <text>An employer shall submit to the Comptroller a copy of a withholding exemption certificate which is received from an employee if:</text> <paragraph num="(i)"> <text>The total number of withholding exemptions claimed on the certificate exceeds 10;</text> </paragraph> <paragraph num="(ii)"> <text>The employee certifies that he or she is exempt from withholding under the Servicemembers Civil Relief Act, as amended by the Military Spouses Residency Relief Act;</text> </paragraph> <paragraph num="(iii)"> <text>The employee certifies that he or she is exempt from withholding because he or she had no income tax liability for the preceding year, expects to incur no liability in the current year, and the wages are expected to exceed $200 a week;</text> </paragraph> <paragraph num="(iv)"> <text>The employee certifies that he or she is a bona fide domiciliary of a state which has a written reciprocal agreement with Maryland exempting salary, wages, or other compensation from taxation; or</text> </paragraph> <paragraph num="(v)"> <text>The employer has reason to believe the certificate is incorrect.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>An employer shall submit a copy of any currently effective withholding exemption certificate (or make the original certificate available for inspection) upon request of the Comptroller.</text> </paragraph> <paragraph num="(c)"> <text>If the Comptroller finds that a withholding exemption certificate contains any materially incorrect statement, or the employee fails to furnish verification when requested to do so, the Comptroller shall notify the employer in writing that the certificate is invalid. Thereafter, the employer shall compute the amount of withholding on the basis of a single person claiming only the employee's personal exemption until the Comptroller advises the employer by written notice to withhold on the basis of any new certificate filed by the employee and revokes the prior written notice.</text> </paragraph> </paragraph> <paragraph num="(17)"> <text>Period During Which Withholding Exemption Certificate Remains in Effect. Except as provided in §B(14) of this regulation, a valid withholding certificate shall continue in effect until another valid withholding exemption certificate takes effect.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Withholding Not Required. Withholding of Maryland income tax is not required with respect to compensation, salary, or wages paid for personal services rendered or performed by:</text> <paragraph num="(1)"> <text>Nonresident individuals employed as seamen upon vessels engaged in oceanic and foreign trade or commerce while these vessels are within any of the ports of this State;</text> </paragraph> <paragraph num="(2)"> <text>A nonresident individual whose state of domicile has a written reciprocal agreement with Maryland exempting salary, wages, or other compensation from taxation;</text> </paragraph> <paragraph num="(3)"> <text>Any employee who has furnished a withholding exemption certificate Form MW 507 to his employer certifying that he:</text> <paragraph num="(a)"> <text>Incurred no income tax liability for the preceding taxable year; and</text> </paragraph> <paragraph num="(b)"> <text>Expects to incur no income tax liability for the current taxable year;</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>A nonresident individual subject to the Servicemembers Civil Relief Act, as amended by the Military Spouses Residency Relief Act:</text> <paragraph num="(a)"> <text>Whose spouse is a member of the armed forces present in Maryland in compliance with military orders;</text> </paragraph> <paragraph num="(b)"> <text>Who is present in Maryland solely to be with the military spouse;</text> </paragraph> <paragraph num="(c)"> <text>Whose domicile is in another state; and</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>Out-of-state employees as defined under Public Safety Article, §14-219, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Time and Place for Filing Returns.</text> <paragraph num="(1)"> <text>Every employer and payor subject to the withholding provisions shall make a return to the Comptroller on Form MW 506.</text> </paragraph> <paragraph num="(2)"> <text>The required return shall be filed on:</text> <paragraph num="(a)"> <text>A monthly basis;</text> </paragraph> <paragraph num="(b)"> <text>A quarterly basis;</text> </paragraph> <paragraph num="(c)"> <text>An annual basis; or</text> </paragraph> <paragraph num="(d)"> <text>A periodic basis.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Monthly Basis. When the aggregate amount required to be deducted and withheld by the employer or payor for any quarterly period can reasonably be expected to be at least $700, the employer or payor is required to file the return and pay the tax monthly on or before the 15th day of the following month.</text> </paragraph> <paragraph num="(4)"> <text>Quarterly Basis. When the aggregate amount required to be deducted and withheld by the employer or payor for any quarterly period is less than $700, the employer or payor is required to file and pay the tax quarterly on or before the 15th day of the following month for each quarter, January—December.</text> </paragraph> <paragraph num="(5)"> <text>Annual Basis.</text> <paragraph num="(a)"> <text>General. Except as provided in §D(5)(b) of this regulation, when the aggregate amount required to be deducted and withheld by the employer or payor for any annual period can reasonably be expected to be less than $250, the employer or payor shall:</text> <paragraph num="(i)"> <text>File the return; and</text> </paragraph> <paragraph num="(ii)"> <text>Pay the tax annually on or before the last day of January immediately following the tax year.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Professional Sports Teams. Each non-Maryland-based professional sports team that has not elected to file on a monthly or quarterly basis shall:</text> <paragraph num="(i)"> <text>File the return; and</text> </paragraph> <paragraph num="(ii)"> <text>Pay the tax annually on or before the last day of January immediately following the tax year.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(6)"> <text>Periodic Basis.</text> <paragraph num="(a)"> <text>For purposes of §D(6) of this regulation, the term “payroll” means the period for which a payment of wages is ordinarily made by the employer to its employees.</text> </paragraph> <paragraph num="(b)"> <text>Every employer or payor who, in the preceding calendar year, was required to withhold at least $15,000 in Maryland withholding tax shall file withholding returns on a periodic schedule so that a return is filed within 3 business days following each payroll that causes the total accumulated tax withheld to equal or exceed $700.</text> </paragraph> <paragraph num="(c)"> <text>If an employer or payor begins to file on a periodic schedule, it shall file a return at least once every month even if no wages are withheld during the month unless the employer:</text> <paragraph num="(i)"> <text>Gives written notice that it no longer has employees; or</text> </paragraph> <paragraph num="(ii)"> <text>Paid less than $15,000 in Maryland income tax during the preceding calendar year.</text> </paragraph> </paragraph> <paragraph num="(d)"> <text>Waiver of Periodic Basis Filing Requirement.</text> <paragraph num="(i)"> <text>If an employer or payor submits to the Comptroller written documentation from the Internal Revenue Service showing that it is allowed to make federal withholding tax deposits on a monthly schedule, then the Comptroller may grant a waiver from the requirement in §D(6)(b) of this regulation.</text> </paragraph> <paragraph num="(ii)"> <text>The waiver shall allow the employer or payor to file the Maryland withholding tax return and pay the tax on a monthly basis for the remainder of the calendar year.</text> </paragraph> <paragraph num="(iii)"> <text>An employer or payor may annually apply to the Comptroller for a renewal of a waiver granted under §D(6)(d)(i) of this regulation, if the employer or payor remains eligible to make federal withholding tax deposits on a monthly schedule.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(7)"> <text>Change in Quarterly Filing. If an employer or payor has become liable to a monthly return of withholding, the employer or payor shall continue on this basis until a request in writing to change to quarterly reports is filed and approved by the Comptroller. The request shall contain evidence that the tax withheld is less than $700 per quarter and will be less than that amount for the next 12 months. If an employer or a payor requests in writing for permission to change from a monthly return to a quarterly return on the ground that withholding has become less than $700 for each quarter, this change shall be permitted only at the beginning of a calendar year.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Year-end Reconciliation Return of Monthly, Quarterly, Annual, and Periodic Returns and Employer Withholding Returns.</text> <paragraph num="(1)"> <text>On or before January 31 of each year, the employer shall furnish to each individual who was employed during the preceding year Copy 2 of Federal Form W-2.</text> </paragraph> <paragraph num="(2)"> <text>On or before January 31 of each year, the employer or payor shall file with the Comptroller the following forms, returns, and information:</text> <paragraph num="(a)"> <text>MW 508 — Employer's Annual Withholding Reconciliation Report.</text> </paragraph> <paragraph num="(b)"> <text>If the employer is not required under §E(2)(c) of this regulation to provide W-2 information on magnetic media, then the employer shall file Copy 1 of Federal Form W-2 for each employee.</text> </paragraph> <paragraph num="(c)"> <text>An employer is required to provide W-2 information on magnetic media, or other machine-readable or electronic format approved by the Comptroller, if the total number of W-2 statements equals or exceeds:</text> <paragraph num="(i)"> <text>25; or</text> </paragraph> <paragraph num="(ii)"> <text>The federal threshold for filing on magnetic media, if the federal threshold is lower than 25.</text> </paragraph> </paragraph> <paragraph num="(d)"> <text>If the employer is required to provide W-2 information using magnetic media, then the employer shall file with the Comptroller the withholding and tax information on magnetic tape, or if approved by the Comptroller, other magnetic media permitted under IRS regulations as follows:</text> <paragraph num="(i)"> <text>Magnetic tape or other approved magnetic media used in reporting withholding and tax information shall conform to the Social Security Administration reporting requirements for the filing of W-2 information as specified in regulations of the Internal Revenue Service as amended from time to time and shall contain Maryland income tax and withholding data;</text> </paragraph> <paragraph num="(ii)"> <text>Employers using magnetic tape or other approved magnetic media may submit to the Comptroller a copy of the data submitted to the Social Security Administration if Maryland information is included or may submit magnetic media containing only income tax and withholding data of employees subject to the Maryland Income Tax Law.</text> </paragraph> </paragraph> <paragraph num="(e)"> <text>Waiver of Magnetic Media Filing Requirement.</text> <paragraph num="(i)"> <text>An employer or payor may annually apply, in writing, at least 45 days before the due date, to the Comptroller for a waiver from the requirement under §E(2)(c) of this regulation.</text> </paragraph> <paragraph num="(ii)"> <text>The Comptroller may grant a waiver if the employer or payor can show that the Internal Revenue Service has granted the employer or payor a waiver from filing information returns electronically by submitting a copy of the federal waiver to the Comptroller, or that the requirement would cause the employer or payor undue hardship. The principal factor in determining undue hardship will be the amount, if any, by which the cost of filing on magnetic media in accordance with §E(2)(d) of this regulation exceeds the cost of filing the returns on other media.</text> </paragraph> </paragraph> <paragraph num="(f)"> <text>Any 1099 series Federal Form, if the employer or payor is required under federal law to file the form and Maryland State withholding tax is greater than $10.</text> </paragraph> </paragraph> </paragraph> <paragraph num="F."> <text>Withholding Agent's Liability.</text> <paragraph num="(1)"> <text>Any employer who negligently shall fail either to withhold the required tax or to pay it to the Comptroller as specified, or both, shall be held personally and individually liable for all monies so involved, and if the employer is a corporate entity, the personal liability shall extend and be applicable to any:</text> <paragraph num="(a)"> <text>Officer of the corporation who exercises direct control over the fiscal management of the corporation; and</text> </paragraph> <paragraph num="(b)"> <text>Agent of the corporation who, in the agent's capacity as such, is under a duty to withhold the tax and transmit it to the Comptroller.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The tax withheld under this regulation shall be deemed to be held by the employer in trust for the State and shall be duly recorded by an employer in a ledger account so as to clearly indicate the amount of tax withheld and that this amount is the property of the State. Failure to transmit to the Comptroller any tax withheld shall constitute a lien in favor of the State recoverable in the manner provided under Tax-General Article, Title 13, Subtitle 8, Annotated Code of Maryland. The failure on the part of an employer to furnish an individual resident or nonresident from whom tax has been withheld a statement of it setting forth the information prescribed on the Federal Form W-2, or where the required statement so furnished is deemed a fraudulent statement, then the employer shall for each failure be subject to a civil penalty in the amount of $50.</text> </paragraph> <paragraph num="(3)"> <text>The failure of a person, as defined in Tax-General Article, §1-101(p), Annotated Code of Maryland, to furnish an annual withholding reconciliation report as required under Tax-General Article, §10-911, Annotated Code of Maryland, or where the required report so furnished is deemed a fraudulent statement, then the employer or payor shall, for each violation, be subject to a civil penalty in the amount of $100.</text> </paragraph> </paragraph> <paragraph num="G."> <text>Other Payments Subject to Withholding.</text> <paragraph num="(1)"> <text>A payor shall withhold the amount of income tax from an annuity, sick pay, or retirement distribution as defined in Tax-General Article, §10-905(a-1), Annotated Code of Maryland, that the payee requests. The payee shall file Form MW 507P with the payor to elect to withhold the payments. The payor is also subject to the annual reconciliation report requirement and shall file this return, Form MW 508, with the Comptroller.</text> </paragraph> <paragraph num="(2)"> <text>Eligible Rollover Distribution.</text> <paragraph num="(a)"> <text>If a payment to a payee is a designated distribution that is an “eligible rollover distribution” within the meaning of §3405(c) of the Internal Revenue Code, which includes any part that is not rolled over directly to another qualified plan and which is subject to federal mandatory withholding, then it is subject to State withholding.</text> </paragraph> <paragraph num="(b)"> <text>The withholding rate as applied to the payment is 7.75 percent.</text> </paragraph> <paragraph num="(c)"> <text>The payor shall withhold tax on each eligible rollover distribution and remit the tax to the Comptroller with a withholding return, Form MW 506. The payor shall file an annual reconciliation report, Form MW 508, with the Comptroller as set forth in §D of this regulation.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Estimated Tax Return."> <paragraph num="A."> <text>Resident and Nonresident Individuals Other Than Farmers.</text> <paragraph num="(1)"> <text>Every individual receiving taxable income which is not subject to the withholding provisions of the Maryland Income Tax Law and Regulation .01 of this chapter and which is not specifically exempt under the Law shall file on Form 502-D or 502-DEP a declaration of estimated tax if the individual's gross income not subject to Maryland employer withholding would be expected to develop a tax of more than $500. Declarations with payments in full are to be filed within 60 days of the receipt of $500 or more of income from awards, prizes, lotteries, or raffles, whether paid in cash or property. The declaration of estimated tax shall be filed on or before April 15, June 15, September 15, and January 15.</text> </paragraph> <paragraph num="(2)"> <text>Payment of 1/4 of the tax estimated to be due and owing shall be made at the time fixed in these regulations for the filing of the estimated tax return on Form 502-D or 502-DEP. An amended declaration of estimated tax may be filed on any of the dates specified in these regulations subsequent to the filing of the estimated return required to be filed on or before April 15 of the current calendar year. Instead of the final estimated return due to be filed for a given calendar year on or before January 15 following the close of the calendar year, the individual, if the individual so elects, may file, on or before January 31, the individual's final return at which time any tax remaining unpaid shall be paid in full. The filing of the final return and the payment in full of the tax shown on it, less any payment of tax previously made, shall be considered as the filing of the estimated return due on or before January 15 or as an amendment to a previously filed declaration of estimated tax covering the same taxable year.</text> </paragraph> <paragraph num="(3)"> <text>Overpayment of the previous year income taxes may be applied to current year estimated income tax. The overpayment may be partially or fully applied to the first installment. If the overpayment equals or exceeds the estimated tax liability for the first installment, the declaration is not required. If the overpayment does not equal the estimated tax liability, a declaration should be filed and the balance paid.</text> </paragraph> <paragraph num="(4)"> <text>Unpaid Tax.</text> <paragraph num="(a)"> <text>Except as otherwise provided in this regulation, the Comptroller shall assess interest and penalty on the underpayment of estimated tax based on the unpaid tax from the due date of the tax to the date on which it is paid.</text> </paragraph> <paragraph num="(b)"> <text>The unpaid tax is the lesser of:</text> <paragraph num="(i)"> <text>90 percent of the tax required to be shown on the return for the current taxable year; or</text> </paragraph> <paragraph num="(ii)"> <text>110 percent of the tax paid for the prior taxable year, reduced by any credit allowed under Tax-General Article, §§10-703 and 10-703.2, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>The Comptroller may not assess interest or penalty if:</text> <paragraph num="(i)"> <text>The underpayment is less than $500; or</text> </paragraph> <paragraph num="(ii)"> <text>At least 90 percent of the individual's taxable income is taxable by another state, and the underpayment is of the county income tax only.</text> </paragraph> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Farmers and Fishermen. An individual whose estimated gross income from farming (including oyster farming) and fishing is at least 2/3 of the total estimated gross income from all sources for the taxable year, instead of the dates set forth in §A of this regulation, may file a declaration of estimated tax on Form 502-D or 502-DEP at any time on or before January 15 of the succeeding taxable year, but if this individual files a return for the taxable year for which the declaration is required and pays in full the tax computed on the return as payable on or before March 1 of the succeeding taxable year, then the return shall be considered as the declaration, or if the tax shown on the return is greater than the estimated tax shown on a declaration previously made, or in the last amendment of the declaration, the return shall be considered as an amendment of the declaration to be filed on or before January 15 of the succeeding taxable year.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".03—.07" heading="Repealed." /> <regulation prefix="Regulation" num=".08" heading="Abatements of Income Tax Assessment."> <paragraph num="A."> <text>The Comptroller or his authorized delegate may abate any assessment, or unpaid portion thereof, if the assessment is in excess of the correct tax liability, if the assessment is made after the expiration of the period of limitation applicable to it, or if the assessment has been erroneously or illegally made.</text> </paragraph> <paragraph num="B."> <text>The Comptroller or his authorized delegate may abate amounts, the collection of which is not warranted because of the administration and collection costs.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".09—.10" heading="Repealed." /> <regulation prefix="Regulation" num=".11" heading="Estimated Withholding Tax Assessments."> <paragraph num="A."> <text>Once a taxpayer has become liable for the filing of withholding tax returns, the taxpayer shall continue to file returns until the Comptroller is notified that the taxpayer no longer has employees or is no longer liable to file returns.</text> </paragraph> <paragraph num="B."> <text>If a return required to be filed is not filed by its due date, after the time provided under Tax-General Article, §13-303, Annotated Code of Maryland, has elapsed, the Comptroller may estimate the amount of tax due from any information available and levy an assessment for this amount, together with applicable penalty, interest, and delinquent fees.</text> </paragraph> <paragraph num="C."> <text>A taxpayer may appeal an assessment by applying for a hearing as provided in COMAR 03.01.01.04.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Tax-General Article, §§2-103, 10-822, and 10-911, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date:</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 effective August 4, 1970; amended effective April 7, 1978 (5:7 Md. R. 520)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01A amended effective November 30, 1979 (6:24 Md. R. 1918); October 3, 1980 (7:20 Md. R. 1876); January 9, 1989 (15:27 Md. R. 3126); October 12, 1992 (19:20 Md. R. 1813); December 28, 1998 (25:26 Md. R. 1918); December 22, 2003 (30:25 Md. R. 1844); October 9, 2006 (33:20 Md. R. 1612); February 9, 2009 (36:3 Md. R. 207); July 8, 2013 (40:13 Md. R. 1073)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01B amended effective November 30, 1979 (6:24 Md. R. 1918); October 3, 1980 (7:20 Md. R. 1876); September 12, 1983 (10:18 Md. R. 1606); October 3, 1988 (15:20 Md. R. 2333); January 9, 1989 (15:27 Md. R. 3126); June 26, 1989 (16:12 Md. R. 1332); August 20, 1990 (17:16 Md. R. 1989); October 12, 1992 (19:20 Md. R. 1813); January 14, 1999 (26:1 Md. R. 21); December 22, 2003 (30:25 Md. R. 1844); October 9, 2006 (33:20 Md. R. 1612); July 8, 2013 (40:13 Md. R. 1073)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01B, C amended effective March 21, 2011 (38:6 Md. R. 393)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01B, E amended effective April 30, 2012 (39:8 Md. R. 533)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01C amended effective October 3, 1980 (7:20 Md. R. 1876); January 9, 1989 (15:27 Md. R. 3126); October 12, 1992 (19:20 Md. R. 1813); March 31, 2014 (41:6 Md. R. 377)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01D amended effective November 30, 1979 (6:24 Md. R. 1918); May 6, 1985 (12:9 Md. R. 808); December 1, 1986 (13:24 Md. R. 2557); October 3, 1988 (15:20 Md. R. 2333); October 12, 1992 (19:20 Md. R. 1813); January 14, 1999 (26:1 Md. R. 21); December 22, 2003 (30:25 Md. R. 1844); October 9, 2006 (33:20 Md. R. 1612); October 22, 2007 (34:21 Md. R. 1913)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01E amended effective November 30, 1979 (6:24 Md. R. 1918); October 3, 1988 (7:20 Md. R. 1876); May 6, 1985 (12:9 Md. R. 808); August 20, 1990 (17:16 Md. R. 1989); October 12, 1992 (19:20 Md. R. 1813); December 22, 2003 (30:25 Md. R. 1844); October 9, 2006 (33:20 Md. R. 1612); March 27, 2017 (44:6 Md. R. 324); May 2, 2022 (49:9 Md. R. 529)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01F amended effective October 3, 1988 (15:20 Md. R. 2333); January 9, 1989 (15:27 Md. R. 3126); December 22, 2003 (30:25 Md. R. 1844); May 2, 2022 (49:9 Md. R. 529)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01G adopted effective October 9, 2006 (33:20 Md. R. 1612)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01G amended effective February 9, 2009 (36:3 Md. R. 207)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02 effective August 4, 1970</annotation> <annotation type="History" subtype="Administrative History">Regulation .02A amended effective November 30, 1979 (6:24 Md. R. 1918); May 6, 1985 (12:9 Md. R. 808); January 9, 1989 (15:27 Md. R. 3126); August 20, 1990 (17:16 Md. R. 1989); November 20, 1994 (21:23 Md. R. 1931); January 14, 1999 (26:1 Md. R. 21); December 22, 2003 (30:25 Md. R. 1844); May 2, 2022 (49:9 Md. R. 529)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective November 30, 1979 (6:24 Md. R. 1918); December 22, 2003 (30:25 Md. R. 1844); October 9, 2006 (33:20 Md. R. 1612)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02C amended effective November 30, 1979 (6:24 Md. R. 1918); October 3, 1988 (15:20 Md. R. 2333)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02C repealed effective January 9, 1989 (15:27 Md. R. 3126)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02D amended effective May 6, 1985 (12:9 Md. R. 808); October 3, 1988 (15:20 Md. R. 2333)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02D repealed effective January 9, 1989 (15:27 Md. R. 3126)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03 effective January 12, 1968; amended effective November 30, 1979 (6:24 Md. R. 1918); May 6, 1985 (12:9 Md. R. 808)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03E amended effective August 11, 1978 (5:16 Md. R. 1253)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03E—G amended as an emergency provision effective January 1, 1978 (4:27 Md. R. 2093); adopted permanently effective April 7, 1978 (5:7 Md. R. 520)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03 repealed effective March 6, 1989 (16:4 Md. R. 494)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04 effective July 24, 1969</annotation> <annotation type="History" subtype="Administrative History">Regulation .04C amended effective November 30, 1979 (6:24 Md. R. 1918); May 6, 1985 (12:9 Md. R. 808)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04 repealed effective March 6, 1989 (16:4 Md. R. 494)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05 effective July 24, 1969</annotation> <annotation type="History" subtype="Administrative History">Regulation .05 amended effective August 11, 1978 (5:16 Md. R. 1253); May 6, 1985 (12:9 Md. R. 808)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05 repealed effective March 6, 1989 (16:4 Md. R. 494)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06 effective October 17, 1968</annotation> <annotation type="History" subtype="Administrative History">Regulation .06 repealed effective March 6, 1989 (16:4 Md. R. 494)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07 effective July 24, 1969; repealed effective November 30, 1979 (6:24 Md. R. 1918)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07 adopted effective August 15, 1983 (10:16 Md. R. 1450)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07 repealed effective March 6, 1989 (16:4 Md. R. 494)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08 adopted effective April 7, 1978 (5:7 Md. R. 520)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09 adopted effective May 24, 1982 (9:10 Md. R. 1018)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09 repealed effective August 6, 1990 (17:15 Md. R. 1853)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10 adopted effective May 24, 1982 (9:10 Md. R. 1018)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10A amended effective January 9, 1989 (15:27 Md. R. 3126)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10 repealed effective August 6, 1990 (17:15 Md. R. 1853)</annotation> <annotation type="History" subtype="Administrative History">Regulation .11 adopted effective December 29, 1986 (13:26 Md. R. 2806)</annotation> <annotation type="History" subtype="Administrative History">Regulation .11 amended effective January 14, 1999 (26:1 Md. R. 21)</annotation> <annotation type="History" subtype="Administrative History">Regulation .11B amended effective August 20, 1990 (17:16 Md. R. 1989)</annotation> <annotation type="History" subtype="Administrative History">Annotations:</annotation> <annotation type="History" subtype="Administrative History">COMAR 03.04.01.03E cited in Comptroller v. Shell Oil Co., 65 Md. App. 252 (1985)</annotation> <annotation type="History" subtype="Administrative History">COMAR 03.04.01.03E cited in Ward Europa v. Comptroller</annotation> </annotations> </chapter> <chapter num="02" heading="Individual"> <regulation prefix="Regulation" num=".01" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Day”, for purposes of §B(7) of this regulation, includes any part of a day, provided, however, that a continuous period of 24 hours or less may not constitute more than 1 day.</text> </paragraph> <paragraph num="(2)"> <text>“Dependent” means any individual as defined in §152 of the Internal Revenue Code.</text> </paragraph> <paragraph num="(3)"> <text>“Individual” means a natural person.</text> </paragraph> <paragraph num="(4)"> <text>“Member” means:</text> <paragraph num="(a)"> <text>A shareholder of an S Corporation;</text> </paragraph> <paragraph num="(b)"> <text>A general or limited partner of a partnership, limited partnership, or limited liability partnership;</text> </paragraph> <paragraph num="(c)"> <text>A member of a limited liability company as defined under Corporations and Associations Article, Title 4A, Annotated Code of Maryland, if the limited liability company is taxable as a partnership under §761 of the Internal Revenue Code; or</text> </paragraph> <paragraph num="(d)"> <text>A beneficiary of a business trust.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>“Nonresident” means an individual who is not a resident of this State.</text> </paragraph> <paragraph num="(6)"> <text>“Pass-through entity” means:</text> <paragraph num="(a)"> <text>An S Corporation;</text> </paragraph> <paragraph num="(b)"> <text>A partnership;</text> </paragraph> <paragraph num="(c)"> <text>A limited liability company as defined under Corporations and Associations Article, Title 4A, Annotated Code of Maryland, if the limited liability company is taxable as a partnership under §761 of the Internal Revenue Code; or</text> </paragraph> <paragraph num="(d)"> <text>A business trust that is not taxed as a corporation under this title.</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>Resident.</text> <paragraph num="(a)"> <text>“Resident” means an individual as defined in Tax-General Article, §10-101(k), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(b)"> <text>“Resident” includes an individual who:</text> <paragraph num="(i)"> <text>For more than 6 months of the taxable year maintains a place of abode in this State; and</text> </paragraph> <paragraph num="(ii)"> <text>Spends, in the aggregate, 183 days or more within this State during the taxable year.</text> </paragraph> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Resident Filing Status."> <paragraph num="A."> <text>Except as otherwise provided in this regulation, each resident of this State shall use the same filing status:</text> <paragraph num="(1)"> <text>As used to file their federal income tax return; or</text> </paragraph> <paragraph num="(2)"> <text>As if the individual had been required to file a federal income tax return.</text> </paragraph> </paragraph> <paragraph num="B."> <text>An individual who is single and may be claimed as a dependent on another taxpayer's return shall use the filing status “dependent taxpayer”.</text> </paragraph> <paragraph num="C."> <text>A married couple who files a joint federal income tax return may file separate State income tax returns if:</text> <paragraph num="(1)"> <text>One spouse is a resident and the other spouse is a nonresident;</text> </paragraph> <paragraph num="(2)"> <text>The spouses are domiciled, or maintain principal places of abode, in different counties on the last day of the taxable year;</text> </paragraph> <paragraph num="(3)"> <text>The spouses have different taxable periods; or</text> </paragraph> <paragraph num="(4)"> <text>The Comptroller determines circumstances warrant.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Nonresident Filing Status."> <paragraph num="A."> <text>An individual who maintains a place of abode in this State for more than 6 months of the taxable year, and is not domiciled in this State, is considered a nonresident if the individual is:</text> <paragraph num="(1)"> <text>An active member of the armed forces;</text> </paragraph> <paragraph num="(2)"> <text>A midshipman of the Naval Academy in Annapolis;</text> </paragraph> <paragraph num="(3)"> <text>A commissioned officer of the United States Public Health Service;</text> </paragraph> <paragraph num="(4)"> <text>A commissioned officer of the National Oceanic and Atmospheric Administration; or</text> </paragraph> <paragraph num="(5)"> <text>The spouse of a servicemember that is an active member of the armed forces, the commissioned corps of the National Oceanic and Atmospheric Administration, or the commissioned corps of the United States Public Health Service, who is present in this State solely to be with the servicemember that is present in this State in compliance with military orders.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Except as otherwise provided in this regulation, each nonresident individual required to file a State income tax return shall:</text> <paragraph num="(1)"> <text>Use the same filing status used to file their federal income tax return; or</text> </paragraph> <paragraph num="(2)"> <text>Use the same filing status as if the individual had been required to file a federal income tax return.</text> </paragraph> </paragraph> <paragraph num="C."> <text>A married couple who files a joint federal income tax return may file separate State income tax returns if:</text> <paragraph num="(1)"> <text>One spouse is a resident and the other spouse is a nonresident;</text> </paragraph> <paragraph num="(2)"> <text>The spouses have different taxable periods; or</text> </paragraph> <paragraph num="(3)"> <text>The Comptroller determines circumstances warrant.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Single Dependent. “Dependent taxpayer” filing status shall be used by each individual who is:</text> <paragraph num="(1)"> <text>Single;</text> </paragraph> <paragraph num="(2)"> <text>Claimed as a dependent by another taxpayer; and</text> </paragraph> <paragraph num="(3)"> <text>Required to file a State income tax return.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Filing Composite Return on Behalf of a Nonresident."> <paragraph num="A."> <text>Who May File.</text> <paragraph num="(1)"> <text>Subject to the provisions under §§B and C of this regulation, a pass-through entity doing business in this State that pays tax on behalf of nonresident members as required under Tax-General Article, §10-102.1(b)(2)(i), Annotated Code of Maryland, may file a composite return on behalf of all or some of its nonresident members.</text> </paragraph> <paragraph num="(2)"> <text>A pass-through entity doing business in this State and electing to pay tax with respect to the distributive or pro rata shares of all members under Tax-General Article, §10-102.1(b)(2)(ii), Annotated Code of Maryland, is not permitted to file a composite return on behalf of any member.</text> </paragraph> <paragraph num="(3)"> <text>Due Date. A composite return shall be filed by the due date for the filing of an information return under COMAR 03.04.07.03A.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Nonresident Qualifications. Nonresident members may not be included in a composite return unless:</text> <paragraph num="(1)"> <text>They are individuals;</text> </paragraph> <paragraph num="(2)"> <text>They elect in writing to the pass-through entity to be included in the composite return;</text> </paragraph> <paragraph num="(3)"> <text>Their only source of income in Maryland is from the pass-through entity filing the composite return;</text> </paragraph> <paragraph num="(4)"> <text>They agree that the Maryland taxable income reported on the composite return shall be taxed at a rate which is the sum of:</text> <paragraph num="(a)"> <text>The top marginal State income tax rate for individuals under Tax-General Article, §10-105(a), Annotated Code of Maryland; and</text> </paragraph> <paragraph num="(b)"> <text>The rate of tax imposed under Tax-General Article, §10-106.1, Annotated Code of Maryland;</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>They agree that the pass-through entity is acting as their agent for the following purposes:</text> <paragraph num="(a)"> <text>Filing an income tax return on their behalf;</text> </paragraph> <paragraph num="(b)"> <text>Receipt of any refund; and</text> </paragraph> <paragraph num="(c)"> <text>Payment of any tax due;</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>They are members of a pass-through entity that pays tax on behalf of nonresident members as required under Tax-General Article, §10-102.1(b)(2)(i), Annotated Code of Maryland; and</text> </paragraph> <paragraph num="(7)"> <text>They have no modifications to income other than the modification required as a result of Maryland's decoupling from the additional depreciation allowance and special 5-year net operating loss carryback provisions that may be claimed on a composite return and, for tax years 2020 and 2021, the subtraction of a coronavirus relief payment under Tax-General Article, §10-207(jj), Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Requirements for Filing.</text> <paragraph num="(1)"> <text>Statement of Verification. The composite return shall contain a statement signed by an authorized official of the pass-through entity verifying that the nonresident individuals included in the return qualify under §B of this regulation.</text> </paragraph> <paragraph num="(2)"> <text>Tax Rate. The Maryland taxable income reported on the composite return shall be taxed at a rate which is the sum of:</text> <paragraph num="(a)"> <text>The top marginal State income tax rate for individuals under Tax-General Article, §10-105(a), Annotated Code of Maryland; and</text> </paragraph> <paragraph num="(b)"> <text>The rate of tax imposed under Tax-General Article, §10-106.1, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The composite return shall contain a schedule which includes:</text> <paragraph num="(a)"> <text>A statement showing the percentage of stock ownership or shares in the pass-through entity of each nonresident member;</text> </paragraph> <paragraph num="(b)"> <text>The total income of the pass-through entity and the amount attributable to Maryland sources;</text> </paragraph> <paragraph num="(c)"> <text>The name, address, and Social Security number or federal identification number of each nonresident member;</text> </paragraph> <paragraph num="(d)"> <text>The filing status of each nonresident member;</text> </paragraph> <paragraph num="(e)"> <text>The distributive income allocable to Maryland for each nonresident member;</text> </paragraph> <paragraph num="(f)"> <text>The allowable exemptions for each nonresident member, which equal the total of allowable exemptions for a resident multiplied by a fraction:</text> <paragraph num="(i)"> <text>The numerator of which is the nonresident taxable income as defined in COMAR 03.04.07.01; and</text> </paragraph> <paragraph num="(ii)"> <text>The denominator of which is the distributive or pro rata share of pass-through entity income as defined in COMAR 03.04.07.01B(2) and (9);</text> </paragraph> </paragraph> <paragraph num="(g)"> <text>The amount of the standard deduction of each nonresident member which equals the maximum standard deduction allowed a resident having the same filing status multiplied by a fraction:</text> <paragraph num="(i)"> <text>The numerator of which is the nonresident taxable income as defined in COMAR 03.04.07.01; and</text> </paragraph> <paragraph num="(ii)"> <text>The denominator of which is the distributive or pro rata share of the pass-through entity income as defined in COMAR 03.04.07.01B(2) and (9);</text> </paragraph> </paragraph> <paragraph num="(h)"> <text>The taxable income of each nonresident member;</text> </paragraph> <paragraph num="(i)"> <text>The income tax liability of each nonresident member using the top marginal State income tax rate for individuals under Tax-General Article, §10-105(a), Annotated Code of Maryland;</text> </paragraph> <paragraph num="(j)"> <text>The additional tax liability of each nonresident member using the tax rate under Tax-General Article, §10-106.1, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(k)"> <text>The amount of taxes paid on behalf of the nonresident member;</text> </paragraph> <paragraph num="(l)"> <text>The balance of tax due which shall be paid in full with the filing of the composite tax return; and</text> </paragraph> <paragraph num="(m)"> <text>The amount of any refund.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Credit for Taxes Paid Other States. Credit for taxes paid other states is not permitted on the composite return.</text> </paragraph> <paragraph num="(5)"> <text>Signature.</text> <paragraph num="(a)"> <text>Partnership. A general partner shall sign the composite return.</text> </paragraph> <paragraph num="(b)"> <text>S Corporation. The president or other authorized officer of the S corporation shall sign the composite return.</text> </paragraph> <paragraph num="(c)"> <text>Limited Liability Company. An authorized member of the limited liability company shall sign the composite return.</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>Effect of Filing a Composite Return. The filing of a composite return on behalf of nonresident members is considered the return of each nonresident member included in the return.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Allocation of Nonresident Business Income."> <paragraph num="A."> <text>Income of a nonresident for personal services rendered partly within and partly without this State shall be determined as follows:</text> <paragraph num="(1)"> <text>Commissions of a traveling salesman or agent which depend directly on sales made are allocated outside this State if the:</text> <paragraph num="(a)"> <text>Sales are outside this State, or</text> </paragraph> <paragraph num="(b)"> <text>Merchandise is delivered to points outside this State;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Compensation other than commissions which depend directly on sales made for service performed partly within and partly outside this State shall be allocated based on the total number of working days employed outside this State compared to all working days employed both within and outside this State.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Nonbusiness income derived from interest, dividends, and annuities is allocable to the nonresident's state of domicile and not to this State.</text> </paragraph> <paragraph num="C."> <text>Income from a business, trade, profession, or occupation carried on partly within and partly outside this State shall be determined by separate accounting when practicable. If separate accounting is not practicable, income allocable outside this State shall be determined by:</text> <paragraph num="(1)"> <text>Percentage allocation which is:</text> <paragraph num="(a)"> <text>The average value of tangible business property outside this State over the average value of all tangible business property multiplied by 100,</text> </paragraph> <paragraph num="(b)"> <text>Business income outside this State over total business income multiplied by 100,</text> </paragraph> <paragraph num="(c)"> <text>The average of the percentages determined in §C(1)(a) and (b) of this regulation, and</text> </paragraph> <paragraph num="(d)"> <text>The average percentage arrived at in §C(1)(c) of this regulation applied to total business income to arrive at income allocable outside this State;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Apportionment of sales as described in COMAR 03.04.03.08; or</text> </paragraph> <paragraph num="(3)"> <text>A method or methods subject to approval by the Comptroller.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Maryland Adjusted Gross Income of a Nonresident Individual."> <paragraph num="A."> <text>The Maryland adjusted gross income of a nonresident individual is the individual's federal adjusted gross income for the taxable year as determined under the Internal Revenue Code with the adjustments described in §§B and C of this regulation.</text> </paragraph> <paragraph num="B."> <text>Additions to Federal Adjusted Gross Income shall be:</text> <paragraph num="(1)"> <text>Wages, salary, or other compensation for services performed in this State which are exempt by federal law or treaty from federal but not State tax on income;</text> </paragraph> <paragraph num="(2)"> <text>Oil percentage depletion allowance as provided for under Tax-General Article, §10-204(e), Annotated Code of Maryland, to the extent attributable to sources in this State;</text> </paragraph> <paragraph num="(3)"> <text>50 percent of the sum of the tax preference items as provided for under Tax-General Article, §10-205(f), to the extent derived from real or tangible personal property located in this State;</text> </paragraph> <paragraph num="(4)"> <text>Amount of the credit claimed under Tax-General Article, §10-702, Annotated Code of Maryland, for wages paid to an employee in an enterprise zone located in this State;</text> </paragraph> <paragraph num="(5)"> <text>Amount of expenses for reforestation or timber stand improvement as provided for under Tax-General Article, §10-205(c); and</text> </paragraph> <paragraph num="(6)"> <text>The amount of any loss or adjustment to income that is:</text> <paragraph num="(a)"> <text>Included in computing federal adjusted gross income; and</text> </paragraph> <paragraph num="(b)"> <text>Not attributable to sources within this State.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Subtractions from Federal Adjusted Gross Income. To the extent included in computing federal adjusted gross income, the following are subtracted from the federal adjusted gross income of a nonresident individual to determine Maryland adjusted gross income:</text> <paragraph num="(1)"> <text>Income derived from:</text> <paragraph num="(a)"> <text>Real or tangible personal property located outside this State;</text> </paragraph> <paragraph num="(b)"> <text>Services performed outside this State;</text> </paragraph> <paragraph num="(c)"> <text>A business, occupation, profession, or trade that is carried on wholly outside this State;</text> </paragraph> <paragraph num="(d)"> <text>That part of a business, occupation, profession, or trade carried on by the individual both within and without this State that is attributable to the business, occupation, profession, or trade carried on outside this State;</text> </paragraph> <paragraph num="(e)"> <text>A pass-through entity that is equal to the member's distributive or pro rata share attributable to the business carried on outside this State;</text> </paragraph> <paragraph num="(f)"> <text>Annuities, pensions, state and local income tax refunds, interest, dividends, or other intangible property except if from:</text> <paragraph num="(i)"> <text>Maryland State lottery prizes or other gambling winnings derived from this State; or</text> </paragraph> <paragraph num="(ii)"> <text>A business, occupation, profession, or trade carried on by the individual in this State;</text> </paragraph> </paragraph> <paragraph num="(g)"> <text>Distributions, to a beneficiary, of accumulated income on which a fiduciary has paid Maryland income tax; and</text> </paragraph> <paragraph num="(h)"> <text>Salary, wages, or other compensation received as:</text> <paragraph num="(i)"> <text>An active member of the armed forces;</text> </paragraph> <paragraph num="(ii)"> <text>A midshipman of the Naval Academy at Annapolis;</text> </paragraph> <paragraph num="(iii)"> <text>A commissioned officer of the United States Public Health Service;</text> </paragraph> <paragraph num="(iv)"> <text>A commissioned officer of the National Oceanic and Atmospheric Administration; or</text> </paragraph> <paragraph num="(v)"> <text>The spouse of a servicemember that is an active member of the armed forces, the commissioned corps of the National Oceanic and Atmospheric Administration, or the commissioned corps of the United States Public Health Service, who is present in this State solely to be with the servicemember that is present in this State in compliance with military orders;</text> </paragraph> </paragraph> </paragraph> <paragraph num="(2)"> <text>Amounts derived from:</text> <paragraph num="(a)"> <text>Adoption expenses as provided for under Tax-General Article, §10-208(b);</text> </paragraph> <paragraph num="(b)"> <text>Blindness-related expenses as provided for under Tax-General Article, §10-208(c);</text> </paragraph> <paragraph num="(c)"> <text>Enhanced agricultural management equipment expenses as provided for under Tax-General Article, §10-208(d), to the extent that the expenses are incurred for conservation of land located in this State;</text> </paragraph> <paragraph num="(d)"> <text>Dependent care and household expenses as provided for under Tax-General Article, §10-208(e), to the extent the expenses are attributable to income received from services performed or business carried on within this State;</text> </paragraph> <paragraph num="(e)"> <text>Value of fringe benefits attributable to an employer-provided police or fire department vehicle as provided for under Tax-General Article, §10-207(d);</text> </paragraph> <paragraph num="(f)"> <text>Volunteer travel expenses as provided for under Tax-General Article, §10-208(j);</text> </paragraph> <paragraph num="(g)"> <text>Reforestation or timber stand expenses as provided for under Tax-General Article, §10-208(i), to the extent incurred for land located in this State;</text> </paragraph> <paragraph num="(h)"> <text>Wage expenses for targeted jobs as provided for under Tax-General Article, §10-208(k), to the extent that the wages are paid for services performed in Maryland;</text> </paragraph> <paragraph num="(i)"> <text>The amount by which the cost difference between a conventional on-site sewage disposal system and a system that utilizes nitrogen removal technology exceeds the amount of assistance the individual receives from the Department of the Environment under the Environment Article, §9-1108, Annotated Code of Maryland; and</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The value of:</text> <paragraph num="(a)"> <text>Donated artwork to the extent provided for under Tax-General Article, §10-208(f); and</text> </paragraph> <paragraph num="(b)"> <text>Donated farm products as provided for under Tax-General Article, §10-208(g), to the extent that the products are donated to a gleaning cooperative located in this State.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>A net operating loss generated when an individual is not subject to Maryland income tax law may not be allowed as a deduction to offset the Maryland income from any year when that individual is subject to Maryland income tax law.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Exemptions Allowed a Nonresident."> <text>Whether or not a federal return is filed a nonresident may claim the personal and dependent exemptions provided for under Tax-General Article, §10-219, Annotated Code of Maryland.</text> </regulation> <regulation prefix="Regulation" num=".08" heading="Deductions Allowed a Nonresident."> <paragraph num="A."> <text>A nonresident individual may use the standard deduction as provided for under Tax-General Article, §10-219, Annotated Code of Maryland, or itemize deductions as provided for under Tax-General Article, §§10-218 and 10-219, Annotated Code of Maryland.</text> </paragraph> <paragraph num="B."> <text>Standard Deduction.</text> <paragraph num="(1)"> <text>A nonresident individual may elect to use the standard deduction whether or not the individual itemizes deductions on the individual's federal income tax return in determining federal taxable income.</text> </paragraph> <paragraph num="(2)"> <text>Limitation. A nonresident may claim the standard deduction on the Maryland return in the amount computed by multiplying the appropriate standard deduction by a fraction:</text> <paragraph num="(a)"> <text>The numerator of which is Maryland adjusted gross income; and</text> </paragraph> <paragraph num="(b)"> <text>The denominator of which is federal adjusted gross income.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Itemized Deductions.</text> <paragraph num="(1)"> <text>Only an individual who itemizes deductions on the federal income tax return may elect to itemize deductions on the individual's Maryland income tax return.</text> </paragraph> <paragraph num="(2)"> <text>Limitation. A nonresident may claim itemized deductions on the Maryland income tax return:</text> <paragraph num="(a)"> <text>In the amount computed by multiplying federal itemized deductions, reduced by the amount claimed as taxes on income paid to a state or political subdivision of a state, by a fraction:</text> <paragraph num="(i)"> <text>The numerator of which is Maryland adjusted gross income, and</text> </paragraph> <paragraph num="(ii)"> <text>The denominator of which is federal adjusted gross income; or</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Actual itemized deductions verifiable by the individual as paid in Maryland.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Maryland Taxable Income of a Nonresident."> <text>The Maryland taxable income of a nonresident individual is the individual's Maryland adjusted gross income less the:</text> <paragraph num="A."> <text>Exemptions allowed a nonresident under Regulation .07 of this chapter; and</text> </paragraph> <paragraph num="B."> <text>Deductions allowed a nonresident under Regulation .08 of this chapter.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Income Tax Deficiency Assessment."> <paragraph num="A."> <text>When an income tax deficiency is developed from an audit of a taxpayer's return, the Comptroller may make an assessment under Tax-General Article, §13-401, Annotated Code of Maryland.</text> </paragraph> <paragraph num="B."> <text>A taxpayer may appeal an assessment by applying for a hearing as provided under COMAR 03.01.01.04.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Reporting Federal Tax Adjustments."> <paragraph num="A."> <text>When the amount of a taxpayer's federal net taxable income reported on the federal return is increased by the Internal Revenue Service (IRS) or any change is required by the IRS in the method of reporting, accounting for, or treatment of particular income, the taxpayer shall report to the Revenue Administration Division the increase of federal net taxable income or the nature of the change within 90 days after the IRS has issued its final determination.</text> </paragraph> <paragraph num="B."> <text>A disposition of an assessment by the IRS by way of abatement, settlement, or compromise may not be construed as an abatement, settlement, or compromise of the taxpayer's liability to this State.</text> </paragraph> <paragraph num="C."> <text>The report filed with the Comptroller's Office shall consist of:</text> <paragraph num="(1)"> <text>A complete copy of the federal audit including any exhibits attached to it; and</text> </paragraph> <paragraph num="(2)"> <text>The taxpayer's acceptance of the IRS final determination or the taxpayer's grounds for objection to the IRS determination.</text> </paragraph> </paragraph> <paragraph num="D."> <text>If the taxpayer fails to file the report within 90 days, the Comptroller may make an assessment under Tax-General Article, §13-1101(b), Annotated Code of Maryland.</text> </paragraph> <paragraph num="E."> <text>If a taxpayer files a timely report, the Comptroller shall make an assessment within 1 year after receipt of the report as provided by Tax-General Article, §13-1101(c), Annotated Code of Maryland.</text> </paragraph> <paragraph num="F."> <text>After receipt of the federal audit report, the Comptroller shall re-compute the amount of tax due on the Maryland return and mail a report of income tax audit changes to the taxpayer's last known address.</text> </paragraph> <paragraph num="G."> <text>A taxpayer may appeal an assessment by applying for a hearing as provided under COMAR 03.01.01.04.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".12" heading="Limitation for Part-Year Resident."> <text>Unless the Comptroller requires or allows another method, for taxable years beginning after December 31, 1992, an individual who is a resident for only part of the taxable year shall prorate the deduction for exemptions under Tax-General Article, §10-211 or 10-212, Annotated Code of Maryland, and the standard deduction under Tax-General Article, §10-217, or itemized deductions under Tax-General Article, §10-218, by using a fraction, the:</text> <paragraph num="A."> <text>Numerator of which is the individual's Maryland adjusted gross income; and</text> </paragraph> <paragraph num="B."> <text>Denominator of which is the individual's federal adjusted gross income.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".13" heading="Income Tax Checkoffs."> <paragraph num="A."> <text>An individual taxpayer may designate a contribution on the taxpayer's return to be credited towards the:</text> <paragraph num="(1)"> <text>Chesapeake Bay and Endangered Species Fund, as established under Natural Resources Article, §1-701 et seq., Annotated Code of Maryland;</text> </paragraph> <paragraph num="(2)"> <text>Developmental Disabilities Waiting List Equity Fund, as established under Health-General Article, §7-205, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(3)"> <text>Maryland Cancer Fund, as established under Health-General Article, §20-117, Annotated Code of Maryland; or</text> </paragraph> <paragraph num="(4)"> <text>Maryland Fair Campaign Financing Fund, as established under Election Law Article, §15-103, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="B."> <text>A taxpayer may direct that the contribution be made as either:</text> <paragraph num="(1)"> <text>An addition to the tax owed by the taxpayer; or</text> </paragraph> <paragraph num="(2)"> <text>A reduction of the refund due the taxpayer.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Amount of Contribution.</text> <paragraph num="(1)"> <text>A taxpayer may designate a contribution which is greater than or less than the refund due on the return.</text> </paragraph> <paragraph num="(2)"> <text>If a taxpayer designates a contribution which is less than the refund due, then the taxpayer's designation shall be given effect up to the full amount of the designated contribution, with the balance of the tax refund to be processed according to the procedures generally applicable to refunds.</text> </paragraph> <paragraph num="(3)"> <text>If the taxpayer's designated contribution is greater than the refund due, then:</text> <paragraph num="(a)"> <text>If one fund is designated, the designated contribution shall be given effect, up to the full amount of the refund plus any additional payment made with the filing of the return, less any reduction for taxes due;</text> </paragraph> <paragraph num="(b)"> <text>If more than one fund is designated, then the full amount of the refund, plus payments less any reductions for taxes, shall be divided between the funds with each fund receiving a proportionate amount of the contribution.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".14" heading="Extension of Time to File."> <paragraph num="A."> <text>Except as provided in §D of this regulation, an individual who is unable to file a personal income tax return by the due date shall file an Application for Extension of Time to File Maryland Income Tax Return (Form 502E).</text> </paragraph> <paragraph num="B."> <text>The application:</text> <paragraph num="(1)"> <text>Shall be filed by the original due date of the return; and</text> </paragraph> <paragraph num="(2)"> <text>Extends only the time allowed to file the income tax return.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Full payment of the expected tax due is required with the filing of the application.</text> </paragraph> <paragraph num="D."> <text>An individual is not required to file an Application for Extension of Time to File Maryland Income Tax Return (Form 502E) if the individual:</text> <paragraph num="(1)"> <text>Expects to owe no tax for the taxable year; and</text> </paragraph> <paragraph num="(2)"> <text>Has filed federal Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return, with the IRS.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".15" heading="Maryland Senator Edward J. Kasemeyer College Investment Plan."> <paragraph num="A."> <text>Definitions.</text> <paragraph num="(1)"> <text>In this regulation, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="(2)"> <text>Terms Defined.</text> <paragraph num="(a)"> <text>“Account holder” means the person who establishes an investment account on behalf of a qualified designated beneficiary.</text> </paragraph> <paragraph num="(b)"> <text>“Contributor” means an individual who contributes to a Maryland Senator Edward J. Kasemeyer Prepaid College Trust Account under Education Article, §18-1903, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(c)"> <text>Investment Account.</text> <paragraph num="(i)"> <text>“Investment account” means an account established by an account holder under Education Article, Title 18, Subtitle 19A, Annotated Code of Maryland, on behalf of a qualified designated beneficiary for the purpose of applying distributions toward qualified higher education expenses at eligible educational institutions.</text> </paragraph> <paragraph num="(ii)"> <text>“Investment account” may include more than one investment option.</text> </paragraph> </paragraph> <paragraph num="(d)"> <text>“Investment option” means the investment portfolios available to account holders in the Maryland Senator Edward J. Kasemeyer College Investment Plan.</text> </paragraph> <paragraph num="(e)"> <text>“Qualified designated beneficiary” has the meaning stated in §529(e) of the Internal Revenue Code.</text> </paragraph> <paragraph num="(f)"> <text>“Qualified higher education expenses” has the meaning stated in §529(e) of the Internal Revenue Code.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Subtraction Modification.</text> <paragraph num="(1)"> <text>Regardless of the number of investment options included in an investment account:</text> <paragraph num="(a)"> <text>All contributions by an account holder or contributor on behalf of one qualified designated beneficiary constitute one investment account; and</text> </paragraph> <paragraph num="(b)"> <text>The subtraction modification in Tax-General Article, §10-208(o), Annotated Code of Maryland, is limited to $2,500 per year per qualified designated beneficiary.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>For a married couple, if each spouse makes a contribution of at least $2,500 to an investment account for the same qualified designated beneficiary, and the couple files a joint Maryland income tax return, the subtraction modification for the couple on the joint return is $5,000.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Addition Modification.</text> <paragraph num="(1)"> <text>An account holder is required to add to federal adjusted gross income in computing Maryland taxable income any distribution received from the Maryland Senator Edward J. Kasemeyer College Investment Plan in the taxable year that is not used on behalf of the qualified designated beneficiary for qualified higher education expenses.</text> </paragraph> <paragraph num="(2)"> <text>The addition required in §C(1) of this regulation shall be reduced by any amount included in the account holder's federal adjusted gross income as a result of the distribution.</text> </paragraph> <paragraph num="(3)"> <text>The cumulative amount of the addition required under this section for the taxable year and all prior taxable years may not exceed the cumulative amount allowed as a subtraction under §B of this regulation and Tax-General Article, §10-208(o), Annotated Code of Maryland, for the taxable year and all prior taxable years for contributions made by an account holder to an investment account under which the distribution is received.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".16" heading="Limitation for Resident."> <paragraph num="A."> <text>An individual shall itemize deductions on the individual's federal income tax return in order to elect to itemize deductions on the individual's State income tax return.</text> </paragraph> <paragraph num="B."> <text>An individual who does not elect to itemize deductions may claim the standard deduction.</text> </paragraph> <paragraph num="C."> <text>Resident with Nonresident Spouse.</text> <paragraph num="(1)"> <text>If a married couple files a joint federal income tax return but elect to file separate income tax returns pursuant to Regulation .02 of this chapter, or if the nonresident spouse is not required to file an income tax return, then the resident individual may, unless the Comptroller requires or allows another method:</text> <paragraph num="(a)"> <text>Claim the standard deduction;</text> </paragraph> <paragraph num="(b)"> <text>Claim:</text> <paragraph num="(i)"> <text>Only the individual's federal itemized deductions, from among those deductions claimed on the federal return, as limited under Tax-General Article, §10-218(b), Annotated Code of Maryland, that are attributable exclusively to the individual; and</text> </paragraph> <paragraph num="(ii)"> <text>From among those federal itemized deductions of the individual not claimed under §C(1)(b)(i) of this regulation, a prorated amount of the itemized deductions in accordance with §C(1)(c) of this regulation; or</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>Claim a prorated amount of the itemized deductions claimed on the federal income tax return by using a fraction, the:</text> <paragraph num="(i)"> <text>Numerator of which is the individual's Maryland adjusted gross income; and</text> </paragraph> <paragraph num="(ii)"> <text>Denominator of which is the married couple’s joint federal adjusted gross income.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(2)"> <text>For purposes of allocating itemized deductions under §C(1)(b)(i) of this regulation, “attributable exclusively” means that:</text> <paragraph num="(a)"> <text>The individual is solely responsible for the payment of an expense claimed as an itemized deduction, including compliance with a valid court order or separation agreement; or</text> </paragraph> <paragraph num="(b)"> <text>The individual jointly responsible for the payment of an expense claimed as an itemized deduction can demonstrate payment of the full amount of the itemized deduction with funds that are not attributable, in whole or in part, to the other jointly responsible individual.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".17" heading="Donations to Diaper Banks and Other Charitable Entities."> <paragraph num="A."> <text>Definitions.</text> <paragraph num="(1)"> <text>In this regulation, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="(2)"> <text>Terms Defined.</text> <paragraph num="(a)"> <text>“Diaper bank” means a nonprofit organization located in the State that:</text> <paragraph num="(i)"> <text>Is qualified as tax exempt under the Internal Revenue Code, §501(c)(3);</text> </paragraph> <paragraph num="(ii)"> <text>Is established and operating primarily for the purpose of collecting or purchasing disposable diapers or other hygiene products for infants or children; and</text> </paragraph> <paragraph num="(iii)"> <text>Distributes those diapers or hygiene products through schools, health care facilities, government agencies, or other nonprofit entities for eventual distribution to individuals free of charge.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>“Donation” means an irrevocable gift of:</text> <paragraph num="(i)"> <text>Disposable diapers, other hygiene products for infants or children, or feminine personal hygiene products; or</text> </paragraph> <paragraph num="(ii)"> <text>Cash that is specifically designated for the purchase of disposable diapers, other hygiene products for infants or children, or feminine personal hygiene products.</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>“Feminine personal hygiene products” means sanitary pads, tampons, menstrual sponges, menstrual cups, or other similar feminine hygiene products, whether reusable or disposable.</text> </paragraph> <paragraph num="(d)"> <text>“Qualified charitable entity” means a diaper bank, homeless shelter, domestic violence shelter, religious organization, or other charitable organization that distributes diapers, other hygiene products for infants or children, or feminine personal hygiene products, and that is registered with the Comptroller as a distributor of disposable diapers, other hygiene products for infants or children, or feminine personal hygiene products as described in §C of this regulation.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Subtraction for Individual Taxpayers.</text> <paragraph num="(1)"> <text>For any taxable year beginning after December 31, 2020, but before January 1, 2024, an individual may subtract up to $1,000 of donations made by the taxpayer during the taxable year to a qualified charitable entity from federal adjusted gross income to determine Maryland adjusted gross income.</text> </paragraph> <paragraph num="(2)"> <text>To claim the subtraction under §B(1) of this regulation, the taxpayer shall file with the income tax return on which the subtraction modification is taken a statement with the following information:</text> <paragraph num="(a)"> <text>The name of each qualified charitable entity to which a donation was made;</text> </paragraph> <paragraph num="(b)"> <text>The value of the donation to each qualified charitable entity identified in §B(2)(a) of this regulation, which the Comptroller may verify with the qualified charitable entity; and</text> </paragraph> <paragraph num="(c)"> <text>Any other information that the Comptroller requires.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Qualified Charitable Entities.</text> <paragraph num="(1)"> <text>In order to register with the Comptroller as a qualified charitable entity, an entity shall:</text> <paragraph num="(a)"> <text>Submit an application in the form and manner prescribed by the Comptroller;</text> </paragraph> <paragraph num="(b)"> <text>Submit with the application required under §C(1)(a) of this regulation the following documents:</text> <paragraph num="(i)"> <text>The entity’s organizing instrument, such as its articles of incorporation;</text> </paragraph> <paragraph num="(ii)"> <text>The entity’s current operating instrument, such as its by-laws;</text> </paragraph> <paragraph num="(iii)"> <text>The entity’s determination letter from the Internal Revenue Service designating the entity as a §501(c)(3) charitable organization; and</text> </paragraph> <paragraph num="(iv)"> <text>Certification that the entity is in good standing;</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>Operate in compliance with all applicable federal, State, and local laws;</text> </paragraph> <paragraph num="(d)"> <text>Be registered as a charity with the Maryland Secretary of State; and</text> </paragraph> <paragraph num="(e)"> <text>Provide additional documentation as required by the Comptroller.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Upon request by a donor, a qualified charitable entity shall issue to the donor a receipt indicating:</text> <paragraph num="(a)"> <text>For a cash donation, the amount donated that is specifically designated for the purchase of disposable diapers, other hygiene products for infants or children, or feminine personal hygiene products;</text> </paragraph> <paragraph num="(b)"> <text>For a noncash donation, a description of the noncash contribution;</text> </paragraph> <paragraph num="(c)"> <text>The name of the organization;</text> </paragraph> <paragraph num="(d)"> <text>A statement that no goods or services were provided by the organization, if that is the case;</text> </paragraph> <paragraph num="(e)"> <text>A description and good faith estimate of the value of goods or services, if any, the organization provided in return for the contribution;</text> </paragraph> <paragraph num="(f)"> <text>A statement that goods or services, if any, that the organization provided in return for the contribution consisted entirely of intangible religious benefits, if that was the case; and</text> </paragraph> <paragraph num="(g)"> <text>The date of the donation.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>When the value of a donation equals or exceeds $250, the donor shall obtain and keep in their records a receipt from the qualified charitable entity as described in §C(2) of this regulation.</text> </paragraph> <paragraph num="(4)"> <text>A qualified charitable entity shall provide annually to the Comptroller by January 31 for the prior tax year:</text> <paragraph num="(a)"> <text>A list of donors from whom the charity has received donations; and</text> </paragraph> <paragraph num="(b)"> <text>To the extent available, the value of each donor’s donation.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".18" heading="Subtraction for Contributions to First-Time Homebuyer Savings Accounts."> <paragraph num="A."> <text>Definitions.</text> <paragraph num="(1)"> <text>In this regulation, the following terms have the meaning indicated.</text> </paragraph> <paragraph num="(2)"> <text>Terms Defined.</text> <paragraph num="(a)"> <text>“Account holder” means a first-time homebuyer who establishes a first-time homebuyer savings account.</text> </paragraph> <paragraph num="(b)"> <text>“Allowable closing costs” means a disbursement listed on a settlement statement for the purchase of a home in the State by an account holder.</text> </paragraph> <paragraph num="(c)"> <text>“Eligible costs” means the down payment and allowable closing costs for the purchase of a home in the State by an account holder.</text> </paragraph> <paragraph num="(d)"> <text>“Financial institution” has the meaning stated in Financial Institutions Article, §1-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(e)"> <text>“First-time homebuyer” means an individual who is a resident of the State and who has not owned or purchased, either individually or jointly, a home in the State in the last 7 years.</text> </paragraph> <paragraph num="(f)"> <text>“First-time homebuyer savings account” or “account” means an account with a financial institution that an account holder designates as a first-time homebuyer savings account on the account holder’s Maryland income tax return for taxable year 2021 or any following taxable year and that is established for the sole purpose of paying or reimbursing eligible costs for the purchase of a home in the State by the account holder.</text> </paragraph> <paragraph num="(g)"> <text>“Home” means a single-family residential real property, including a mobile home as defined in Real Property Article, §8A-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(h)"> <text>“Settlement statement” means the statement of receipts and disbursements for a transaction related to real estate, including a statement prescribed under the Real Estate Settlement Procedures Act of 1974, 12 U.S.C. §§2601—2617 and 12 CFR 1024.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Availability of Subtraction.</text> <paragraph num="(1)"> <text>Subject to the limitations in §B(2) of this regulation, the following amounts are allowed as a subtraction from the federal adjusted gross income to determine Maryland adjusted gross income:</text> <paragraph num="(a)"> <text>Up to $5,000 of the amount contributed by an account holder to a first-time homebuyer savings account during the taxable year; and</text> </paragraph> <paragraph num="(b)"> <text>The earnings, including interest and other income on the principal, from the account during the taxable year.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Limitations.</text> <paragraph num="(a)"> <text>An account holder may claim the subtraction under §B(1) of this regulation:</text> <paragraph num="(i)"> <text>For a period not to exceed 10 years;</text> </paragraph> <paragraph num="(ii)"> <text>For total earnings not to exceed $50,000 during the 10-year period; and</text> </paragraph> <paragraph num="(iii)"> <text>Except as provided for in §D(2) and (3) of this regulation, if the principal and earnings of the account remain in the account until a withdrawal is made for eligible costs related to the purchase of a home by the account holder.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>An account holder may not be the account holder of more than one account.</text> </paragraph> <paragraph num="(c)"> <text>The account holder shall use the funds in the account for eligible costs related to the purchase of a home within 15 years following the date on which the account was established.</text> </paragraph> <paragraph num="(d)"> <text>Any funds in the account for which a subtraction was claimed and not expended on eligible costs by December 31 of the last year of the 15-year period under §B(2)(c) of this regulation shall be subject to taxation as ordinary income.</text> </paragraph> <paragraph num="(e)"> <text>A person other than the account holder who transfers money to the account is not entitled to the subtraction.</text> </paragraph> <paragraph num="(f)"> <text>The subtraction is available in all taxable years beginning after December 31, 2020.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>An individual may jointly establish an account with another person if the joint account holders are both first-time homebuyers and file a joint State income tax return.</text> </paragraph> <paragraph num="(4)"> <text>Joint Returns.</text> <paragraph num="(a)"> <text>Each spouse on a joint return who is the sole account holder of a first-time homebuyer savings account may claim up to the full amount of the subtraction under §B(1) of this regulation.</text> </paragraph> <paragraph num="(b)"> <text>The amount claimed by each spouse is limited to their:</text> <paragraph num="(i)"> <text>Contributions to the account on which they are the account holder; and</text> </paragraph> <paragraph num="(ii)"> <text>Earnings on the account on which they are the account holder.</text> </paragraph> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Claiming the Subtraction.</text> <paragraph num="(1)"> <text>An account holder claiming a subtraction shall file with the income tax return on which the subtraction is claimed, and each subsequent year, whether or not the subtraction is claimed in each subsequent year, until the funds are used for eligible costs, a list of transactions for the account during the taxable year.</text> </paragraph> <paragraph num="(2)"> <text>On withdrawal of funds from the account, submit to the Comptroller a detailed account of the eligible costs toward which the account funds were applied and a statement of the amount of funds remaining in the account, if any.</text> </paragraph> <paragraph num="(3)"> <text>The detailed account of the eligible costs described in §C(2) of this regulation shall include:</text> <paragraph num="(a)"> <text>Copies of statements provided by the account holder’s financial institution; and</text> </paragraph> <paragraph num="(b)"> <text>The settlement statement related to the purchase of the home in the State by the account holder.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>Withdrawal for Purposes Other than Eligible Costs.</text> <paragraph num="(1)"> <text>Except as authorized under §D(2)(a) and (3) of this regulation, if the account holder withdraws any funds for which a subtraction has been claimed from the account for a purpose other than eligible costs for the purchase of a home:</text> <paragraph num="(a)"> <text>The funds shall be taxed as ordinary income of the account holder for the tax year in which they were withdrawn; and</text> </paragraph> <paragraph num="(b)"> <text>The account holder shall pay a penalty to the State equal to 10 percent of the amount withdrawn.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Rollovers.</text> <paragraph num="(a)"> <text>An account holder may withdraw money from the account and deposit the money in a new first-time homebuyer savings account held by a different financial institution or the same financial institution.</text> </paragraph> <paragraph num="(b)"> <text>An account holder who withdraws funds from an account but does not deposit the funds in a new first-time homebuyer savings account within 60 days of withdrawal shall be subject to the tax and penalty described in §D(1) of this regulation.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>A disbursement of any assets of a first-time homebuyer savings account under a filing by an account holder for protection under the United States Bankruptcy Code, 11 U.S.C. §§101—1330, does not subject the account holder to the liabilities described in §D(1) of this regulation.</text> </paragraph> <paragraph num="(4)"> <text>A use of the account funds to pay a financial institution’s administrative costs is not be considered a withdrawal from the account subject to the provisions of §D(1) of this regulation if the administrative costs:</text> <paragraph num="(a)"> <text>Are disclosed by the financial institution, in writing, to the account holder at the time the account is opened; and</text> </paragraph> <paragraph num="(b)"> <text>Do not inure to the benefit of the account holder.</text> </paragraph> </paragraph> </paragraph> </regulation> <annotations> <annotation type="Authority">Tax-General Article, §§2-103, 10-102.1, 10-208, and 10-823, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date:</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.05 adopted as an emergency provision effective November 3, 1980 (7:23 Md. R. 2159); adopted permanently effective March 13, 1981 (8:4 Md. R. 337)</annotation> <annotation type="History" subtype="Administrative History">Regulations .01E—H, .02B—I, .04C, and .05A—D amended effective September 26, 1983 (10:19 Md. R. 1689)</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.05, Tax Refund Intercept Program, repealed effective October 3, 1988 (15:20 Md. R. 2333)</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.11, Individual, adopted effective January 9, 1989 (15:27 Md. R. 3126)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 amended effective March 29, 1993 (20:6 Md. R. 579); January 24, 2000 (27:1 Md. R. 74)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01B amended effective October 9, 2006 (33:20 Md. R. 1612); February 9, 2009 (36:3 Md. R. 207)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02 amended effective October 12, 1992 (19:20 Md. R. 1813)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02A amended and C adopted effective November 20, 1994 (21:23 Md. R. 1931)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02C amended effective March 31, 2014 (41:6 Md. R. 377)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03 amended effective October 12, 1992 (19:20 Md. R. 1813); November 20, 1994 (21:23 Md. R. 1931)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03A amended effective March 21, 2011 (38:6 Md. R. 393); July 8, 2013 (40:13 Md. R. 1073)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03C amended effective March 31, 2014 (41:6 Md. R. 377)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04 repealed and new Regulation .04 adopted effective January 20, 1992 (19:1 Md. R. 23)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04 amended effective May 2, 2022 (49:9 Md. R. 529)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04A amended effective October 9, 2006 (33:20 Md. R. 1612)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04B amended effective October 9, 2006 (33:20 Md. R. 1612); February 9, 2009 (36:3 Md. R. 207)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04C amended effective March 29, 1993 (20:6 Md. R. 579); January 14, 1999 (26:1 Md. R. 21); October 9, 2006 (33:20 Md. R. 1612); February 9, 2009 (36:3 Md. R. 207)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06 amended effective August 20, 1990 (17:16 Md. R. 1989); October 12, 1992 (19:20 Md. R. 1813); December 28, 1998 (25:26 Md. R. 1919); January 14, 1999 (26:1 Md. R. 21)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06C amended effective October 9, 2006 (33:20 Md. R. 1612); April 19, 2010 (37:8 Md. R. 614); March 21, 2011 (38:6 Md. R. 393); April 30, 2012 (39:8 Md. R. 533); March 31, 2014 (41:6 Md. R. 377)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06D adopted effective October 22, 2007 (34:21 Md. R. 1913)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06D amended effective May 2, 2022 (49:9 Md. R. 529)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07 amended effective October 12, 1992 (19:20 Md. R. 1813)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07A amended effective August 20, 1990 (17:16 Md. R. 1989)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08 amended effective October 12, 1992 (19:20 Md. R. 1813)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08B amended effective October 9, 2006 (33:20 Md. R. 1612)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10 repealed and new Regulation .10 adopted effective January 14, 1999 (26:1 Md. R. 21)</annotation> <annotation type="History" subtype="Administrative History">Regulation .11A amended effective April 28, 2014 (41:8 Md. R. 469)</annotation> <annotation type="History" subtype="Administrative History">Regulation .11A, G amended effective January 14, 1999 (26:1 Md. R. 21)</annotation> <annotation type="History" subtype="Administrative History">Regulation .12 adopted effective October 25, 1993 (20:21 Md. R. 1653)</annotation> <annotation type="History" subtype="Administrative History">Regulation .13 adopted effective December 18, 1995 (22:25 Md. R. 1961)</annotation> <annotation type="History" subtype="Administrative History">Regulation .13 amended effective March 21, 2011 (38:6 Md. R. 393)</annotation> <annotation type="History" subtype="Administrative History">Regulation .13A amended effective October 9, 2006 (33:20 Md. R. 1612); February 9, 2009 (36:3 Md. R. 207); May 2, 2022 (49:9 Md. R. 529)</annotation> <annotation type="History" subtype="Administrative History">Regulation .13D amended effective February 9, 2009 (36:3 Md. R. 207)</annotation> <annotation type="History" subtype="Administrative History">Regulation .14 adopted effective December 28, 1998 (25:26 Md. R. 1919)</annotation> <annotation type="History" subtype="Administrative History">Regulation .15 adopted effective December 23, 2002 (29:25 Md. R. 1981)</annotation> <annotation type="History" subtype="Administrative History">Regulation .15 amended effective February 9, 2009 (36:3 Md. R. 207); May 2, 2022 (49:9 Md. R. 529)</annotation> <annotation type="History" subtype="Administrative History">Regulation .15B amended effective March 31, 2014 (41:6 Md. R. 377)</annotation> <annotation type="History" subtype="Administrative History">Regulation .16 adopted effective April 25, 2005 (32:8 Md. R. 741)</annotation> <annotation type="History" subtype="Administrative History">Regulation .16C amended effective March 31, 2014 (41:6 Md. R. 377)</annotation> <annotation type="History" subtype="Administrative History">Regulation .17 adopted effective March 21, 2022 (49:6 Md. R. 404)</annotation> <annotation type="History" subtype="Administrative History">Regulation .18 adopted effective March 21, 2022 (49:6 Md. R. 404)</annotation> </annotations> </chapter> <chapter num="03" heading="Corporations"> <regulation prefix="Regulation" num=".01" heading="Scope."> <paragraph num="A."> <text>This chapter provides specific guidance to all corporate entities subject to the Maryland income tax laws.</text> </paragraph> <paragraph num="B."> <text>COMAR 03.04.08 applies to banking and similar institutions as defined in that chapter. Corporations not coming within that definition, including subsidiaries or affiliates of banking and similar institutions, shall apportion their income between Maryland and other states as required by applicable regulations and administrative releases of the Comptroller.</text> </paragraph> <paragraph num="C."> <text>Banking and nonbanking institutions are required to file a Maryland corporate income tax return if they are engaged in or conducting business in this State. No change is intended by these regulations in existing income tax law or practice with respect to the level of activity sufficient to require the filing of an income tax return, or the apportionment of income to this State.</text> </paragraph> <paragraph num="D."> <text>Banking and nonbanking institutions may be required to use a modified apportionment formula under the authority of COMAR 03.04.08.03C if a banking institution, and of Regulation .08E of this chapter if a nonbanking institution.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Allocation” means the assignment of income to a particular state.</text> </paragraph> <paragraph num="(2)"> <text>“Apportionment” means the allocation of income between states by the use of a formula.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Corporations Required to File."> <paragraph num="A."> <text>A corporation, not expressly exempt, having any income allocable to this State, shall file a Maryland corporation income tax return even though it has no Maryland taxable income.</text> </paragraph> <paragraph num="B."> <text>Special Requirements. Special requirements apply to the following organizations:</text> <paragraph num="(1)"> <text>Affiliated corporations which are included in a consolidated federal return shall file separate Maryland returns, and each separate corporation shall report its taxable income without regard to any consolidation for federal income tax purposes;</text> </paragraph> <paragraph num="(2)"> <text>Real estate investment trusts which qualify as such under the Internal Revenue Code shall be taxable in Maryland to the same extent they are taxable under federal law;</text> </paragraph> <paragraph num="(3)"> <text>S corporations allowed Subchapter S filing status under the Internal Revenue Code shall file a corporate income tax return to:</text> <paragraph num="(a)"> <text>Report pass-through items to shareholders, and</text> </paragraph> <paragraph num="(b)"> <text>Pay tax on income taxable at the corporate level;</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Corporate partners of partnerships shall report their share of partnership income or loss on the corporate return;</text> </paragraph> <paragraph num="(5)"> <text>Corporations exempt from taxation under Internal Revenue Code, §501, with unrelated business taxable income shall file a corporate income tax return to report income to the extent taxable for federal purposes;</text> </paragraph> <paragraph num="(6)"> <text>Those institutions set forth in Tax-General Article, §8-101(c)(2)(vi), Annotated Code of Maryland, are subject to the following:</text> <paragraph num="(a)"> <text>The provisions of this chapter, with the exception of Regulation .08 of this chapter, and</text> </paragraph> <paragraph num="(b)"> <text>The provisions of COMAR 03.04.08.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Organizations Exempt from Filing Corporation Income Tax Returns. The following organizations are exempt from filing corporation income tax returns:</text> <paragraph num="(1)"> <text>Insurance companies within the meaning of Insurance Article, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(2)"> <text>Common trust funds as defined in Financial Institutions Article, §3-501(b), Annotated Code of Maryland; and</text> </paragraph> <paragraph num="(3)"> <text>Nonprofit organizations exempt from federal income tax under the Internal Revenue Code, §501(c).</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Filing of Returns."> <paragraph num="A."> <text>A corporation shall file a corporation income tax return by the 15th day of the 4th month following the end of the tax year or period. The return shall be filed with a copy of the federal return for the corresponding tax year or period.</text> </paragraph> <paragraph num="B."> <text>Certain organizations that are afforded a later due date for filing federal returns under the Internal Revenue Code shall be afforded the same later due date for filing Maryland income tax returns.</text> </paragraph> <paragraph num="C."> <text>Extension of Time to File.</text> <paragraph num="(1)"> <text>A corporation unable to file by the due date shall file an Application for Extension to File Corporation Income Tax Return (Form 500E) to be granted an automatic extension of up to 7 months.</text> </paragraph> <paragraph num="(2)"> <text>The application shall be filed by the original due date and extends only the time allowed to file the income tax return.</text> </paragraph> <paragraph num="(3)"> <text>Full payment of the expected tax due is required with the application.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Signing of Returns. A return shall be signed by a duly authorized officer of the corporation and the tax return preparer if the preparer is other than an employee or officer of the corporation.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Computing the Tax."> <paragraph num="A."> <text>Accounting Periods. The taxable year or period for which the return is filed shall be the same as that for which the federal return is filed, and in every instance that a federal return is required, a corresponding State return shall be filed.</text> </paragraph> <paragraph num="B."> <text>Use of Federal Figures. The starting point for the Maryland return is the taxable income as defined in the Internal Revenue Code and developed on the federal return. Corporations included in a consolidated filing for federal purposes shall file separate Maryland returns and compute separate taxable income.</text> </paragraph> <paragraph num="C."> <text>Rate of Tax. The tax rate is 8.25 percent of Maryland taxable income.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Other Forms, Returns, Schedules, and Statements."> <paragraph num="A."> <text>Copy of Federal Return Required.</text> <paragraph num="(1)"> <text>Failure to attach the required federal copy to the Maryland return shall constitute a nonfiling.</text> </paragraph> <paragraph num="(2)"> <text>Corporations included in a consolidated filing for federal purposes shall attach a copy of pages one through five of the actual consolidated return and shall also provide a copy of the columnar schedule of income and expense, and of balance sheet items, reconciling the separate items of each member corporation to the consolidated totals.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Reporting of Internal Revenue Service Adjustments.</text> <paragraph num="(1)"> <text>If at any time the items of federal net taxable income reported for any taxable year or period are adjusted by the Internal Revenue Service (IRS) and will increase Maryland taxable income, a copy of the final IRS adjustment report shall be submitted within 90 days under separate cover.</text> </paragraph> <paragraph num="(2)"> <text>If an affiliated group of corporations files a consolidated federal return, then a copy of the actual IRS adjustment report shall be submitted and shall include a schedule reconciling the separate adjustments for each member corporation.</text> </paragraph> <paragraph num="(3)"> <text>A claim for refund based upon a federal adjustment shall be filed within the time provided under Tax-General Article, §13-1104(c), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(4)"> <text>Notification of a federal audit shall be submitted under separate cover, indicating the corporate name, federal employer identification number, tax year or years involved, and information sufficient to identify the IRS audit and issue or issues.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Amended Returns.</text> <paragraph num="(1)"> <text>To correct a previously filed return, the corporation shall file an amended return and provide an explanation and reconciliation of the changes.</text> </paragraph> <paragraph num="(2)"> <text>To claim a net operating loss carryback:</text> <paragraph num="(a)"> <text>The corporation shall attach a copy of the documents required and filed with the IRS; and</text> </paragraph> <paragraph num="(b)"> <text>A member of a consolidated group shall:</text> <paragraph num="(i)"> <text>Attach a copy of any related documents required and filed with the IRS for the group, and</text> </paragraph> <paragraph num="(ii)"> <text>Reconcile the deduction claimed for the separate corporation.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(3)"> <text>To claim a refund, the corporation shall file an amended return within the time provided under Tax-General Article, §13-1104(c), Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Registration of Exempt Organizations.</text> <paragraph num="(1)"> <text>Organizations exempt from taxation under §501 of the Internal Revenue Code shall register with the Comptroller of the Treasury, Revenue Administration Division.</text> </paragraph> <paragraph num="(2)"> <text>An authorized official of the exempt organization shall register the organization by submitting a copy of the Internal Revenue Service determination letter.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Estimated Tax.</text> <paragraph num="(1)"> <text>A corporation shall make quarterly estimated tax payments during the tax period if the estimated tax for the complete period will exceed $1,000.</text> </paragraph> <paragraph num="(2)"> <text>Payments of $10,000 or more shall be remitted by immediately available funds pursuant to COMAR 03.01.02.</text> </paragraph> <paragraph num="(3)"> <text>A corporation shall file Form 500D with remittances by the required installment due dates.</text> </paragraph> <paragraph num="(4)"> <text>A declaration of estimated income tax payment shall be due by the 15th day of the 4th, 6th, 9th, and 12th month following the beginning of the tax year or period.</text> </paragraph> <paragraph num="(5)"> <text>The total estimated tax payments for the year shall be at least 90 percent of the tax developed for the current taxable year or 110 percent of the tax developed for the prior tax year.</text> </paragraph> <paragraph num="(6)"> <text>At least 25 percent of the total estimated tax shall be remitted by each of the four installment due dates.</text> </paragraph> <paragraph num="(7)"> <text>For a short tax period, the total estimated tax for the taxable period shall be paid equally over the number of installment due dates occurring during the short tax year. However, estimated tax need not be paid for a short period of less than 4 months.</text> </paragraph> <paragraph num="(8)"> <text>Assessment of interest and penalty for underpayment of estimated tax shall be based on the tax for the current taxable year.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Losses, Audits, and Appeals."> <paragraph num="A."> <text>Net Operating Loss Deduction.</text> <paragraph num="(1)"> <text>For the loss year, the net operating loss may be used to offset Maryland modifications.</text> </paragraph> <paragraph num="(2)"> <text>The deductions for carryback and carryover shall be calculated and claimed following federal income tax provisions, and a modification to the amount of the deductions may not be allowed under Maryland income tax law.</text> </paragraph> <paragraph num="(3)"> <text>When an affiliated group of corporations files a consolidated return for federal purposes, each separate member corporation shall calculate any net operating loss deduction based on its separate federal taxable income and loss and as if the member corporation was not involved in a consolidated filing and filed a separate federal return.</text> </paragraph> <paragraph num="(4)"> <text>If a corporation elected to relinquish the entire carryback period for federal purposes, a copy of the federal election shall be submitted with the Maryland return for the loss year.</text> </paragraph> <paragraph num="(5)"> <text>A net operating loss generated when a corporation is not subject to Maryland income tax law may not be allowed as a deduction to offset Maryland income.</text> </paragraph> <paragraph num="(6)"> <text>If a liquidated or acquired corporation was not subject to Maryland income tax law when its net operating loss was generated, then the acquiring corporation which is subject to Maryland income tax law may not use the net operating loss of the liquidated or acquired corporation as a deduction to offset Maryland income.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Capital Loss Carryover. A capital loss carryover shall be allowed for Maryland filing. However, a capital loss carryback may not be an allowable deduction under Maryland income tax law.</text> </paragraph> <paragraph num="C."> <text>Audits. All items reported on the return are subject to audit, verification, and revision. In the event of revision and assessment or reduced refund, the Comptroller shall issue a notice to the corporation.</text> </paragraph> <paragraph num="D."> <text>Appeals. A taxpayer may appeal an assessment or denial of a refund by applying for a hearing as provided under COMAR 03.01.01.04.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Apportionment of Income."> <paragraph num="A."> <text>Corporations engaged in business within and outside the State shall allocate income to reflect the amount attributable to this State.</text> </paragraph> <paragraph num="B."> <text>Corporations operating within and outside the State as unitary businesses shall use an apportionment formula to determine the amount of income to be allocated:</text> <paragraph num="(1)"> <text>All of the factors of the apportionment formula shall be developed as fractions, the numerator of which shall be the total of items in this State during the tax year, and the denominator shall be the total of items everywhere during the tax year.</text> </paragraph> <paragraph num="(2)"> <text>Each factor shall be separately determined and the number of factors used shall be averaged to arrive at the final apportionment factor.</text> </paragraph> <paragraph num="(3)"> <text>The items on both numerator and denominator of each factor shall be adjusted by the applicable addition and subtraction adjustments provided under Tax-General Article, Title 10, Subtitle 3, Part II, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(4)"> <text>The items of both numerator and denominator shall be reconciled to the items as categorized and reported on the federal income tax return.</text> </paragraph> <paragraph num="(5)"> <text>If a return is filed by a corporation operating within and outside the State which reflects a loss with no income to be apportioned, an apportionment factor shall be calculated for the filing to be considered complete.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Apportionment Formula.</text> <paragraph num="(1)"> <text>Corporations operating as a unitary business within and outside the State shall, for tax years beginning before December 31, 2021, generally use a three-factor formula of property, payroll, and sales to determine the part of the corporation’s Maryland modified income derived from or reasonably attributable to trade or business carried on in the State, as follows:</text> <paragraph num="(a)"> <text>For a taxable year beginning before January 1, 2018, the apportionment formula is a fraction, the numerator of which is the sum of the property factor, payroll factor, and twice the sales factor, and the denominator is four;</text> </paragraph> <paragraph num="(b)"> <text>For a taxable year beginning after December 31, 2017, but before January 1, 2019, the apportionment formula is a fraction, the numerator of which is the sum of the property factor, the payroll factor, and three times the sales factor, and the denominator of which is five;</text> </paragraph> <paragraph num="(c)"> <text>For a taxable year beginning after December 31, 2018, but before January 1, 2020, the apportionment formula is a fraction, the numerator of which is the sum of the property factor, the payroll factor, and four times the sales factor, and the denominator of which is six;</text> </paragraph> <paragraph num="(d)"> <text>For a taxable year beginning after December 31, 2019, but before January 1, 2021, the apportionment formula is a fraction, the numerator of which is the sum of the property factor, the payroll factor, and five times the sales factor, and the denominator of which is seven; and</text> </paragraph> <paragraph num="(e)"> <text>For a taxable year beginning after December 31, 2020, but before January 1, 2022, the apportionment formula is a fraction, the numerator of which is the sum of the property factor, the payroll factor, and six times the sales factor, and the denominator of which is eight.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Corporations operating as unitary businesses within and outside the State shall, for a taxable year beginning after December 31, 2021, determine the part of the corporation’s Maryland modified income derived from or reasonably attributable to trade or business carried on in the State by using a single sales factor apportionment formula, by multiplying its Maryland modified income by 100 percent of the sales factor.</text> </paragraph> <paragraph num="(3)"> <text>A worldwide headquartered company, as defined by Tax-General Article, §10-402(a), Annotated Code of Maryland, may elect to calculate its Maryland modified income derived from or reasonably attributable to trade or business carried on in the State using a three-factor apportionment fraction, the numerator of which is the sum of the property factor, the payroll factor, and twice the sales factor, and the denominator of which is four.</text> </paragraph> <paragraph num="(4)"> <text>The three factors are described in §C(5)—(7) of this regulation.</text> </paragraph> <paragraph num="(5)"> <text>The sales factor includes the amounts of income reported during the taxable year as gross receipts or sales, or both (less returns and allowances), dividends and interest, gross rents and royalties, capital gains, and certain other income as follows:</text> <paragraph num="(a)"> <text>Gross receipts are generally sales of tangible personal property and shall be included in the numerator if the property is delivered or shipped to a purchaser within this State, regardless of f.o.b. point or other conditions of sale.</text> </paragraph> <paragraph num="(b)"> <text>Sales of property in transit destined to this State also shall be included in the numerator.</text> </paragraph> <paragraph num="(c)"> <text>Gross receipts from contracting or service-related activities shall be included in the numerator if the receipts are derived from customers within this State as determined in §D of this regulation.</text> </paragraph> <paragraph num="(d)"> <text>Gross income from intangible items such as dividends, interest, royalties, and capital gains from the sale of intangible property shall be included in the numerator based upon the average of the property and payroll factors.</text> </paragraph> <paragraph num="(e)"> <text>Gross receipts from the rental, leasing, or licensing of real or tangible personal property shall be included in the numerator if the property is located within this State.</text> </paragraph> <paragraph num="(f)"> <text>When tangible personal property is in this State for a portion of the tax year, the income received for that portion shall be included in the numerator.</text> </paragraph> <paragraph num="(g)"> <text>Capital gains from the sale of real and tangible personal property shall be included in the numerator if the property is located within this State. However, ordinary net gain or loss derived from the sale of depreciable assets shall be excluded from the factor.</text> </paragraph> <paragraph num="(h)"> <text>Other income items shall be considered separately, and the actual treatment shall be dependent upon the nature and type of each item.</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>The property factor includes owned as well as rented tangible personal property used in the trade or business during the taxable year and shall be included in the numerator if the tangible personal property is located within this State. The following apply:</text> <paragraph num="(a)"> <text>The properties to which this subsection applies include:</text> <paragraph num="(i)"> <text>Buildings;</text> </paragraph> <paragraph num="(ii)"> <text>Equipment;</text> </paragraph> <paragraph num="(iii)"> <text>Inventory;</text> </paragraph> <paragraph num="(iv)"> <text>Land;</text> </paragraph> <paragraph num="(v)"> <text>Machinery; and</text> </paragraph> <paragraph num="(vi)"> <text>Other tangible assets.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Property owned by a corporation shall be valued at its original cost and shall be reflected in the factor at the average of the tax year's beginning and ending amounts. However, if there are material changes during the tax year and the average is not a fair representation, the average shall be calculated on a monthly or daily basis.</text> </paragraph> <paragraph num="(c)"> <text>Property in transit shall be considered to be at its destination for purposes of the factor.</text> </paragraph> <paragraph num="(d)"> <text>Property under construction during the tax year shall be excluded from the factor until actually placed in service.</text> </paragraph> <paragraph num="(e)"> <text>Property leased or rented by the corporation shall be included in the factor at a capitalized value as follows:</text> <paragraph num="(i)"> <text>The expense associated with the privilege of occupying or using the property, including such items as fixed rent, percentage rent, real estate taxes, insurance, and maintenance, shall be multiplied by eight to arrive at the capitalized value;</text> </paragraph> <paragraph num="(ii)"> <text>Expenses such as gas, electricity, oil, water, or other items normally consumed shall be excluded.</text> </paragraph> </paragraph> <paragraph num="(f)"> <text>Improvements to the leased or rented property which revert to the owner at the expiration of the lease or rental term shall be amortized and not capitalized. The following apply:</text> <paragraph num="(i)"> <text>The actual cost of the improvements shall be divided by the number of years remaining for the term of the lease; and</text> </paragraph> <paragraph num="(ii)"> <text>The result shall be included in the factor for each tax year.</text> </paragraph> </paragraph> <paragraph num="(g)"> <text>Sublease income shall be included in the sales factor and not used to reduce rental expense.</text> </paragraph> <paragraph num="(h)"> <text>Nonrental or below market rate rental shall be adjusted to reflect a reasonable market rental rate and then capitalized as provided in §C(6)(e)(i) of this regulation.</text> </paragraph> <paragraph num="(i)"> <text>Property that has remained idle and has not produced any revenue for a period of 5 or more years may not be included in the property factor.</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>The payroll factor shall be the amount of compensation paid during the taxable year, as follows:</text> <paragraph num="(a)"> <text>Compensation is included in the numerator if:</text> <paragraph num="(i)"> <text>The individual's service is performed entirely within this State, or</text> </paragraph> <paragraph num="(ii)"> <text>The individual's service is performed both within and without this State but the service performed without this State is incidental to the individual's service within this State;</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Compensation is also included in the numerator if:</text> <paragraph num="(i)"> <text>Some part of the service is performed within this State,</text> </paragraph> <paragraph num="(ii)"> <text>The base of operations or place from which the service is controlled is not in any state where the service is performed, and</text> </paragraph> <paragraph num="(iii)"> <text>The individual's residence is in this State.</text> </paragraph> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>Customers Within this State.</text> <paragraph num="(1)"> <text>“Customers within this State” shall be determined as provided in this section.</text> </paragraph> <paragraph num="(2)"> <text>Domicile.</text> <paragraph num="(a)"> <text>Individuals. Except as provided in this section, a customer to whom a service is provided shall be considered a customer within this State if the customer is an individual domiciled in this State.</text> </paragraph> <paragraph num="(b)"> <text>Business Enterprises.</text> <paragraph num="(i)"> <text>“Business enterprise” includes a proprietorship, partnership, limited liability partnership, corporation, limited liability company, and any other entity, regardless of how structured or denominated, that is engaged in business.</text> </paragraph> <paragraph num="(ii)"> <text>A business enterprise shall be considered a customer within this State if the business enterprise is domiciled in this State.</text> </paragraph> <paragraph num="(iii)"> <text>If the customer is a business enterprise, then the domicile is the state in which is located the office or place of business that provides the principal impetus for the sale. If an office or place of business cannot be identified as providing the principal impetus for the sale, then the domicile shall be the state in which the headquarters or principal place of business management of the customer is located.</text> </paragraph> </paragraph> <aftertext>Example 2-1: X Company, a subsidiary corporation located in Maryland, administers medical plans on behalf of its parent corporation, which is located in Tennessee. X Company administers these medical plans for individuals that are domiciled in Maryland. The fees paid for these administration services are included in the numerator of X Company's sales factor. This example illustrates that the ultimate customer is determined by the domicile of the individual/business enterprise actually receiving the service.</aftertext> </paragraph> <paragraph num="(3)"> <text>Services Related to Real Property. If a person provides a service relating to construction or improvement to real property, then whether the customer is a customer within this State will be determined by the situs of the property.</text> </paragraph> <paragraph num="(4)"> <text>Brokerage Services. Receipts derived from securities brokerages services allocable to this State are determined by multiplying the total dollar amount of sales of securities brokerage services by a fraction, the numerator of which is the receipts from securities brokerage services from customers domiciled in this State and the denominator of which is the receipts from securities brokerage services from all customers. Receipts from securities brokerage services include commissions on transactions, the spread earned on principal transactions in which the broker buys or sells from its account, total margin interest paid on behalf of brokerage accounts owned by the broker's customers, and fees and receipts of all kinds from the underwriting of securities. For principal transactions that are part of brokerage receipts, if the income from these transactions can be tied to, or associated with, an identifiable customer that provides the impetus for the transaction, the receipt shall be assigned to the domicile of that customer. If it is impossible to identify or associate a specific customer with a receipt, the receipt shall be excluded from both the numerator and the denominator of the receipts factor. If receipts from brokerage services can be associated with a particular customer, but it is impractical to associate the receipts with the address of the customer, the customer shall be presumed to have a domicile at the branch office that generates transactions for the customer.</text> </paragraph> <paragraph num="(5)"> <text>Services to Regulated Investment Companies.</text> <paragraph num="(a)"> <text>Receipts from services that are derived directly or indirectly from the sale of management, distribution, administration, or securities brokerages services to, or on behalf of, a regulated investment company or its beneficial owners (including receipts derived directly or indirectly from trustees, sponsors, or participants of employee benefit plans that have accounts in a regulated investment company) shall be allocated to this State to the extent that shareholders of the regulated investment company are domiciled in this State. A separate computation shall be made with respect to the receipts derived from each regulated investment company. The total amount of receipts derived from each regulated investment company which are allocable to this State shall be equal to the total receipts so derived multiplied by a fraction:</text> <paragraph num="(i)"> <text>The numerator of which is the average of the sum of the beginning-of-the-year and end-of-the-year number of shares owned by the regulated investment company share-holders domiciled in this State; and</text> </paragraph> <paragraph num="(ii)"> <text>The denominator of which is the average of the sum of the beginning-of-the-year and end-of-the-year number of shares owned by all shareholders.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>For purposes of the fraction, the year shall be the taxable year of the regulated investment company that ends with or within the taxable year of the taxpayer.</text> </paragraph> <paragraph num="(c)"> <text>“Domicile” means the shareholder's mailing address on the records of the regulated investment company. If the regulated investment company or the person providing management services to the regulated investment company has actual knowledge that the shareholder's primary residence or principal place of business is different than the shareholder's mailing address, then the shareholder's primary residence or principal place of business is the shareholder's domicile. If the shareholder's address is not known or determinable and it is impracticable to obtain this information, then the domicile of the shareholder will be the location or domicile of the business entity that provides the impetus for the transaction.</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>Broadcast and Print Media. All revenue, including advertising receipts, derived from print and broadcast media shall be included in the numerator of the sales factor based on a reasonable estimate of the Maryland component of the audience for the broadcaster or publisher. In the case of print media, audience shall be measured by circulation.</text> </paragraph> <paragraph num="(7)"> <text>Processing or Similar Services to Business Customers. If a business enterprise provides processing or similar services to a customer having a location in more than one state, then the business enterprise's customers within this State are determined by the point of sale between the ultimate consumer and the business enterprise's customer.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Other Apportionment Methods.</text> <paragraph num="(1)"> <text>A corporation engaged primarily in leasing or rental operations shall use an equally weighted two-factor formula of receipts and property, except that receipts from intangible items shall be excluded.</text> </paragraph> <paragraph num="(2)"> <text>Corporations engaged primarily in certain types of transportation shall use a one-factor formula as described below to determine the amount of income allocable to this State:</text> <paragraph num="(a)"> <text>Trucks (Motorfreight Carriers). Number of miles traveled on roads in-State compared to the number of miles traveled on roads everywhere.</text> </paragraph> <paragraph num="(b)"> <text>Railroads. Number of miles traveled on tracks in-State compared to the number of miles traveled on tracks everywhere.</text> </paragraph> <paragraph num="(c)"> <text>Ships. Number of days spent in ports and on waterways in-State compared to the number of days spent in ports and on waterways everywhere.</text> </paragraph> </paragraph> </paragraph> <paragraph num="F."> <text>Special Rules.</text> <paragraph num="(1)"> <text>If an apportionment formula does not fairly represent the extent of a corporation's activity in this State, the Comptroller may alter the formula or its components.</text> </paragraph> <paragraph num="(2)"> <text>A corporation's share of partnership or joint venture receipts, property, and wages shall be included in the apportionment formula:</text> <paragraph num="(a)"> <text>To the extent of the factors required; and</text> </paragraph> <paragraph num="(b)"> <text>In the same manner as if they were direct receipts, property, and wages of the corporation.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Separate accounting may be allowed only if:</text> <paragraph num="(a)"> <text>It is practicable; and</text> </paragraph> <paragraph num="(b)"> <text>The activity of the corporation within this State is nonunitary.</text> </paragraph> </paragraph> </paragraph> <paragraph num="G."> <text>Airline Industry.</text> <paragraph num="(1)"> <text>In this section, the following terms have the meanings indicated:</text> <paragraph num="(a)"> <text>“Departures” means all takeoffs, whether scheduled or nonscheduled flights, that occur during revenue service.</text> </paragraph> <paragraph num="(b)"> <text>“Flight equipment” means aircraft and their integral components.</text> </paragraph> <paragraph num="(c)"> <text>Originating Passengers.</text> <paragraph num="(i)"> <text>“Originating passengers” means passengers first received in air travel as reported on the Department of Transportation “Passenger Origin and Destination Survey Report.”</text> </paragraph> <paragraph num="(ii)"> <text>“Originating passengers” does not include enplanements occurring on flight changes en route.</text> </paragraph> </paragraph> <paragraph num="(d)"> <text>“Originating tons” means loaded or short tons (2,000 pounds) of cargo at the beginning of a flight.</text> </paragraph> <paragraph num="(e)"> <text>“Value” means the original cost of real property or tangible personal property and, in the case of rented or leased property, value means eight times the net annual rental or lease expense.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Corporations engaged primarily in the airline industry shall use a three-factor formula of sales, property, and payroll to determine the amount of income allocable to this State.</text> </paragraph> <paragraph num="(3)"> <text>Sales Factor.</text> <paragraph num="(a)"> <text>The numerator of the sales factor is the sum of the passenger revenue and freight revenue allocable to this State for the taxable year. Passenger revenue is computed by multiplying passenger revenue everywhere by the ratio of the number of originating passengers in Maryland compared to the number of originating passengers everywhere. Freight revenue is computed by multiplying freight revenue everywhere by the ratio of originating tons in this State compared to originating tons everywhere.</text> </paragraph> <paragraph num="(b)"> <text>The denominator of the sales factor is the sum of passenger revenue everywhere plus freight revenue everywhere.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Property Factor.</text> <paragraph num="(a)"> <text>The numerator of the property factor is the sum of the average value of real property and tangible personal property owned, rented, and used in this State during the taxable year plus the value of flight equipment allocable to this State. The allocation of the value of flight equipment is determined by the following:</text> <paragraph num="(i)"> <text>50 percent times the air miles in this State over the air miles everywhere times the value of flight equipment everywhere; plus</text> </paragraph> <paragraph num="(ii)"> <text>50 percent times the departures from this State over the departures everywhere times the value of flight equipment everywhere.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>The denominator of the property factor is the sum of the average value of all real property and tangible personal property owned and rented everywhere, including the value of all flight equipment.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>Payroll Factor.</text> <paragraph num="(a)"> <text>The numerator of the payroll factor is the total amount paid as compensation for services performed in this State plus flight crew compensation allocable to this State. The allocation of flight crew compensation allocable to this State is determined by the following:</text> <paragraph num="(i)"> <text>50 percent times the air miles in this State over the air miles everywhere times flight crew compensation everywhere; plus</text> </paragraph> <paragraph num="(ii)"> <text>50 percent times the departures from this State over the departures everywhere times flight crew compensation everywhere.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>The denominator of the payroll factor is the total payroll everywhere for the taxable year.</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>The final apportionment factor is arrived at by averaging the sum of the separately computed sales, property, and payroll factors.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Apportionment of Income — Motion Picture and Television Film Producers and Television Networks."> <paragraph num="A."> <text>Scope.</text> <paragraph num="(1)"> <text>This regulation applies to:</text> <paragraph num="(a)"> <text>Motion picture and television film producers and affiliated distribution companies;</text> </paragraph> <paragraph num="(b)"> <text>Producers of television commercials;</text> </paragraph> <paragraph num="(c)"> <text>Television networks; and</text> </paragraph> <paragraph num="(d)"> <text>Independent television stations, to the extent they are members of a chain of commonly owned stations all of which operate as network affiliates or all of which are unaffiliated with a network but which operate:</text> <paragraph num="(i)"> <text>Collectively in purchasing properties for telecast or in marketing air time, or</text> </paragraph> <paragraph num="(ii)"> <text>As a producer.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(2)"> <text>This regulation applies to taxable years beginning after December 31, 1998.</text> </paragraph> </paragraph> <paragraph num="B."> <text>In this regulation, the following terms have the meanings indicated:</text> <paragraph num="(1)"> <text>Film.</text> <paragraph num="(a)"> <text>“Film” means the physical embodiment of a play, story, or other literary, commercial, educational, or artistic work as a motion picture, video tape, disc, or other similar medium, except that it does not include news or sports films produced for telecast.</text> </paragraph> <paragraph num="(b)"> <text>“Film” does not include video cassettes or discs intended for home viewing.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>“Release date” means the date on which a film is placed in service as follows:</text> <paragraph num="(a)"> <text>A film is placed in service when it is first telecast or exhibited to the primary audience for which the film was created;</text> </paragraph> <paragraph num="(b)"> <text>A motion picture film is placed in service when it is first publicly exhibited for entertainment purposes;</text> </paragraph> <paragraph num="(c)"> <text>An educational film is placed in service when it is first exhibited for instructional purposes;</text> </paragraph> <paragraph num="(d)"> <text>Each episode of a television series is placed in service when it is first telecast; and</text> </paragraph> <paragraph num="(e)"> <text>A film is not placed in service merely because it is completed and therefore in a condition or state of readiness and availability for telecast or exhibition, or merely because it is telecast or exhibited to prospective exhibitors, sponsors, or purchasers, or is shown in a “sneak preview” before a select audience.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>“Rent” includes license fees for the exhibition or telecast of films.</text> </paragraph> <paragraph num="(4)"> <text>“Tangible personal property”, whether owned or rented, includes but is not limited to sets, props, wardrobes, and other similar equipment or property.</text> </paragraph> <paragraph num="(5)"> <text>“Subscriber” means the individual residence or other outlet which is the ultimate recipient of the transmission of a subscription television telecaster.</text> </paragraph> <paragraph num="(6)"> <text>“Telecast” means the transmission of an electronic signal by radiowaves or microwaves or by wires, lines, coaxial cables, wave guides, or other tangible conduits of communication.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Films.</text> <paragraph num="(1)"> <text>Each episode of a series of films produced for television shall constitute a separate film, notwithstanding that the series relates to the same principal subject and is produced during one or more television seasons.</text> </paragraph> <paragraph num="(2)"> <text>A “film” is deemed to be tangible personal property.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Apportionment of Business Income. The property, payroll, and sales factor of the apportionment formula for motion picture and television film producers and television networks is computed pursuant to Tax-General Article, §10-402, Annotated Code of Maryland, and Regulation .08 of this chapter, except as provided in this regulation.</text> </paragraph> <paragraph num="E."> <text>Property Factor.</text> <paragraph num="(1)"> <text>In the case of rented studios, the net annual rental rate includes only the amount of the basic or flat rental charge by the studio for the use of a stage and other permanent equipment such as sound recording equipment, and similar equipment except that additional equipment rented from other sources or from the studio not covered in the basic or flat rental charge and used for 1 week or longer (even though rented on a day-to-day basis) are included. Lump-sum net rental payments for a period which encompasses more than single income year are assigned ratably over the rental period.</text> </paragraph> <paragraph num="(2)"> <text>The value of films:</text> <paragraph num="(a)"> <text>Is the original cost of producing the film as determined for federal income tax purposes, before any adjustment for federal credits which have not been claimed for state purposes; and</text> </paragraph> <paragraph num="(b)"> <text>Includes talent salaries.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The value of a film is not included in the property factor until its release date.</text> </paragraph> <paragraph num="(4)"> <text>Video cassettes and discs are included in the property factor at their inventory cost as shown in the taxpayer's books and records.</text> </paragraph> <paragraph num="(5)"> <text>Denominator.</text> <paragraph num="(a)"> <text>All real property and tangible personal property (other than films), whether owned or rented, which is used in the business, are included in the denominator.</text> </paragraph> <paragraph num="(b)"> <text>Films are included in the property factor at original cost for 12 years beginning with the release date.</text> </paragraph> <paragraph num="(c)"> <text>Films of a topical nature including news or current event programs, sporting events, or interview shows are included in the property factor at original cost for 1 year beginning with the release date.</text> </paragraph> <paragraph num="(d)"> <text>All films, other than those included in the denominator under §E(5)(b) and (c) of this regulation, are aggregated and treated as a single film property which is included in the property factor. This property is valued at eight times the gross receipts generated during the income year from theater distribution, network television, television syndication, cable television, subscription television, and the marketing of video cassettes and discs through licensing or direct selling, or similar receipts, but not in an amount greater than the total original cost of the aggregated film property.</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>Numerator.</text> <paragraph num="(a)"> <text>If tangible personal property (other than films) is located or used in this State for part of the income year, its value is determined by applying the ratio which the number of days the property is located or used in this State bears to the total number of days the property was owned or rented during the taxable year.</text> </paragraph> <paragraph num="(b)"> <text>The total value of films included in the property factor under §E(5) of this regulation is attributed to this State in the same ratio as the total Maryland receipts from these films, as determined in §G(1)—(3) of this regulation pertaining to the sales factor, bears to the total of receipts of these films everywhere.</text> </paragraph> </paragraph> </paragraph> <paragraph num="F."> <text>Payroll Factor.</text> <paragraph num="(1)"> <text>Denominator.</text> <paragraph num="(a)"> <text>The denominator includes all compensation paid to employees during the taxable year, including talent salaries and residual and profit participation payments.</text> </paragraph> <paragraph num="(b)"> <text>The amount paid to a corporation for providing the services of an actor or director who is an employee of the corporation, or for loaning the services of an actor or director who is under contract with the corporation, is, if substantial, included in the producer's payroll factor as if the amount paid was compensation paid to an employee of the producer.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Numerator. Compensation of employees engaged in the production of a film on location is attributed to this State in the same ratio as the total Maryland receipts from the films, as determined in §G(1)—(3) of this regulation pertaining to the sales factor, bears to the total receipts everywhere. Compensation of all other employees is governed by Regulation .08C(5) of this chapter.</text> </paragraph> </paragraph> <paragraph num="G."> <text>Sales Factor.</text> <paragraph num="(1)"> <text>The numerator includes all gross receipts of the taxpayer from sources within this State including the following:</text> <paragraph num="(a)"> <text>Gross receipts from films in release to theaters and television stations located in this State;</text> </paragraph> <paragraph num="(b)"> <text>Gross receipts from films in release to or by a television network for network telecast in the ratio that the audience for the network stations (owned and affiliated) located in Maryland bears to the total audience for all network stations (owned and affiliated) everywhere;</text> </paragraph> <paragraph num="(c)"> <text>Gross receipts from films in release to subscription television telecasters in the ratio that the subscribers for the telecaster located in Maryland bears to the total subscribers of the telecaster everywhere; and</text> </paragraph> <paragraph num="(d)"> <text>Receipts from sales and rentals of video cassettes and discs as provided in Regulation .08C(3)(a), (b), and (e) of this chapter.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Under §G(1)(b) of this regulation, the audience is determined by rate card values published annually by market surveys or other industry publications, or, if none are available, by population data published by the U.S. Bureau of the Census.</text> </paragraph> <paragraph num="(3)"> <text>Under §G(1)(c) of this regulation, if the number of subscribers cannot be determined accurately from records maintained by the taxpayer, then the ratio is determined on the basis of the applicable year’s statistics on subscribers published by market surveys or other industry publications, or, if none are available, by population data published by the U.S. Bureau of the Census for all states in which the telecaster has subscribers.</text> </paragraph> </paragraph> <paragraph num="H."> <text>Making and Revoking Election for Exclusion from this Regulation.</text> <paragraph num="(1)"> <text>A company described in §A(1) of this regulation shall apportion its income as set forth in this regulation unless the company makes an election to be excluded from the requirements of this regulation.</text> </paragraph> <paragraph num="(2)"> <text>A company doing business in Maryland on or before the effective date of this regulation that wishes to be excluded from the requirements of this regulation must make the election for exclusion on or before the due date, including an extended due date, of the company's original tax return for its first taxable year beginning on or after January 1, 1999.</text> </paragraph> <paragraph num="(3)"> <text>A company that begins doing business in Maryland after the effective date of this regulation and that wishes to be excluded from the requirements of this regulation must make the election for exclusion on or before the due date, including an extended due date, of the company's first original income tax return required to be filed with the Comptroller.</text> </paragraph> <paragraph num="(4)"> <text>An electing company shall make the election by attaching a statement to its tax return for the year for which the election is made. This election shall contain the following information:</text> <paragraph num="(a)"> <text>The name of the electing company;</text> </paragraph> <paragraph num="(b)"> <text>The address of the electing company;</text> </paragraph> <paragraph num="(c)"> <text>The taxpayer identification number of the electing company; and</text> </paragraph> <paragraph num="(d)"> <text>A statement to the effect that the company is electing to be excluded from the apportionment of income as required in this regulation.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>A company is deemed to have made an election to apportion its income consistent with the principles set forth in this regulation if the company does not make an election as set forth in §H(1)—(4) of this regulation.</text> </paragraph> <paragraph num="(6)"> <text>Revocation of Election.</text> <paragraph num="(a)"> <text>An election under this regulation may be revoked by the electing company at any time by attaching a statement to its tax return for the year for which the revocation is made. The revocation shall contain the following information:</text> <paragraph num="(i)"> <text>The name of the revoking company;</text> </paragraph> <paragraph num="(ii)"> <text>The address of the revoking company;</text> </paragraph> <paragraph num="(iii)"> <text>The taxpayer identification number of the revoking company; and</text> </paragraph> <paragraph num="(iv)"> <text>A statement to the effect that the company is revoking its election to be excluded from the apportionment of income as required in this regulation.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>A company that has revoked its election under §H(6) of this regulation may not thereafter elect to be excluded from the requirements of this regulation.</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>An election made by one member of an affiliated group is not binding on any other member of the group. Each separate entity shall file its own election or revocation.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Apportionment of Income—Single Sales Factor Apportionment for Manufacturing Corporations."> <paragraph num="A."> <text>Scope. This regulation provides specific guidelines for manufacturing corporations subject to the Maryland income tax laws.</text> </paragraph> <paragraph num="B."> <text>In this regulation, the following terms have the meanings indicated:</text> <paragraph num="(1)"> <text>Manufacturing Corporation.</text> <paragraph num="(a)"> <text>“Manufacturing corporation” means a domestic or foreign corporation that is primarily engaged in activities that, in accordance with the North American Industrial Classification System, would be included in sector 11, 31, 32, or 33.</text> </paragraph> <paragraph num="(b)"> <text>“Manufacturing corporation” does not include:</text> <paragraph num="(i)"> <text>A refiner, as defined in Business Regulation Article, §10-101, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(ii)"> <text>An affiliated or commonly controlled corporation that engages in activities on behalf of a manufacturing corporation, either directly or indirectly; or</text> </paragraph> <paragraph num="(iii)"> <text>An affiliated or unaffiliated service provider.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(2)"> <text>“North American Industrial Classification System (NAICS)” means the North American Industrial Classification System, United States Manual, United States Office of Management and Budget, 1997 Edition.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Classification as a Manufacturing Corporation.</text> <paragraph num="(1)"> <text>To be classified as a manufacturing corporation, the requisite activities of the NAICS code shall be performed directly by the entity using the one-factor formula. While it is not required that entities using the one-factor formula perform all elements of a vertically integrated manufacturing process, it is required that the activities leading to their classification as a manufacturing corporation be performed by the corporation, and not by related or unrelated entities.</text> </paragraph> <paragraph num="(2)"> <text>Examples.</text> <paragraph num="(a)"> <text>The operation of the criteria in §C(1) of this regulation is shown by §C (2) (b)—(d) of this regulation.</text> </paragraph> <paragraph num="(b)"> <text>X Company sells goods that are manufactured under cost plus contracts and service agreements by affiliated subsidiaries and unaffiliated companies. X Company's only activities are related to storage and transportation of goods, sales, and general headquarters management. X Company is not a manufacturing corporation within the meaning of this regulation.</text> </paragraph> <paragraph num="(c)"> <text>Y Company sells motorcycles produced from parts such as engines, frames, and gears that it purchases from a variety of affiliated and unaffiliated suppliers. It assembles these parts into finished products for resale using its own employees to do so. Y Company is a manufacturing corporation within the meaning of this regulation.</text> </paragraph> <paragraph num="(d)"> <text>Z Company manufactures, sells, and installs custom and off-the-shelf cabinets. Z Company is a manufacturing corporation within the meaning of this regulation. C Contractor purchases custom and off-the-shelf cabinets for its customers and installs the cabinets in its customers' homes. Although C Contractor may assemble the off-the-shelf cabinets and install them, C Contractor is not a manufacturing corporation within the meaning of this regulation.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>Primarily Engaged.</text> <paragraph num="(1)"> <text>A manufacturing corporation is primarily engaged in activities that would be included in NAICS sector 11, 31, 32, or 33 if:</text> <paragraph num="(a)"> <text>More than 50 percent of the corporation's sales are derived from activities from one or more of these sectors; and</text> </paragraph> <paragraph num="(b)"> <text>Line 1c of the corporation's federal income tax return (sales) are more than 50 percent of line 11 of the corporation's federal income tax return (total income).</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Sales, as determined under this section, include all of the corporation's gross receipts or sales, less returns and allowances, as reported on line 1c of the corporation's federal income tax return.</text> </paragraph> <paragraph num="(3)"> <text>The sales factor of a company using a one-factor formula as required by this regulation is determined as follows:</text> <paragraph num="(a)"> <text>Sales of tangible personal property shall be allocated to the numerator or denominator of the factor by the same methods and rules applied in COMAR 03.04.03.08C(3)(a) and (b);</text> </paragraph> <paragraph num="(b)"> <text>Gross receipts from the rental, leasing, or licensing of real or tangible personal property shall be allocated to the numerator or the denominator by the same methods and rules applied in COMAR 03.04.03.08C(3)(e) and (f);</text> </paragraph> <paragraph num="(c)"> <text>Service income shall be allocated to the numerator or denominator by the same methods and rules applied in COMAR 03.04.03.08C(3)(c);</text> </paragraph> <paragraph num="(d)"> <text>Gross receipts from intangible items such as interest, royalties, capital gains, including capital gains from sales of tangible personal property, and ordinary gains and losses shall be excluded from the numerator and denominator; and</text> </paragraph> <paragraph num="(e)"> <text>Other income items shall be considered separately and the actual treatment shall be dependent upon the nature and type of each item.</text> </paragraph> </paragraph> </paragraph> <paragraph num="E."> <text>Apportionment Method. If a manufacturing corporation carries on its trade or business within and outside of the State and the trade or business is a unitary business, the part of the corporation's Maryland modified income derived from or reasonably attributable to trade or business carried on in the State shall be determined using a single sales factor apportionment formula, by multiplying its Maryland modified income by 100 percent of the sales factor.</text> </paragraph> <paragraph num="F."> <text>Tax Return Reporting.</text> <paragraph num="(1)"> <text>NAICS Code.</text> <paragraph num="(a)"> <text>In filing its tax return for each year, a manufacturing corporation shall certify that the NAICS code reported on its Maryland tax return is consistent with that reported to other government agencies and accurately reflects the primary activities of the corporation.</text> </paragraph> <paragraph num="(b)"> <text>If the Comptroller determines that a corporation has submitted information that incorrectly classifies the corporation as a manufacturing corporation, the Comptroller shall reclassify the corporation in an appropriate manner.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>For each taxable year beginning after December 31, 2005, but before January 1, 2011, a manufacturing corporation that has more than 25 employees and apportions its income under this regulation shall attach to its Maryland tax return a report containing the following information as of the last day of the taxable year:</text> <paragraph num="(a)"> <text>The difference in tax owed as a result of using the single sales factor apportionment method under this regulation as compared to the tax owed using the three-factor, double-weighted sales factor apportionment method as set forth in COMAR 03.04.03.08, in effect for the last taxable year beginning on or before December 31, 2000;</text> </paragraph> <paragraph num="(b)"> <text>The volume of sales in the State and worldwide;</text> </paragraph> <paragraph num="(c)"> <text>The taxable income in the State and worldwide; and</text> </paragraph> <paragraph num="(d)"> <text>The book value of plant, land, and equipment in the State and worldwide.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Donations to Diaper Banks and Other Charitable Entities."> <paragraph num="A."> <text>Definitions.</text> <paragraph num="(1)"> <text>In this regulation, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="(2)"> <text>Terms Defined.</text> <paragraph num="(a)"> <text>“Diaper bank” means a nonprofit organization located in the State that:</text> <paragraph num="(i)"> <text>Is qualified as tax exempt under §501(c)(3) of the Internal Revenue Code;</text> </paragraph> <paragraph num="(ii)"> <text>Is established and operating primarily for the purpose of collecting or purchasing disposable diapers or other hygiene products for infants or children; and</text> </paragraph> <paragraph num="(iii)"> <text>Distributes those diapers or hygiene products through schools, health care facilities, government agencies, or other nonprofit entities for eventual distribution to individuals free of charge.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>“Donation” means an irrevocable gift of:</text> <paragraph num="(i)"> <text>Disposable diapers, other hygiene products for infants or children, or feminine personal hygiene products; or</text> </paragraph> <paragraph num="(ii)"> <text>Cash that is specifically designated for the purchase of disposable diapers, other hygiene products for infants or children, or feminine personal hygiene products.</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>“Feminine personal hygiene products” means sanitary pads, tampons, menstrual sponges, menstrual cups, or other similar feminine hygiene products, whether reusable or disposable.</text> </paragraph> <paragraph num="(d)"> <text>“Qualified charitable entity” means a diaper bank, homeless shelter, domestic violence shelter, religious organization, or other charitable organization that distributes diapers, other hygiene products for infants or children, or feminine personal hygiene products, and that is registered with the Comptroller as a distributor of disposable diapers, other hygiene products for infants or children, or feminine personal hygiene products as described in COMAR 03.04.02.17.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Subtraction for Corporations.</text> <paragraph num="(1)"> <text>For any taxable year beginning after December 31, 2020, but before January 1, 2024, a corporation may subtract up to $1,000 of donations made by the taxpayer during any taxable year to a qualified charitable entity from federal taxable income to determine Maryland modified income.</text> </paragraph> <paragraph num="(2)"> <text>To claim the subtraction under §B(1) of this regulation, the taxpayer shall file with the income tax return on which the subtraction modification is taken a statement with the following information:</text> <paragraph num="(a)"> <text>The name of each qualified charitable entity to which a donation was made;</text> </paragraph> <paragraph num="(b)"> <text>The value of the donation to each qualified charitable entity identified in §B(2)(a) of this regulation, which the Comptroller may verify with the qualified charitable entity; and</text> </paragraph> <paragraph num="(c)"> <text>Any other information that the Comptroller requires.</text> </paragraph> </paragraph> </paragraph> </regulation> <annotations> <annotation type="Authority">Tax-General Article, §§2-103 and 10-306.1(h), Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: January 9, 1989 (15:27 Md. R. 3126)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 amended effective January 1, 1998 (24:12 Md. R. 861); June 25, 2001 (28:12 Md. R. 1103)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01E repealed effective May 2, 2022 (49:9 Md. R. 529)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03B amended effective January 1, 1998 (24:12 Md. R. 861); January 14, 1999 (26:1 Md. R. 22); October 9, 2006 (33:20 Md. R. 1612)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03C amended effective January 14, 1999 (26:1 Md. R. 22); October 9, 2006 (33:20 Md. R. 1612)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04A amended effective March 27, 2017 (44:6 Md. R. 324)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04C amended effective October 22, 2007 (34:21 Md. R. 1913); April 19, 2010 (37:8 Md. R. 614)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05C amended effective February 9, 2009 (36:3 Md. R. 207)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06A amended effective April 19, 2010 (37:8 Md. R. 614)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06B, C amended effective August 20, 1990 (17:16 Md. R. 1989)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06D amended effective January 14, 1999 (26:1 Md. R. 22)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06E amended effective December 22, 2003 (30:25 Md. R. 1844); July 8, 2013 (40:13 Md. R. 1073)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07A amended effective October 22, 2007 (34:21 Md. R. 1913)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07D amended effective January 14, 1999 (26:1 Md. R. 22)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08 amended effective January 1, 1998 (24:26 Md. R. 1754); May 2, 2022 (49:9 Md. R. 529)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08B amended effective October 9, 2006 (33:20 Md. R. 1612)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08C amended effective October 12, 1992 (19:20 Md. R. 1813); October 9, 2006 (33:20 Md. R. 1612)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08D amended effective October 9, 2006 (33:20 Md. R. 1612)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08G adopted effective October 9, 2006 (33:20 Md. R. 1612)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09 adopted effective April 3, 2000 (27:6 Md. R. 639)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09G amended effective May 2, 2022 (49:9 Md. R. 529)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10 adopted effective March 4, 2002 (29:4 Md. R. 416)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10F amended effective February 9, 2009 (36:3 Md. R. 207)</annotation> <annotation type="History" subtype="Administrative History">Regulation .11 adopted effective March 21, 2022 (49:6 Md. R. 404)</annotation> </annotations> </chapter> <chapter num="04" heading="Special"> <regulation prefix="Regulation" num=".01" heading="Order of Payment for Unpaid Income Tax."> <paragraph num="A."> <text>Income tax payments received by the Comptroller shall be applied as follows:</text> <paragraph num="(1)"> <text>Payments accompanying returns shall be applied to the period covered by the return in the following manner:</text> <paragraph num="(a)"> <text>First to any penalty;</text> </paragraph> <paragraph num="(b)"> <text>Second to accrued interest; and</text> </paragraph> <paragraph num="(c)"> <text>Third to the unpaid tax.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>All other payments shall be applied to the earliest delinquent tax year in the following manner:</text> <paragraph num="(a)"> <text>First to any penalty;</text> </paragraph> <paragraph num="(b)"> <text>Second to accrued interest; and</text> </paragraph> <paragraph num="(c)"> <text>Third to the unpaid tax.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>A refund of income tax due a taxpayer shall be applied first as provided for in §A(2) of this regulation, and then in the following order of priority:</text> <paragraph num="(1)"> <text>To any debt collection intercept under COMAR 03.04.05 or 03.04.06; and</text> </paragraph> <paragraph num="(2)"> <text>To the taxpayer of any remaining balance.</text> </paragraph> </paragraph> </regulation> <annotations> <annotation type="Authority">Tax-General Article, §2-103, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: January 9, 1989 (15:27 Md. R. 3126)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 amended effective August 20, 1990 (17:16 Md. R. 1989); May 2, 2022 (49:9 Md. R. 529)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02C amended effective January 14, 1999 (26:1 Md. R. 22)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02 repealed effective October 9, 2006 (33:20 Md. R. 1612)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03H adopted effective January 14, 1999 (26:1 Md. R. 22)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03 repealed effective October 9, 2006 (33:20 Md. R. 1612)</annotation> </annotations> </chapter> <chapter num="05" heading="Tax Refund Intercept Program — Delinquent Debts"> <regulation prefix="Regulation" num=".01" heading="Definitions."> <paragraph num="A."> <text>“Central Collection Unit” means the Central Collection Unit of the Department of Budget and Management.</text> </paragraph> <paragraph num="B."> <text>“Certify” means to furnish to the Comptroller the names, with other identification including address, Social Security or federal tax identification number, and amount of debt of debtors owing money to the State.</text> </paragraph> <paragraph num="C."> <text>“Comptroller” means the Comptroller of the Treasury.</text> </paragraph> <paragraph num="D."> <text>“Debt” means any liquidated sum due and owing any State agency which has accrued through contract, subrogation, tort, operation of law, or other cause of action, regardless of whether there is an outstanding judgment for that sum.</text> </paragraph> <paragraph num="E."> <text>“Intercept” means the action of the Comptroller of withholding all or part of a tax refund due a taxpayer and remitting it to the Central Collection Unit.</text> </paragraph> <paragraph num="F."> <text>“Debtor” means any individual, fiduciary, or business entity which may be entitled to receive a Maryland income tax refund and which owes money to, or has a delinquent account with, any State agency which has not been adjudged satisfied by court order, set aside by court order, or discharged in bankruptcy. “Debtor” and “taxpayer” are synonymous, when a match of names has been made by the Comptroller.</text> </paragraph> <paragraph num="G."> <text>“Refund” means any taxpayer's Maryland income tax refund.</text> </paragraph> <paragraph num="H."> <text>“Review officer” means a staff person designated by the Central Collection Unit to conduct hearings and to render decisions as described in this chapter.</text> </paragraph> <paragraph num="I."> <text>“State agency” means any agency, association, board, bureau, college, commission, committee, council, foundation, fund, department, institute, institution, public corporation, service, trust, university, or other unit of State government, including any subunit of these agencies.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Duties of the Central Collection Unit."> <paragraph num="A."> <text>The Central Collection Unit may certify to the Comptroller the name of any debtor:</text> <paragraph num="(1)"> <text>Against whom it has obtained a judgment in any court; or</text> </paragraph> <paragraph num="(2)"> <text>Whose account has been referred to the Central Collection Unit in accordance with COMAR 17.01.01 by an educational institution to which the debtor owes a debt for unpaid tuition, fees, or education loans.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The Central Collection Unit may not certify any account with a balance of $25 or less.</text> </paragraph> <paragraph num="C."> <text>The certification shall be made on or before the first day of November for the tax refund payable the following year. Each certification shall provide the name, address, Social Security or federal identification number, and any known aliases of the debtor certified. It shall also provide the Central Collection Unit sequence number and the total amount of the debt.</text> </paragraph> <paragraph num="D."> <text>At least 30 calendar days before certification of a debt, the Central Collection Unit shall send the debtor written notice of the intention to certify the debt. This notice shall also advise the debtor of:</text> <paragraph num="(1)"> <text>The amount of the debt;</text> </paragraph> <paragraph num="(2)"> <text>The basis for the debt;</text> </paragraph> <paragraph num="(3)"> <text>The debtor's right to request an investigation of the validity of the debt;</text> </paragraph> <paragraph num="(4)"> <text>His right to contest any adverse determination in a hearing before the Central Collection Unit; and</text> </paragraph> <paragraph num="(5)"> <text>His right to judicial appeal in accordance with the Administrative Procedure Act.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Duties of the Comptroller."> <paragraph num="A."> <text>As frequently as practical, the Comptroller shall compare the names of the debtors certified by the Central Collection Unit with the names of taxpayers who file tax returns and are entitled to a tax refund.</text> </paragraph> <paragraph num="B."> <text>If a match is made between a taxpayer eligible for tax refund and a certified debtor, the Comptroller shall pay the refund to the Central Collection Unit, but only to the extent of the amount of the debt certified. Any refund in excess of a certified debt shall be paid by the Comptroller to the debtor.</text> </paragraph> <paragraph num="C."> <text>If a match occurs with one of the parties to a joint tax return, the Comptroller shall withhold only the portion of the refund attributable to the debtor.</text> </paragraph> <paragraph num="D."> <text>The Comptroller shall remit to the Central Collection Unit payments withheld pursuant to this chapter. The Comptroller shall also provide the Central Collection Unit with a list identifying the debtors for whom remittance is made and the debtors for whom the Comptroller has determined that no intercept can be made. The list shall include each debtor's name, address, Social Security number or federal tax identification number, and the Central Collection Unit account number.</text> </paragraph> <paragraph num="E."> <text>The Comptroller shall notify a debtor for whom an intercept is made of the amount paid to the Central Collection Unit and of his right to request an investigation by the Central Collection Unit of the validity of the debt and to request an administrative hearing subject to judicial review in accordance with the Administrative Procedure Act.</text> </paragraph> <paragraph num="F."> <text>The Comptroller shall delete a certified name or change names certified when instructed to do so by the Central Collection Unit.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Investigation."> <paragraph num="A."> <text>Within 15 days of the notice of the Central Collection Unit's intention to certify his name or of the Comptroller's having intercepted his refund, a debtor has the right to request an investigation by the Central Collection Unit if the debtor disputes the validity or the amount of the debt.</text> </paragraph> <paragraph num="B."> <text>The Central Collection Unit shall submit to the debtor a report of its findings within 15 days from the date that the request for investigation was received. The report shall include a notice of the right to request a hearing on the findings and the method of doing so in accordance with the Administrative Procedure Act.</text> </paragraph> <paragraph num="C."> <text>If the investigation results in the reduction or elimination of the debt, the Central Collection Unit shall take corrective action as necessary, by correcting the certification, discontinuing the certification procedures, or remitting to the debtor any intercepted amounts in excess of the debt. Corrective action shall be taken within 30 days of the date on which the Central Collection Unit completes a report of its findings.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Administrative Hearing."> <paragraph num="A."> <text>A debtor may contest the findings of the investigation as to the validity and the amount of the debt in a hearing before the Central Collection Unit. Any request for a hearing shall be submitted in writing to the Central Collection Unit within 30 days of the date of which the investigation report was mailed to the debtor.</text> </paragraph> <paragraph num="B."> <text>In the hearing before the Central Collection Unit, the debtor may not raise any issue regarding the amount of tax refund otherwise due the taxpayer. This restriction does not prejudice any rights available to the debtor under the tax laws.</text> </paragraph> <paragraph num="C."> <text>The Central Collection Unit may deny a request for a hearing if the:</text> <paragraph num="(1)"> <text>Appeal is not filed timely and no good cause for the delay is shown;</text> </paragraph> <paragraph num="(2)"> <text>Issues raised in the appeal have been adjudicated by a court; or</text> </paragraph> <paragraph num="(3)"> <text>Issues raised in an intercept appeal have been adjudicated on an appeal of the certification and no new law or evidence has been introduced.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Conduct of Hearings.</text> <paragraph num="(1)"> <text>Within 15 days of receipt of a timely request for a hearing, the debtor shall be notified of the hearing date. The Central Collection Unit shall designate the place for a hearing and shall notify the appellant of it at least 5 days in advance. If the appellant notifies the review officer that either the date or place designated is not convenient and requests a new date or place for the hearing and gives a valid reason for so requesting, the review officer may designate another date and place.</text> </paragraph> <paragraph num="(2)"> <text>The debtor may waive an oral hearing date, in which case the hearing shall be conducted by a review of the record. A review of the record shall consist of a review of the relevant collection records and any written evidence submitted by the debtor.</text> </paragraph> <paragraph num="(3)"> <text>At any hearing, the debtor has the right to have an attorney or other representative present to assist him.</text> </paragraph> <paragraph num="(4)"> <text>The debtor has the right to present witnesses, documentary evidence, and oral argument, and to examine any documents presented by others as evidence at the hearing and to cross-examine any witness.</text> </paragraph> <paragraph num="(5)"> <text>The debtor may not raise any issues in the hearing that have been previously litigated, whether in court or in an administrative hearing. The review officer shall make a record, containing the substance of what happened at the hearing, to be retained by the Central Collection Unit. This record, together with all papers filed in the proceedings and the review officer's findings and conclusions, and decisions, constitutes the exclusive record and shall be available for review by the debtor or representative at any reasonable time for a period of 2 years or until all litigation on the intercept is ended, whichever is greater.</text> </paragraph> <paragraph num="(6)"> <text>The State agency which referred the debt to the Central Collection Unit may participate in the hearing.</text> </paragraph> <paragraph num="(7)"> <text>A hearing request may be withdrawn by the debtor or representative at any time.</text> </paragraph> <paragraph num="(8)"> <text>A hearing request is considered abandoned if the debtor and his representative fail to appear at the hearing and fail to notify the Central Collection Unit within 5 days of the original hearing date of a desire to pursue the appeal.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Decisions.</text> <paragraph num="(1)"> <text>The review officer shall prepare a written summary of findings of fact and conclusions of law based exclusively on the record and shall make a decision upon those findings.</text> </paragraph> <paragraph num="(2)"> <text>The date of the hearing is the date for calculating the amount of any debt considered in the decision.</text> </paragraph> <paragraph num="(3)"> <text>If, in the case of a hearing on certification, the review officer finds that the debtor is incorrectly certified, the review officer shall instruct the Comptroller to delete the debtor's name from the certification list, or to reduce the amount of certified debt, whichever is appropriate.</text> </paragraph> <paragraph num="(4)"> <text>In the case of a hearing on an intercept, if the review officer decides that no debt exists, the Central Collection Unit shall pay the full tax refund to the taxpayer within 5 days of the date of that determination. If the review officer determines that the tax refund remitted to the Central Collection Unit is in excess of the amount of the debt, the Central Collection Unit shall return the excess to the debtor within 30 days of the date of the decision.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Judicial Appeal. A taxpayer may appeal the review officer's decision in accordance with the Administrative Procedure Act.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Tax-General Article, §§2-103 and 13-919, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: November 8, 1982 (9:22 Md. R. 2198) (jointly promulgated with the Department of Budget and Management — see COMAR 17.01.02)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 03.04.03 to COMAR 03.04.05 effective October 3, 1988 (15:20 Md. R. 2333)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01A amended effective October 9, 2006 (33:20 Md. R. 1612)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01B, G amended effective March 21, 2011 (38:6 Md. R. 393)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02C amended effective March 21, 2011 (38:6 Md. R. 393)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03C amended effective October 9, 2006 (33:20 Md. R. 1612)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03D amended effective March 21, 2011 (38:6 Md. R. 393)</annotation> </annotations> </chapter> <chapter num="06" heading="Tax Refund Intercept Program—Child Support"> <regulation prefix="Regulation" num=".01" heading="Purpose and Scope."> <text>For regulations describing the procedures for the State Tax Refund Intercept Program, see COMAR 07.07.08.</text> </regulation> <annotations> <annotation type="Authority">Tax-General Article, §2-103; Family Law Article, §10-113; Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: October 3, 1988 (15:20 Md. R. 2333)</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.03 repealed and new Regulation .01 adopted effective October 9, 2006 (33:20 Md. R. 1613)</annotation> </annotations> </chapter> <chapter num="07" heading="Pass-Through Entity Tax"> <regulation prefix="Regulation" num=".01" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Distributable cash flow” has the meaning stated in Tax-General Article, §10-102.1(a)(2), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>“Distributive share of partnership income” means the total distributive share of income (loss) items as reported on Schedule K of the federal partnership return, Form 1065, less interest from U.S. obligations.</text> </paragraph> <paragraph num="(3)"> <text>“Member” has the meaning stated in Tax-General Article, §10-102.1(a)(4), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(4)"> <text>“Multistate pass-through entity” means a pass-through entity doing business within and outside the State.</text> </paragraph> <paragraph num="(5)"> <text>“Nonresident entity” has the meaning stated in Tax-General Article, §10-102.1(a)(5), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(6)"> <text>“Nonresident member” includes, unless specifically designated elsewhere, a nonresident individual member and a nonresident entity member.</text> </paragraph> <paragraph num="(7)"> <text>“Nonresident taxable income” means:</text> <paragraph num="(a)"> <text>For a pass-through entity that is a partnership (including a limited liability company taxed as a partnership and a business trust taxed as a partnership), the total nonresident members' share of the distributive share of partnership income allocated to this State; and</text> </paragraph> <paragraph num="(b)"> <text>For a pass-through entity that is an S corporation, the total nonresident members' pro rata share of S corporation income allocated to this State.</text> </paragraph> </paragraph> <paragraph num="(8)"> <text>“Pass-through entity”, unless specifically designated elsewhere, has the meaning stated in Tax-General Article, §10-102.1(a)(7), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(9)"> <text>“Pass-through entity's taxable income” means the portion of a pass-through entity's income under the federal Internal Revenue Code, calculated without regard to any deduction for taxes based on net income that are imposed by any state or political subdivision of a state, that is derived from or reasonably attributable to the trade or business of the pass-through entity in this State.</text> </paragraph> <paragraph num="(10)"> <text>“Pro rata share of S corporation income” means the total of the pro rata share of income (loss) items reported on Schedule K of Form 1120S, U.S. Income Tax Return for an S corporation, less interest from U.S. obligations.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Imposition and Computation of Tax."> <paragraph num="A."> <text>Imposition of Tax on Nonresident Members.</text> <paragraph num="(1)"> <text>A tax is imposed on a pass-through entity that:</text> <paragraph num="(a)"> <text>Has a nonresident member;</text> </paragraph> <paragraph num="(b)"> <text>Has nonresident taxable income for the taxable year; and</text> </paragraph> <paragraph num="(c)"> <text>Does not elect to pay the tax with respect to the distributive shares or pro rata shares of all members of the pass-through entity under Tax-General Article, §10-102.1(b)(2)(ii), Annotated Code of Maryland.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>The tax paid under Tax-General Article, §10-102.1(b)(2)(i), Annotated Code of Maryland, with respect to nonresident members' distributive or pro rata shares of income shall be treated as a tax imposed on the nonresident member that is paid by the pass-through entity on behalf of the nonresident member.</text> </paragraph> <paragraph num="C."> <text>Election to Pay Tax with Respect to All Members</text> <paragraph num="(1)"> <text>A pass-through entity may elect to pay tax on the distributive or pro rata shares of all members of the pass-through entity under Tax-General Article, §10-102.1(b)(2)(ii), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>When a pass-through entity elects to pay tax on the distributive or pro rata shares of all members of the pass-through entity under Tax-General Article, §10-102.1(b)(2)(ii), Annotated Code of Maryland, the tax shall be treated as a tax on the pass-through entity itself.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Allocation of Income for a Multistate Pass-Through Entity.</text> <paragraph num="(1)"> <text>A multistate pass-through entity that is a partnership (including a limited liability company taxed as a partnership and a business trust taxed as a partnership) shall allocate income to this State using:</text> <paragraph num="(a)"> <text>The apportionment formula for corporations under COMAR 03.04.03.08 A—E; or</text> </paragraph> <paragraph num="(b)"> <text>Separate accounting.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>A multistate pass-through entity that is an S corporation shall allocate income to this State using:</text> <paragraph num="(a)"> <text>The apportionment formula for corporations under COMAR 03.04.03.08 A—E; or</text> </paragraph> <paragraph num="(b)"> <text>Separate accounting, but this method is only allowable if the business activity of the S corporation within this State is not unitary.</text> </paragraph> </paragraph> </paragraph> <paragraph num="E."> <text>Amount of Tax.</text> <paragraph num="(1)"> <text>Calculation of Nonresident Tax for Pass-Through Entities Paying Tax with Respect to Nonresident Members' Distributive or Pro Rata Shares Under Tax-General Article, §10-102.1(b)(2)(i), Annotated Code of Maryland.</text> <paragraph num="(a)"> <text>If the pass-through entity has one or more nonresident members that are individuals, and does not elect to pay the tax with respect to the distributive or pro rata shares of all members under Tax-General Article, §10-102.1(b)(2)(ii), Annotated Code of Maryland, the amount of tax is the sum of:</text> <paragraph num="(i)"> <text>The nonresident taxable income of the nonresident members that are individuals, multiplied by the lowest rate of income tax for an individual under Tax-General Article, §10-106.1, Annotated Code of Maryland; and</text> </paragraph> <paragraph num="(ii)"> <text>The nonresident taxable income of the nonresident members that are individuals, multiplied by the top marginal State tax rate for an individual under Tax-General Article, §10-105(a), Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>If the pass-through entity has one or more nonresident entity members, the amount of tax is computed by applying the rate of tax for a corporation under Tax-General Article, §10-105(b), Annotated Code of Maryland, to the nonresident taxable income of the nonresident entity members.</text> </paragraph> <paragraph num="(c)"> <text>If the pass-through entity has a nonresident member that is an individual and a nonresident entity member, then the amounts as computed in §E(1)(a) and (b) of this regulation shall be summed to arrive at the amount of tax.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Calculation of Tax for Pass-Through Entities Electing to Pay Tax with Respect to All Members' Distributive or Pro Rata Shares Under Tax-General Article, §10-102.1(b)(2)(ii), Annotated Code of Maryland.</text> <paragraph num="(a)"> <text>If the pass-through entity has one or more members that are individuals, the amount of the tax is the sum of:</text> <paragraph num="(i)"> <text>The individual members' distributive or pro rata share of the pass-through entity's taxable income, multiplied by the lowest rate of income tax for an individual under Tax-General Article, §10-106.1, Annotated Code of Maryland; and</text> </paragraph> <paragraph num="(ii)"> <text>The individual members' distributive share or pro rata share of the pass-through entity's taxable income, multiplied by the top marginal State tax rate for an individual under Tax-General Article, §10-105(a), Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>If the pass-through entity has one or more entity members, the amount of the tax is computed by applying the rate of tax for a corporation under Tax-General Article, §10-105(b), Annotated Code of Maryland, to the distributive or pro rata share of the pass-through entity's taxable income of entity members.</text> </paragraph> <paragraph num="(c)"> <text>If the pass-through entity has a member that is an individual and an entity member, then the amounts as computed in §E(2)(a) and (b) of this regulation shall be summed to arrive at the amount of the tax paid on all members distributive or pro rata share.</text> </paragraph> </paragraph> </paragraph> <paragraph num="F."> <text>Limitation on Tax Imposed. The tax imposed on a pass-through entity is the lesser of:</text> <paragraph num="(1)"> <text>The amount of tax imposed as computed under §E of this regulation;</text> </paragraph> <paragraph num="(2)"> <text>For a pass-through entity paying the nonresident tax under Tax-General Article, §10-102.1(b)(2)(i), Annotated Code of Maryland, the sum of the shares of all the nonresident members in the pass-through entity's distributable cash flow; or</text> </paragraph> <paragraph num="(3)"> <text>For a pass-through entity paying tax on all members' distributive or pro rata shares under Tax-General Article, §10-102.1(b)(2)(ii), Annotated Code of Maryland, the sum of the shares of all members in the pass-through entity's distributable cash flow.</text> </paragraph> </paragraph> <paragraph num="G."> <text>Special: Certain Members.</text> <paragraph num="(1)"> <text>A member that is itself a pass-through entity shall comply with the provisions of this regulation with respect to any of its members.</text> </paragraph> <paragraph num="(2)"> <text>A pass-through entity that has a member that is exempt from income tax under Tax-General Article, §10-104(2), Annotated Code of Maryland, is exempt from complying with the provisions of this regulation with respect to that member.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Filing of Returns and Payment of Tax."> <paragraph num="A."> <text>Requirement to File Returns.</text> <paragraph num="(1)"> <text>Information Return. A pass-through entity doing business in this State and paying tax on behalf of nonresident members under Tax-General Article, §10-102.1(b)(2)(i), Annotated Code of Maryland, shall file an information return using Form 510. A pass-through entity paying tax on behalf of nonresident members under Tax-General Article, §10-102.1(b)(2)(i), Annotated Code of Maryland, that is an S corporation may be required to file a corporate income tax return as provided in COMAR 03.04.03.03B(3).</text> </paragraph> <paragraph num="(2)"> <text>Income Tax Return. A pass-through entity doing business in this State and electing to be taxed on all members' distributive or pro rata shares under Tax-General Article, §10-102.1(b)(2)(ii), Annotated Code of Maryland, shall file an income tax return using Form 511. An S corporation that pays the tax on all members' shares of income under Tax-General Article, §10-102.1(b)(2)(ii), Annotated Code of Maryland, may be required to file a corporate income tax return as provided in COMAR 03.04.03.03B(3).</text> </paragraph> <paragraph num="(3)"> <text>Attachments.</text> <paragraph num="(a)"> <text>A pass-through entity that is a partnership (including a limited liability company taxed as a partnership and a business trust taxed as a partnership) shall file with the information return a copy of:</text> <paragraph num="(i)"> <text>Schedule K of Federal Form 1065; and</text> </paragraph> <paragraph num="(ii)"> <text>A Schedule K-1 for each nonresident member.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>A pass-through entity that is an S corporation shall file with the information return a copy of:</text> <paragraph num="(i)"> <text>Schedule K of Federal Form 1120S; and</text> </paragraph> <paragraph num="(ii)"> <text>A Schedule K-1 for each nonresident member.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(4)"> <text>Due Date. Except as provided in §A(5) of this regulation, the due date for filing a return is:</text> <paragraph num="(a)"> <text>For a pass-through entity that is a partnership (including a limited liability company taxed as a partnership and a business trust taxed as a partnership), the 15th day of the 4th month following the close of the partnership's taxable year; and</text> </paragraph> <paragraph num="(b)"> <text>For a pass-through entity that is an S corporation, the 15th day of the 4th month following the close of the taxable year.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>Extension of Time to File.</text> <paragraph num="(a)"> <text>A pass-through entity that is a partnership (including a limited liability company taxed as a partnership and a business trust taxed as a partnership) shall be granted an automatic extension of up to 6 months by filing a Form 510E.</text> </paragraph> <paragraph num="(b)"> <text>A pass-through entity that is an S corporation shall be granted an automatic extension of up to 7 months by filing a Maryland Form 510E.</text> </paragraph> <paragraph num="(c)"> <text>Time for Filing. The due date for filing an extension is:</text> <paragraph num="(i)"> <text>For a pass-through entity that is a partnership (including a limited liability company taxed as a partnership and a business trust taxed as a partnership, the 15th day of the 4th month following the close of the partnership's taxable year; and</text> </paragraph> <paragraph num="(ii)"> <text>For a pass-through entity that is an S corporation, the 15th day of the 4th month following the close of the S corporation's taxable year.</text> </paragraph> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Estimated Tax Returns.</text> <paragraph num="(1)"> <text>Requirement to File. A pass-through entity shall file quarterly estimated tax returns using Form 510D if the total tax imposed under Tax-General Article, §10-102.1(b), Annotated Code of Maryland, is reasonably expected to exceed $1,000 for the taxable year. At least 25 percent of the total estimated tax shall be remitted by each of the four installment dates set forth in §B(2) of this regulation.</text> </paragraph> <paragraph num="(2)"> <text>Due Date.</text> <paragraph num="(a)"> <text>A pass-through entity that is a partnership (including a limited liability company taxed as a partnership and a business trust taxed as a partnership) required to file estimated tax returns shall file the returns and pay the tax due on or before the 15th day of the 4th, 6th, and 9th month of the tax year and the 15th day of the 1st month of the succeeding year.</text> </paragraph> <paragraph num="(b)"> <text>A pass-through entity that is an S corporation required to file estimated tax returns shall file the returns and pay the tax due on or before the 15th day of the 4th, 6th, 9th, and 12th month of the tax year.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Unpaid Tax.</text> <paragraph num="(a)"> <text>The Comptroller shall assess interest and penalties on the underpayment of estimated tax based on the unpaid tax from the due date of the tax to the date on which the tax is paid.</text> </paragraph> <paragraph num="(b)"> <text>The unpaid tax is the lesser of:</text> <paragraph num="(i)"> <text>90 percent of the tax required to be shown on the return for the current taxable year; or</text> </paragraph> <paragraph num="(ii)"> <text>110 percent of the tax paid for the prior taxable year.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(4)"> <text>Short Tax Period. For a short tax period, the total estimated tax for the taxable period shall be paid equally over the number of installment due dates occurring during the short tax year. However, estimated tax is not required to be remitted for a short period of less than 4 months.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Annual Return.</text> <paragraph num="(1)"> <text>Requirement to File.</text> <paragraph num="(a)"> <text>A pass-through entity shall file an annual return whether or not a tax is due.</text> </paragraph> <paragraph num="(b)"> <text>The annual return shall reconcile the total estimated taxes paid with the total tax liability computed on the return.</text> </paragraph> <paragraph num="(c)"> <text>If estimated tax returns are not required, the annual return shall develop the tax due for the taxable year.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Due Date. Except as provided in §C(3) of this regulation, the annual return, with payment of any tax due, shall be filed on or before the due date for the filing of the pass-through entity return as provided in §A(4) of this regulation.</text> </paragraph> <paragraph num="(3)"> <text>Extension of Time to File. An extension of time to file an annual return shall be allowed for the same period of time allowed under §A(5) of this regulation, if:</text> <paragraph num="(a)"> <text>An extension is requested for the information return; and</text> </paragraph> <paragraph num="(b)"> <text>The extension is requested within the time provided under §A(5)(c) of this regulation.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Effect of Extension. An extension of time to file an annual return may not extend the time for payment of any tax due.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Credit for Tax Paid.</text> <paragraph num="(1)"> <text>Tax required to be paid by the pass-through entity under Tax-General Article, §10-102.1(b)(2)(i), Annotated Code of Maryland, is paid on behalf of the nonresident members.</text> </paragraph> <paragraph num="(2)"> <text>Tax elected to be paid by the pass-through entity under Tax-General Article, §10-102.1(b)(2)(ii), Annotated Code of Maryland, is a tax imposed on the entity itself.</text> </paragraph> <paragraph num="(3)"> <text>The tax attributable to a member's share of the taxable income that was paid by the pass-through entity shall be claimed by that member as a credit, allowed by Tax-General Article, §10-701.1, Annotated Code of Maryland, on:</text> <paragraph num="(a)"> <text>The tax return of the member; or</text> </paragraph> <paragraph num="(b)"> <text>If the entity does not elect to be taxed on all members' distributive or pro rata shares of income, a composite return filed on behalf of the electing nonresident member by the pass-through entity paying the tax on behalf of nonresidents under Tax-General Article, §10-102.1(b)(2)(i), Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>For a pass-through entity that has a member that is a fiduciary, the credit allowed by Tax-General Article, §10-701.1, Annotated Code of Maryland, may be claimed by the beneficiary of that fiduciary in an amount in proportion to the distribution of income by the fiduciary to that beneficiary.</text> </paragraph> <paragraph num="(5)"> <text>Overpayments of tax shown on the annual return of a pass-through entity that paid the tax on behalf of nonresidents under Tax-General Article, §10-102.1(b)(2)(i), Annotated Code of Maryland, may not be:</text> <paragraph num="(a)"> <text>Refunded to the pass-through entity; or</text> </paragraph> <paragraph num="(b)"> <text>Applied to the current year estimated tax of the pass-through entity.</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>Overpayments of tax shown on the annual return of a pass-through entity that elects to pay on all members' distributive or pro rata shares of income under Tax-General Article, §10-102.1(b)(2)(ii), Annotated Code of Maryland, may be:</text> <paragraph num="(a)"> <text>Refunded to the pass-through entity; or</text> </paragraph> <paragraph num="(b)"> <text>Applied to the current year estimated tax of the pass-through entity.</text> </paragraph> </paragraph> </paragraph> <paragraph num="E."> <text>Member That Is a Pass-Through Entity. A member of a pass-through entity that is itself a pass-through entity also shall file the form as provided under §A or C(1) of this regulation.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Statements to Members."> <paragraph num="A."> <text>Requirements. A pass-through entity shall provide each member with an income tax statement.</text> </paragraph> <paragraph num="B."> <text>Form and Contents of Statement.</text> <paragraph num="(1)"> <text>Form. A pass-through entity may elect to use a:</text> <paragraph num="(a)"> <text>Maryland Form 510, Schedule K-1;</text> </paragraph> <paragraph num="(b)"> <text>Modified Federal Form K-1; or</text> </paragraph> <paragraph num="(c)"> <text>Statement prepared by the pass-through entity on its own form.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Contents.</text> <paragraph num="(a)"> <text>Pass-through Entity Income Tax Statement. A pass-through entity that elects to use its own form as provided under §B(1)(b) of this regulation shall label the statement “Member Income Tax Statement”, and the statement shall contain the following:</text> <paragraph num="(i)"> <text>Name and address of the pass-through entity;</text> </paragraph> <paragraph num="(ii)"> <text>Federal employer identification number of the pass-through entity;</text> </paragraph> <paragraph num="(iii)"> <text>Maryland central registration number of the pass-through entity, if one has been issued;</text> </paragraph> <paragraph num="(iv)"> <text>Name and address of the member;</text> </paragraph> <paragraph num="(v)"> <text>Social Security number or federal employer identification number of the member;</text> </paragraph> <paragraph num="(vi)"> <text>Amount of the member's distributive or pro rata share of income attributable to Maryland sources;</text> </paragraph> <paragraph num="(vii)"> <text>Description and amount of Maryland addition and subtraction modifications allocated to the member;</text> </paragraph> <paragraph num="(viii)"> <text>Amount of the Maryland tax paid on the member's shares of distributable or pro rata income; and</text> </paragraph> <paragraph num="(ix)"> <text>Description and amount of Maryland credits allocated to the member.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Modified Form K-1. A pass-through entity that elects to use a modified Form K-1, in addition to the information provided for federal purposes, shall include the amount of the:</text> <paragraph num="(i)"> <text>Member's share of income attributable to Maryland sources;</text> </paragraph> <paragraph num="(ii)"> <text>Description and amount of addition and subtraction modifications allocated to the member;</text> </paragraph> <paragraph num="(iii)"> <text>Tax paid on the member's shares; and</text> </paragraph> <paragraph num="(iv)"> <text>Description and amount of credits allocated to the member.</text> </paragraph> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Composite Returns."> <paragraph num="A."> <text>A pass-through entity may file a composite return on behalf of the nonresident members that are individuals (not including fiduciaries) pursuant to COMAR 03.04.02.04.</text> </paragraph> <paragraph num="B."> <text>An electing pass-through entity may not file a composite return on behalf of any members.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Tax-General Article, §§2-103 and 10-102.1(c) and (f), Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: January 20, 1992 (19:1 Md. R. 23)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01B amended effective March 29, 1993 (20:6 Md. R. 579)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02C amended effective January 14, 1999 (26:1 Md. R. 22)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03 amended effective November 20, 1994 (21:23 Md. R. 1931)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03B amended and D adopted effective December 22, 2003 (30:25 Md. R. 1845)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04B amended effective December 22, 2003 (30:25 Md. R. 1845)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective October 9, 2006 (33:20 Md. R. 1613)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01B amended effective May 2, 2022 (49:9 Md. R. 529)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02 amended effective May 2, 2022 (49:9 Md. R. 529)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective April 19, 2010 (37:8 Md. R. 614)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02C amended effective February 9, 2009 (36:3 Md. R. 207)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03 amended effective May 2, 2022 (49:9 Md. R. 529)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03A amended effective March 27, 2017 (44:6 Md. R. 324)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04 amended effective May 2, 2022 (49:9 Md. R. 529)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04B amended effective March 21, 2011 (38:6 Md. R. 393)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05 amended effective May 2, 2022 (49:9 Md. R. 529)</annotation> </annotations> </chapter> <chapter num="08" heading="Banks and Similar Institutions"> <regulation prefix="Regulation" num=".01" heading="Scope."> <text>This chapter provides specific guidance to banking and similar institutions subject to the Maryland income tax laws.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>Banking institution.</text> <paragraph num="(a)"> <text>“Banking institution” means a:</text> <paragraph num="(i)"> <text>Commercial bank;</text> </paragraph> <paragraph num="(ii)"> <text>Savings bank, except a savings bank chartered by the Office of Thrift Supervision;</text> </paragraph> <paragraph num="(iii)"> <text>Trust company;</text> </paragraph> <paragraph num="(iv)"> <text>Company that substantially competes with national banks in the State;</text> </paragraph> <paragraph num="(v)"> <text>Credit company;</text> </paragraph> <paragraph num="(vi)"> <text>Finance company, other than a finance company that makes loans only to farmers for agricultural purposes;</text> </paragraph> <paragraph num="(vii)"> <text>International banking facility;</text> </paragraph> <paragraph num="(viii)"> <text>Loan company;</text> </paragraph> <paragraph num="(ix)"> <text>Mortgage company;</text> </paragraph> <paragraph num="(x)"> <text>Safe-deposit company; or</text> </paragraph> <paragraph num="(xi)"> <text>Savings and loan association.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>“Banking institution” does not include:</text> <paragraph num="(i)"> <text>A company licensed under the federal Small Business Investment Act of 1958;</text> </paragraph> <paragraph num="(ii)"> <text>A corporation that elects to be taxed as a small business corporation under Subchapter S of the Internal Revenue Code;</text> </paragraph> <paragraph num="(iii)"> <text>An entity that is a real estate mortgage conduit as defined in the Internal Revenue Code; or</text> </paragraph> <paragraph num="(iv)"> <text>A limited liability company.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(2)"> <text>“Billing address” means the location indicated in the books and records of the taxpayer on the first day of the taxable year, or on a later date in the taxable year when the customer relationship began, as the address where any notice, statement, or bill relating to a customer's account is mailed.</text> </paragraph> <paragraph num="(3)"> <text>“Borrower or credit card holder located in this State” means a:</text> <paragraph num="(a)"> <text>Borrower, other than a credit card holder, that is engaged in a trade or business which maintains its commercial domicile in this State; or</text> </paragraph> <paragraph num="(b)"> <text>Borrower that is not engaged in a trade or business or a credit card holder whose billing address is in this State.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Commercial Domicile.</text> <paragraph num="(a)"> <text>“Commercial domicile” means:</text> <paragraph num="(i)"> <text>The headquarters of the trade or business; that is, the place from which the trade or business is principally managed and directed; or</text> </paragraph> <paragraph num="(ii)"> <text>If a taxpayer is organized under the laws of a foreign country, or of the Commonwealth of Puerto Rico, or any territory or possession of the United States, the state of the United States or the District of Columbia from which the taxpayer's trade or business in the United States is principally managed and directed.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>It shall be presumed, subject to rebuttal, that the location from which the taxpayer's trade or business is principally managed and directed is the state of the United States or the District of Columbia to which the greatest number of employees are regularly connected or out of which they are working, irrespective of where the services of the employees are performed as of the last day of the taxable year.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>“Compensation” means wages, salaries, commissions, and any other form of remuneration paid to employees for personal services.</text> </paragraph> <paragraph num="(6)"> <text>“Credit card” means a credit, debit, travel, or entertainment card.</text> </paragraph> <paragraph num="(7)"> <text>“Credit card issuer's reimbursement fee” means the fee a taxpayer receives from a merchant's bank because one of the persons to whom the taxpayer has issued a credit card has charged merchandise or services to the credit card.</text> </paragraph> <paragraph num="(8)"> <text>“Employee” means, with respect to a particular taxpayer, an individual who, under the usual common law rules applicable in determining the employer-employee relationship, has the status of an employee of that taxpayer.</text> </paragraph> <paragraph num="(8-1)"> <text>“Financial institution holding company” means a financial institution whose:</text> <paragraph num="(a)"> <text>Only activities are the maintenance and management of intangible investments, and the collection and distribution of income from intangible investments; and</text> </paragraph> <paragraph num="(b)"> <text>Principal income is interest and dividends from one or more of the entities described in §B(1)(a)(v)—(xi) of this regulation.</text> </paragraph> </paragraph> <paragraph num="(9)"> <text>Gross Rents.</text> <paragraph num="(a)"> <text>“Gross rents” means the actual sum of money or other consideration payable for the use or possession of property.</text> </paragraph> <paragraph num="(b)"> <text>“Gross rents” includes, but is not limited to:</text> <paragraph num="(i)"> <text>Any amount payable for the use or possession of real property or tangible property whether designated as a fixed sum of money or as a percentage of receipts, profits, or otherwise;</text> </paragraph> <paragraph num="(ii)"> <text>Any amount payable as additional rent or in lieu of rent, such as interest, taxes, insurance, repairs, or any other amount required to be paid by the terms of a lease or other arrangement; and</text> </paragraph> <paragraph num="(iii)"> <text>A proportionate part of the cost of any improvement to real property made by or on behalf of the taxpayer which reverts to the owner or lessor upon termination of a lease or other arrangement.</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>Under §B(9)(b)(iii) of this regulation, the amount to be included in gross rents is the amount of amortization or depreciation allowed in computing the taxable income base for the taxable year. However, where a building is erected on leased land by or on behalf of the taxpayer, the value of the land is determined by multiplying the gross rent by eight, and the value of the building is determined in the same manner as if owned by the taxpayer.</text> </paragraph> <paragraph num="(d)"> <text>“Gross rents” does not include:</text> <paragraph num="(i)"> <text>Reasonable amounts payable as separate charges for water and electric service furnished by the lessor;</text> </paragraph> <paragraph num="(ii)"> <text>Reasonable amounts payable as service charges for janitorial services furnished by the lessor;</text> </paragraph> <paragraph num="(iii)"> <text>Reasonable amounts payable for storage, if the amounts are payable for space not designated and not under the control of the taxpayer; and</text> </paragraph> <paragraph num="(iv)"> <text>That portion of any rental payment which is applicable to the space subleased from the taxpayer and not used by it.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(10)"> <text>Loan.</text> <paragraph num="(a)"> <text>“Loan” means an extension of credit resulting from direct negotiations between the taxpayer and its customer, or the purchase, in whole or in part, of the extension of credit from another.</text> </paragraph> <paragraph num="(b)"> <text>“Loan” includes participations, syndications, and leases treated as loans for federal income tax purposes.</text> </paragraph> <paragraph num="(c)"> <text>“Loan” does not include:</text> <paragraph num="(i)"> <text>Properties treated as loans under §595 of the Internal Revenue Code as in effect January 1, 1996;</text> </paragraph> <paragraph num="(ii)"> <text>Futures or forward contracts;</text> </paragraph> <paragraph num="(iii)"> <text>Options;</text> </paragraph> <paragraph num="(iv)"> <text>Notional principal contracts such as swaps;</text> </paragraph> <paragraph num="(v)"> <text>Credit card receivables, including purchased credit card relationships;</text> </paragraph> <paragraph num="(vi)"> <text>Non-interest-bearing balances due from depository institutions;</text> </paragraph> <paragraph num="(vii)"> <text>Cash items in the process of collection;</text> </paragraph> <paragraph num="(viii)"> <text>Federal funds sold;</text> </paragraph> <paragraph num="(ix)"> <text>Securities purchased under agreements to resell;</text> </paragraph> <paragraph num="(x)"> <text>Assets held in a trading account;</text> </paragraph> <paragraph num="(xi)"> <text>Securities;</text> </paragraph> <paragraph num="(xii)"> <text>Interests in a REMIC, as defined in §860D of the Internal Revenue Code, or other mortgage-backed or asset-backed security; and</text> </paragraph> <paragraph num="(xiii)"> <text>Other similar items.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(11)"> <text>“Loan secured by real property” means a loan in which 50 percent or more of the aggregate value of the collateral, when valued at fair market value as of the time the original loan was incurred, was real property.</text> </paragraph> <paragraph num="(12)"> <text>“Merchant discount” means the fee or negotiated discount charged to a merchant by the taxpayer for the privilege of participating in a program by which a credit card is accepted in payment for merchandise or services sold to the card holder.</text> </paragraph> <paragraph num="(13)"> <text>“Participation” means an extension of credit in which an undivided ownership interest is held on a pro rata basis in a single loan or pool of loans and related collateral. In a loan participation, the credit originator initially makes the loan and then subsequently resells all or a portion of it to other lenders. The participation may or may not be known to the borrower.</text> </paragraph> <paragraph num="(14)"> <text>Principal Base of Operations.</text> <paragraph num="(a)"> <text>“Principal base of operations” with respect to transportation property means the place from which that property is regularly directed or controlled.</text> </paragraph> <paragraph num="(b)"> <text>“Principal base of operations” with respect to an employee means the place from which the employee regularly:</text> <paragraph num="(i)"> <text>Starts work and to which the employee customarily returns in order to receive instructions from the employer;</text> </paragraph> <paragraph num="(ii)"> <text>Communicates with customers or other persons; or</text> </paragraph> <paragraph num="(iii)"> <text>Performs any other functions necessary to the exercise of the employee's trade or profession at some other point or points.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(15)"> <text>Real Property Owned.</text> <paragraph num="(a)"> <text>“Real property owned” means real property:</text> <paragraph num="(i)"> <text>On which the taxpayer may claim depreciation for federal income tax purposes; or</text> </paragraph> <paragraph num="(ii)"> <text>To which the taxpayer holds legal title and on which no other person may claim depreciation for federal income tax purposes, or could claim depreciation if subject to federal income tax.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>“Real property owned” does not include property acquired in lieu of or pursuant to a foreclosure.</text> </paragraph> </paragraph> <paragraph num="(16)"> <text>“Regular place of business” means an office at which the taxpayer carries on its business in a regular and systematic manner and which is continuously maintained, occupied, and used by employees of the taxpayer.</text> </paragraph> <paragraph num="(17)"> <text>“Syndication” means an extension of credit in which two or more persons fund and each person is at risk only up to a specified percentage of the total extension of credit or up to a specified dollar amount.</text> </paragraph> <paragraph num="(18)"> <text>Tangible Personal Property Owned.</text> <paragraph num="(a)"> <text>“Tangible personal property owned” means tangible personal property:</text> <paragraph num="(i)"> <text>On which the taxpayer may claim depreciation for federal income tax purposes; or</text> </paragraph> <paragraph num="(ii)"> <text>To which the taxpayer holds legal title and on which no other person may claim depreciation for federal income tax purposes, or could claim depreciation if subject to federal income tax.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>“Tangible personal property owned” does not include coin, currency, or property acquired in lieu of or pursuant to a foreclosure.</text> </paragraph> </paragraph> <paragraph num="(19)"> <text>“Taxpayer” means a banking institution engaged in or conducting business in this State.</text> </paragraph> <paragraph num="(20)"> <text>“Transportation property” means vehicles and vessels capable of moving under their own power, such as aircraft, trains, water vessels, and motor vehicles, as well as any equipment or containers attached to the property, such as rolling stock, barges, trailers, or similar items.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Apportionment and Allocation."> <paragraph num="A."> <text>Except as otherwise specifically provided, a banking institution whose business activity is taxable both within and without this State shall allocate and apportion its income as provided in this regulation.</text> </paragraph> <paragraph num="B."> <text>All income which is includable in the Maryland modified income, as defined in Tax-General Article, §10-304, Annotated Code of Maryland, shall be apportioned to this State by multiplying that income by the apportionment percentage. The apportionment percentage is a fraction (as described in §D of this regulation) consisting of the taxpayer's property factor (as described in Regulation .05 of this chapter), payroll factor (as described in Regulation .06 of this chapter), and receipts factor (as described in Regulation .04 of this chapter).</text> </paragraph> <paragraph num="C."> <text>The apportionment formulas described in §D of this regulation are required only on original returns filed on or after this regulation's effective date.</text> </paragraph> <paragraph num="D."> <text>Apportionment Formula.</text> <paragraph num="(1)"> <text>A banking institution operating as a unitary business within and outside the State shall, for tax years beginning before December 31, 2021, use a three-factor formula of property, payroll, and receipts to determine the part of the banking institution's Maryland modified income derived from or reasonably attributable to trade or business carried on in the State, as follows:</text> <paragraph num="(a)"> <text>For a taxable year beginning before January 1, 2018, the apportionment formula is a fraction, the numerator of which is the sum of the property factor, payroll factor, and twice the receipts factor, and the denominator is four;</text> </paragraph> <paragraph num="(b)"> <text>For a taxable year beginning after December 31, 2017, but before January 1, 2019, the apportionment formula is a fraction, the numerator of which is the sum of the property factor, the payroll factor and three times the receipts factor, and the denominator of which is five;</text> </paragraph> <paragraph num="(c)"> <text>For a taxable year beginning after December 31, 2018, but before January 1, 2020, the apportionment formula is a fraction, the numerator of which is the sum of the property factor, the payroll factor, and four times the receipts factor, and the denominator of which is six;</text> </paragraph> <paragraph num="(d)"> <text>For a taxable year beginning after December 31, 2019, but before January 1, 2021, the apportionment formula is a fraction, the numerator of which is the sum of the property factor, the payroll factor, and five times the receipts factor, and the denominator of which is seven; and</text> </paragraph> <paragraph num="(e)"> <text>For a taxable year beginning after December 31, 2020, but before January 1, 2022, the apportionment formula is a fraction, the numerator of which is the sum of the property factor, the payroll factor, and six times the receipts factor, and the denominator of which is eight.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>A banking institution operating as a unitary business within and outside the State shall, for a taxable year beginning after December 31, 2021, determine the part of the taxpayer's Maryland modified income derived from or reasonably attributable to trade or business carried on in the State by using a single receipts factor apportionment formula, by multiplying its Maryland modified income by 100 percent of the receipts factor.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Miscellaneous.</text> <paragraph num="(1)"> <text>A financial institution holding company shall allocate its interest income received from subsidiaries described in Regulation .02B(1)(a)(v)—(xi) of this chapter by use of the apportionment formula of the subsidiary that pays the interest.</text> </paragraph> <paragraph num="(2)"> <text>A financial institution holding company shall apportion all other income to this State through application of this chapter.</text> </paragraph> </paragraph> <paragraph num="F."> <text>If the allocation and apportionment provisions of this regulation do not fairly represent the extent of the taxpayer's business activity in this State, the taxpayer may petition for or the Comptroller may require, in respect to all or any part of the taxpayer's business activity, if reasonable:</text> <paragraph num="(1)"> <text>Separate accounting;</text> </paragraph> <paragraph num="(2)"> <text>The exclusion of any one or more of the factors;</text> </paragraph> <paragraph num="(3)"> <text>The inclusion of one or more additional factors which will fairly represent the taxpayer's business activity in this State; or</text> </paragraph> <paragraph num="(4)"> <text>The employment of any other method to effectuate an equitable allocation and apportionment of the taxpayer's income.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Receipts Factor."> <paragraph num="A."> <text>The receipts factor is a fraction, the numerator of which is the receipts of the taxpayer in this State during the taxable year and the denominator of which is the receipts of the taxpayer within and without this State during the taxable year. The method of calculating receipts for purposes of the denominator is the same as the method used in determining receipts for purposes of the numerator. The receipts factor shall include only those receipts described in this regulation and which are included in the computation of the apportionable income base for the taxable year.</text> </paragraph> <paragraph num="B."> <text>The numerator of the receipts factor shall include:</text> <paragraph num="(1)"> <text>Receipts from the lease or rental of real property owned by the taxpayer if the property is located within this State or receipts from the sublease of real property if the property is located within this State;</text> </paragraph> <paragraph num="(2)"> <text>Receipts from the lease of tangible personal property, as described in §C of this regulation;</text> </paragraph> <paragraph num="(3)"> <text>Interest from loans secured by real property, as described in §D of this regulation;</text> </paragraph> <paragraph num="(4)"> <text>Interest and fees or penalties in the nature of interest from loans not secured by real property if the borrower is located in this State;</text> </paragraph> <paragraph num="(5)"> <text>Net gains from the sale of loans, as described in §E of this regulation;</text> </paragraph> <paragraph num="(6)"> <text>Interest and fees or penalties in the nature of interest from credit card receivables and receipts from fees charged to card holders, such as annual fees, if the billing address of the card holder is in this State;</text> </paragraph> <paragraph num="(7)"> <text>Net gains, but not less than zero, from the sale of credit card receivables multiplied by a fraction, the numerator of which is the amount included in the numerator of the receipts factor pursuant to §B(6) of this regulation and the denominator of which is the taxpayer's total amount of interest and fees or penalties in the nature of interest from credit card receivables and fees charged to card holders;</text> </paragraph> <paragraph num="(8)"> <text>Credit card issuer's reimbursement fees multiplied by a fraction, the numerator of which is the amount included in the numerator of the receipts factor pursuant to §B(6) of this regulation and the denominator of which is the taxpayer's total amount of interest and fees or penalties in the nature of interest from credit card receivables and fees charged to card holders;</text> </paragraph> <paragraph num="(9)"> <text>Receipts from merchant discount if the commercial domicile of the merchant is in this State, with the receipts computed net of any card holder charge backs, but not reduced by any interchange transaction fees or by any issuer's reimbursement fees paid to another for charges made by its card holders;</text> </paragraph> <paragraph num="(10)"> <text>Loan servicing fees, as described in §F of this regulation;</text> </paragraph> <paragraph num="(11)"> <text>Receipts from services not otherwise apportioned under this section if the service is performed:</text> <paragraph num="(a)"> <text>In this State,</text> </paragraph> <paragraph num="(b)"> <text>Both within and without this State, the numerator of the receipts factor includes receipts from services not otherwise apportioned under this section, if a greater proportion of the income-producing activity is performed in this State than in any other state, based on cost of performance;</text> </paragraph> </paragraph> <paragraph num="(12)"> <text>Receipts from investment assets and activities and trading assets and activities, as described in §G of this regulation.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Lease of Tangible Personal Property.</text> <paragraph num="(1)"> <text>Except as described in §C(2) of this regulation receipts from the lease or rental of tangible personal property owned by the taxpayer is included in the receipts factor if the property is located within this State when it is first placed in service by the lessee.</text> </paragraph> <paragraph num="(2)"> <text>Receipts from the lease or rental of transportation property owned by the taxpayer is included in the receipts factor to the extent that the property is used in this State. The extent an aircraft will be deemed to be used in this State and the amount of receipts that is to be included in the numerator of this State's receipts factor is determined by multiplying all the receipts from the lease or rental of the aircraft by a fraction, the numerator of which is the number of landings of the aircraft in this State and the denominator of which is the total number of landings of the aircraft. If the extent of the use of any transportation property within this State cannot be determined, then the property will be deemed to be used wholly in the state in which the property has its principal base of operations. A motor vehicle will be deemed to be used wholly in the state in which it is registered.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Interest from Loans Secured by Real Property.</text> <paragraph num="(1)"> <text>Interest and fees or penalties in the nature of interest from loans secured by real property are included in the receipts factor if the property is located within this State. If the property is located both within this State and one or more other states, the receipts described in this subsection are included in the numerator of the receipts factor if more than 50 percent of the fair market value of the real property is located within this State. If more than 50 percent of the fair market value of the real property is not located within any one state, then the receipts described in this subsection shall be included in the numerator of the receipts factor if the borrower is located in this State.</text> </paragraph> <paragraph num="(2)"> <text>The determination of whether the real property securing a loan is located within this State shall be made as of the time the original agreement was made and subsequent substitutions of collateral shall be disregarded.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Net Gains from the Sale of Loans.</text> <paragraph num="(1)"> <text>Net gains from the sale of loans includes income recorded under the coupon stripping rules of §1286 of the Internal Revenue Code.</text> </paragraph> <paragraph num="(2)"> <text>The amount of net gains, but not less than zero, from the sale of loans secured by real property included in the numerator is determined by multiplying the net gains by a fraction, the numerator of which is the amount included in the numerator of the receipts factor pursuant to §B(3) of this regulation and the denominator of which is the total amount of interest and fees or penalties in the nature of interest from loans secured by real property.</text> </paragraph> <paragraph num="(3)"> <text>The amount of net gains, but not less than zero, from the sale of loans not secured by real property included in the numerator is determined by multiplying the net gains by a fraction, the numerator of which is the amount included in the numerator of the receipts factor pursuant to §B(4) of this regulation and the denominator of which is the total amount of interest and fees or penalties in the nature of interest from loans not secured by real property.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Loan Servicing Fees.</text> <paragraph num="(1)"> <text>Loan servicing fees derived from loans secured by real property are determined by multiplying the fees by a fraction, the numerator of which is the amount included in the numerator of the receipts factor pursuant to §B(3) of this regulation and the denominator of which is the total amount of interest and fees or penalties in the nature of interest from loans secured by real property.</text> </paragraph> <paragraph num="(2)"> <text>Loan servicing fees derived from loans not secured by real property are determined by multiplying the fees by a fraction, the numerator of which is the amount included in the numerator of the receipts factor pursuant to §B(4) of this regulation and the denominator of which is the total amount of interest and fees or penalties in the nature of interest from loans not secured by real property.</text> </paragraph> <paragraph num="(3)"> <text>In circumstances in which the taxpayer receives loan servicing fees for servicing either the secured or the unsecured loans of another, the numerator of the receipts factor shall include those fees if the borrower is located in this State.</text> </paragraph> </paragraph> <paragraph num="G."> <text>Receipts from Investment Assets and Activities and Trading Assets and Activities.</text> <paragraph num="(1)"> <text>Interest, dividends, net gains, but not less than zero, and other income from investment assets and activities, and from trading assets and activities shall be included in the receipts factor. Investment assets and activities and trading assets and activities include, but are not limited to, investment securities, trading account assets, federal funds, securities purchased and sold under agreements to resell or repurchase, options, futures contracts, forward contracts, notional principal contracts such as swaps, equities, and foreign currency transactions. The receipts factor shall include the following amounts:</text> <paragraph num="(a)"> <text>The amount by which interest from federal funds sold and securities purchased under resale agreements exceeds interest expense on federal funds purchased and securities sold under repurchase agreements;</text> </paragraph> <paragraph num="(b)"> <text>The amount by which interest, dividends, gains, and other income from trading assets and activities, including but not limited to assets and activities in the matched book, in the arbitrage book, and foreign currency transactions, exceed amounts paid in lieu of interest, amounts paid in lieu of dividends, and losses from those assets and activities.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The numerator of the receipts factor includes interest, dividends, net gains, but not less than zero, and other income from investment assets and activities, and from trading assets and activities described in §G(1) of this regulation that are attributable to this State.</text> </paragraph> <paragraph num="(3)"> <text>The amount of interest, dividends, net gains, but not less than zero, and other income from investment assets and activities in the investment account to be attributed to this State and included in the numerator is determined by multiplying all the income from those assets and activities by a fraction, the numerator of which is the gross income from those assets and activities which are properly assigned to a regular place of business of the taxpayer within this State and the denominator of which is the gross income from all those assets and activities.</text> </paragraph> <paragraph num="(4)"> <text>The amount of interest from federal funds sold and purchased and from securities purchased under resale agreements and securities sold under repurchase agreements attributable to this State and included in the numerator is determined by multiplying the amount described in §G(1)(a) of this regulation from those funds and securities by a fraction, the numerator of which is the gross income from those funds and securities which are properly assigned to a regular place of business of the taxpayer within this State and the denominator of which is the gross income from all those funds and securities.</text> </paragraph> <paragraph num="(5)"> <text>The amount of interest, dividends, gains, and other income from trading assets and activities, including but not limited to assets and activities in the matched book, in the arbitrage book, and foreign currency transactions, but excluding amounts described in §G(3) and (4) of this regulation, attributable to this State and included in the numerator is determined by multiplying the amount described in §G(1)(b) of this regulation by a fraction, the numerator of which is the gross income from the trading assets and activities which are properly assigned to a regular place of business of the taxpayer within this State and the denominator of which is the gross income from all the assets and activities.</text> </paragraph> <paragraph num="(6)"> <text>The taxpayer shall have the burden of proving that an investment asset or activity or trading asset or activity was properly assigned to a regular place of business outside of this State by demonstrating that the day-to-day decisions regarding the asset or activity occurred at a regular place of business outside this State. Where the day-to-day decisions regarding an investment asset or activity or trading asset or activity occur at more than one regular place of business and one regular place of business is in this State and one regular place of business is outside this State, that asset or activity shall be considered to be located at the regular place of business of the taxpayer where the investment or trading policies or guidelines with respect to the asset or activity are established. Unless the taxpayer demonstrates to the contrary, the policies and guidelines shall be presumed to be established at the commercial domicile of the taxpayer.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Property Factor."> <paragraph num="A."> <text>The property factor is a fraction, the numerator of which is the average value of real property and tangible personal property rented to the taxpayer that is located or used within this State during the taxable year, the average value of the taxpayer's real and tangible personal property owned that is located or used within this State during the taxable year, and the average value of the taxpayer's loans and credit card receivables that are located within this State during the taxable year, and the denominator of which is the average value of all the property located or used within and without this State during the taxable year.</text> </paragraph> <paragraph num="B."> <text>The property factor shall include only property the income or expenses of which are included, or would have been included if not fully depreciated or expensed, or depreciated or expensed to a nominal amount, in the computation of the apportionable income base for the taxable year.</text> </paragraph> <paragraph num="C."> <text>Value of Property Owned by the Taxpayer.</text> <paragraph num="(1)"> <text>The value of real property and tangible personal property owned by the taxpayer is the original cost or other basis of the property for federal income tax purposes without regard to depletion, depreciation, or amortization.</text> </paragraph> <paragraph num="(2)"> <text>Loans are valued at their outstanding principal balance, without regard to any reserve for bad debts. If a loan is charged-off in whole or in part for federal income tax purposes, the portion of the loan charged off is not outstanding. A specifically allocated reserve established pursuant to regulatory or financial accounting guidelines which is treated as charged-off for federal income tax purposes shall be treated as charged-off for purposes of this section.</text> </paragraph> <paragraph num="(3)"> <text>Credit card receivables are valued at their outstanding principal balance, without regard to any reserve for bad debts. If a credit card receivable is charged-off in whole or in part for federal income tax purposes, the portion of the receivable charged-off is not outstanding.</text> </paragraph> </paragraph> <paragraph num="D."> <text>The average value of property owned by the taxpayer is computed on an annual basis by adding the value of the property on the first day of the taxable year and the value on the last day of the taxable year and dividing the sum by two. If averaging on this basis does not properly reflect average value, the Comptroller may require averaging on a more frequent basis. The taxpayer may elect to average on a more frequent basis. When averaging on a more frequent basis is required by the Comptroller or is elected by the taxpayer, the same method of valuation shall be used consistently by the taxpayer with respect to property within and without this State and on all subsequent returns unless the taxpayer receives prior permission from the Comptroller or the Comptroller requires a different method of determining average value.</text> </paragraph> <paragraph num="E."> <text>Average Value of Real Property and Tangible Personal Property Rented to the Taxpayer.</text> <paragraph num="(1)"> <text>The average value of real property and tangible personal property that the taxpayer has rented from another, and which is not treated as property owned by the taxpayer for federal income tax purposes, shall be determined annually by multiplying the gross rents payable during the taxable year by eight.</text> </paragraph> <paragraph num="(2)"> <text>If the use of the general method described in this section results in inaccurate valuations of rented property, any other method which properly reflects the value may be adopted by the Comptroller or by the taxpayer when approved in writing by the Comptroller. Once approved, that method of valuation shall be used on all subsequent returns unless the taxpayer receives prior approval from the Comptroller or the Comptroller requires a different method of valuation.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Location of Real Property and Tangible Personal Property Owned by or Rented to the Taxpayer.</text> <paragraph num="(1)"> <text>Except as described in §F(2) of this regulation, real property and tangible personal property owned by or rented to the taxpayer is considered to be located within this State if it is physically located, situated, or used within this State.</text> </paragraph> <paragraph num="(2)"> <text>Transportation property is included in the numerator of the property factor to the extent that the property is used in this State. The extent an aircraft will be deemed to be used in this State and the amount of value that is to be included in the numerator of this State's property factor is determined by multiplying the average value of the aircraft by a fraction, the numerator of which is the number of landings of the aircraft in this State and the denominator of which is the total number of landings of the aircraft everywhere. If the extent of the use of any transportation property within this State cannot be determined, then the property will be deemed to be used wholly in the state in which the property has its principal base of operations. A motor vehicle will be deemed to be used wholly in the state in which it is registered.</text> </paragraph> </paragraph> <paragraph num="G."> <text>Location of Loans.</text> <paragraph num="(1)"> <text>Regular Place of Business.</text> <paragraph num="(a)"> <text>A loan is considered to be located within this State if it is properly assigned to a regular place of business of the taxpayer within this State.</text> </paragraph> <paragraph num="(b)"> <text>A loan is properly assigned to the regular place of business with which it has a preponderance of substantive contacts. A loan assigned by the taxpayer to a regular place of business without the State shall be presumed to have been properly assigned if the:</text> <paragraph num="(i)"> <text>Taxpayer has assigned, in the regular course of its business, the loan on its records to a regular place of business consistent with federal or state regulatory requirements;</text> </paragraph> <paragraph num="(ii)"> <text>Assignment on its records is based upon substantive contacts of the loan to that regular place of business; and</text> </paragraph> <paragraph num="(iii)"> <text>Taxpayer uses those records reflecting assignment of loans for the filing of all state and local tax returns for which an assignment of loans to a regular place of business is required.</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>The presumption of proper assignment of a loan provided in §G(1)(b) of this regulation may be rebutted upon a showing by the Comptroller, supported by a preponderance of the evidence, that the preponderance of substantive contacts regarding the loan did not occur at the regular place of business to which it was assigned on the taxpayer's records. When that presumption has been rebutted, the loan shall then be located within this State if the taxpayer:</text> <paragraph num="(i)"> <text>Had a regular place of business within this State at the time the loan was made; and</text> </paragraph> <paragraph num="(ii)"> <text>Fails to show, by a preponderance of the evidence, that the preponderance of substantive contacts regarding the loan did not occur within this State.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(2)"> <text>In the case of a loan which is assigned by the taxpayer to a place without this State which is not a regular place of business, it shall be presumed, subject to rebuttal by the taxpayer on a showing supported by the preponderance of evidence, that the preponderance of substantive contacts regarding the loan occurred within this State if, at the time the loan was made, the taxpayer's commercial domicile was within this State.</text> </paragraph> <paragraph num="(3)"> <text>Determination of Preponderance of Substantive Contacts.</text> <paragraph num="(a)"> <text>To determine the state in which the preponderance of substantive contacts relating to a loan have occurred, the facts and circumstances regarding the loan at issue shall be reviewed on a case-by-case basis and consideration shall be given to activities such as the solicitation, investigation, negotiation, approval, and administration of the loan. The terms solicitation, investigation, negotiation, approval, and administration are described in §G(3)(b)—(f) of this regulation.</text> </paragraph> <paragraph num="(b)"> <text>“Solicitation” is either active or passive. Active solicitation occurs when an employee of the taxpayer initiates the contact with the customer. That activity is located at the regular place of business which the taxpayer's employee is regularly connected with or working out of, regardless of where the services of the employee were actually performed. Passive solicitation occurs when the customer initiates the contact with the taxpayer. If the customer's initial contact was not at a regular place of business of the taxpayer, the regular place of business, if any, where the passive solicitation occurred is determined by the facts in each case.</text> </paragraph> <paragraph num="(c)"> <text>“Investigation” is the procedure whereby employees of the taxpayer determine the creditworthiness of the customer as well as the degree of risk involved in making a particular agreement. That activity is located at the regular place of business which the taxpayer's employees are regularly connected with or working out of, regardless of where the services of the employees were actually performed.</text> </paragraph> <paragraph num="(d)"> <text>“Negotiation” is the procedure whereby employees of the taxpayer and its customer determine the terms of the agreement such as the amount, duration, interest rate, frequency of repayment, currency denomination, and security required. That activity is located at the regular place of business which the taxpayer's employees are regularly connected with or working out of, regardless of where the services of the employees were actually performed.</text> </paragraph> <paragraph num="(e)"> <text>“Approval” is the procedure whereby employees or the board of directors of the taxpayer make the final determination of whether to enter into the agreement. That activity is located at the regular place of business which the taxpayer's employees are regularly connected with or working out of, regardless of where the services of the employees were actually performed. If the board of directors makes the final determination, the activity is located at the commercial domicile of the taxpayer.</text> </paragraph> <paragraph num="(f)"> <text>“Administration” is the process of managing the account. This process includes bookkeeping, collecting the payments, corresponding with the customer, reporting to management regarding the status of the agreement, and proceeding against the borrower or the security interest if the borrower is in default. That activity is located at the regular place of business which oversees this activity.</text> </paragraph> </paragraph> </paragraph> <paragraph num="H."> <text>For purposes of determining the location of credit card receivables, credit card receivables are treated as loans and are subject to the provisions of §G of this regulation.</text> </paragraph> <paragraph num="I."> <text>A loan that has been properly assigned to a state shall, absent any change of material fact, remain assigned to that state for the length of the original term of the loan. Thereafter, the loan may be properly assigned to another state if the loan has a preponderance of substantive contact to a regular place of business there.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Payroll Factor."> <paragraph num="A."> <text>The payroll factor is a fraction, the numerator of which is the total amount paid in this State during the taxable year by the taxpayer for compensation and the denominator of which is the total compensation paid both within and without this State during the taxable year. The payroll factor shall include only that compensation which is included in the computation of the apportionable income tax base for the taxable year.</text> </paragraph> <paragraph num="B."> <text>Payments made to an independent contractor or any other person not properly classifiable as an employee shall be excluded from both the numerator and denominator of the factor.</text> </paragraph> <paragraph num="C."> <text>Compensation is paid in this State if any one of the following tests, applied consecutively, is met:</text> <paragraph num="(1)"> <text>The employee's services are performed entirely within this State;</text> </paragraph> <paragraph num="(2)"> <text>The employee's services are performed both within and without the State, but the service performed without the State is incidental to the employee's service within the State; or</text> </paragraph> <paragraph num="(3)"> <text>The employee's services are performed both within and without this State, and:</text> <paragraph num="(a)"> <text>The employee's principal base of operations is within this State,</text> </paragraph> <paragraph num="(b)"> <text>There is no principal base of operations in any state in which some part of the services is performed, but the place from which the services are directed or controlled is in this State, or</text> </paragraph> <paragraph num="(c)"> <text>The principal base of operations and the place from which the services are directed or controlled are not in any state in which some part of the service is performed but the employee's residence is in this State.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>As used in §C(2) of this regulation, “incidental” means any service which is temporary or transitory in nature, or which is rendered in connection with an isolated transaction.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Tax-General Article, §§2-103, 10-306.1, and 10-402(d), Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: January 1, 1998 (24:12 Md. R. 861)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective June 25, 2001 (28:12 Md. R. 1103); April 19, 2010 (37:8 Md. R. 614)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03 amended effective June 25, 2001 (28:12 Md. R. 1103); May 2, 2022 (49:9 Md. R. 529)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06C amended effective October 9, 2006 (33:20 Md. R. 1613)</annotation> </annotations> </chapter> <chapter num="09" heading="Credit for Employer-Provided Long-Term-Care Insurance"> <regulation prefix="Regulation" num=".01" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Long-term-care insurance” has the meaning stated in Insurance Article, §18-101(f), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>“Employer” has the meaning stated in §3401(d) of the Internal Revenue Code.</text> </paragraph> <paragraph num="(3)"> <text>“Employee” means an individual who is employed in this State.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Credit Allowed."> <text>Subject to the limitations in Regulation .03 of this chapter, an employer may claim a credit equal to 5 percent of the costs incurred by the employer during the taxable year to provide long-term-care insurance as part of an employee benefit package.</text> </regulation> <regulation prefix="Regulation" num=".03" heading="Limitations."> <paragraph num="A."> <text>The credit in Regulation .02 of this chapter may not exceed the lesser of:</text> <paragraph num="(1)"> <text>$5,000; or</text> </paragraph> <paragraph num="(2)"> <text>$100 multiplied by the number of employees covered by long-term-care insurance provided under the employee benefit package.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The credit in §A of this regulation and in Regulation .02 of this chapter is not allowed to any employer who claims a credit for the same expenses against the public service company franchise tax.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Exempt Organizations."> <text>If an employer is an organization that is exempt from taxation under §501(c)(3) or (4) of the Internal Revenue Code, then the credit under this chapter may be taken against the State income tax due on unrelated business taxable income as provided under Tax-General Article, §§10-304 and 10-812, Annotated Code of Maryland.</text> </regulation> <regulation prefix="Regulation" num=".05" heading="Carryover of Excess Credit."> <text>If the credit allowed under this chapter in any taxable year exceeds the total of tax otherwise payable by the employer for that taxable year, the employer may apply the excess as a credit for succeeding taxable years until the earlier of:</text> <paragraph num="A."> <text>The full amount of the excess is used; or</text> </paragraph> <paragraph num="B."> <text>The expiration of the fifth taxable year after the taxable year in which the costs to provide long-term-care insurance as part of an employee benefit package were incurred.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Tax-General Article, §2-103, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: January 24, 2000 (27:1 Md. R. 74)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01B amended effective April 19, 2010 (37:8 Md. R. 614)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03B amended effective October 9, 2006 (33:20 Md. R. 1613)</annotation> </annotations> </chapter> <chapter num="10" heading="Maryland Research and Development Tax Credit"> <regulation prefix="Regulation" num=".01" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Basic credit” means the research and development tax credit described in Regulation .02C(1) of this chapter.</text> </paragraph> <paragraph num="(2)"> <text>“Business entity” means a sole proprietorship, partnership, corporation, or other entity doing business in the State.</text> </paragraph> <paragraph num="(3)"> <text>“Credit year” means the year for which the credit is being claimed.</text> </paragraph> <paragraph num="(4)"> <text>“Department” means the Department of Business and Economic Development.</text> </paragraph> <paragraph num="(5)"> <text>“Growth credit” means the research and development tax credit described in Regulation .02C(2) of this chapter.</text> </paragraph> <paragraph num="(6)"> <text>“Maryland base amount” means the base amount as defined in §41(c) of the Internal Revenue Code, that is attributable to Maryland, determined by:</text> <paragraph num="(a)"> <text>Substituting “Maryland qualified research and development expense” for “qualified research expense”;</text> </paragraph> <paragraph num="(b)"> <text>Substituting “Maryland qualified research and development” for “qualified research”; and</text> </paragraph> <paragraph num="(c)"> <text>Using, instead of the “fixed base percentage”:</text> <paragraph num="(i)"> <text>The percentage that the Maryland qualified research and development expense for the 4 taxable years immediately preceding the taxable year in which the expense is incurred is of the gross receipts for those years; or</text> </paragraph> <paragraph num="(ii)"> <text>For a taxpayer that has fewer than 4 but at least 1 prior taxable year, the percentage as determined under §B(6)(c)(i) of this regulation, determined using the number of immediately preceding taxable years that the taxpayer has.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(7)"> <text>“Maryland adjusted base amount” means the Maryland base amount modified for a period of less than 12 months.</text> </paragraph> <paragraph num="(8)"> <text>“Maryland gross receipts” means gross receipts that are reasonably attributable to the conduct of a trade or business in the State, determined under COMAR 03.04.03.08.</text> </paragraph> <paragraph num="(9)"> <text>“Maryland qualified research and development” means qualified research, as defined in §41(d) of the Internal Revenue Code and regulations thereunder, that is conducted in the State.</text> </paragraph> <paragraph num="(10)"> <text>“Maryland qualified research and development expense” means qualified research expenses, as defined in §41(b) of the Internal Revenue Code and regulations thereunder, incurred for Maryland qualified research and development.</text> </paragraph> <paragraph num="(11)"> <text>“Small business” means a for-profit corporation, limited liability company, partnership, or sole proprietorship with net book value assets totaling, at the beginning or the end of the taxable year for which Maryland qualified research and development expenses are incurred, as reported on the balance sheet, less than $5,000,000.</text> </paragraph> <paragraph num="(12)"> <text>“Taxpayer” means an individual or a corporation required to pay an income tax or file an income tax return.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Calculation of Credit."> <paragraph num="A."> <text>The Maryland base percentage is:</text> <paragraph num="(1)"> <text>The percentage that the Maryland qualified research and development expense for the 4 taxable years immediately preceding the taxable year in which the expense is incurred is of the business entity's Maryland gross receipts for those years; or</text> </paragraph> <paragraph num="(2)"> <text>For a business entity that has fewer than 4 but at least 1 taxable year, the percentage as determined under §A(1) of this regulation using the number of immediately preceding taxable years that the business entity has.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The Maryland base amount is:</text> <paragraph num="(1)"> <text>For a business entity with gross receipts in at least 1 of the immediately preceding 4 taxable years, the product of multiplying the Maryland base percentage by the average annual Maryland gross receipts of the business entity for the 4 taxable years immediately preceding the credit year; or</text> </paragraph> <paragraph num="(2)"> <text>For a business entity with no Maryland gross receipts during any of the immediately preceding 4 taxable years, the Maryland base amount is zero.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Subject to the limitations of this regulation, the taxpayer may claim against the State income tax:</text> <paragraph num="(1)"> <text>The basic credit in the amount of 3 percent of the Maryland qualified research and development expenses, not exceeding the Maryland base amount for the business entity, paid or incurred by the business entity during the taxable year; and</text> </paragraph> <paragraph num="(2)"> <text>The growth credit in the amount of 10 percent of the amount by which the Maryland qualified research and development expenses paid or incurred by the business entity during the taxable year exceed the Maryland base amount for the business entity.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Calculation of Credit for Partial or Short Tax Year."> <paragraph num="A."> <text>The Maryland adjusted base amount for a partial or short year taxpayer is the Maryland base amount multiplied by a fraction:</text> <paragraph num="(1)"> <text>The numerator of which is the number of days in the calendar year included in the partial or short tax year; and</text> </paragraph> <paragraph num="(2)"> <text>The denominator of which is 365.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The Maryland qualified research and development expenses for a partial year taxpayer are:</text> <paragraph num="(1)"> <text>The actual Maryland qualified research and development expenses incurred during the partial tax year incurred during the calendar year; or</text> </paragraph> <paragraph num="(2)"> <text>The total Maryland qualified research and development expenses incurred during the entire tax year multiplied by a fraction:</text> <paragraph num="(a)"> <text>The numerator of which is the number of days in the calendar year included in the partial tax year; and</text> </paragraph> <paragraph num="(b)"> <text>The denominator of which is 365.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Subject to the limitations of this regulation, the partial or short year taxpayer may claim against the State income tax:</text> <paragraph num="(1)"> <text>The basic credit in the amount of 3 percent of the Maryland qualified research and development expenses, not exceeding the Maryland adjusted base amount for the business entity, paid or incurred by the business entity during the taxable year; and</text> </paragraph> <paragraph num="(2)"> <text>The growth credit in the amount of 10 percent of the amount by which the Maryland qualified research and development expenses paid or incurred by the business entity during the taxable year exceed the Maryland adjusted base amount for the business entity.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Maximum Annual Credits."> <paragraph num="A."> <text>Except as provided in §D of this regulation, the total amount of basic credits approved by the Department under Regulations .02C(1) and .03C(1) of this chapter may not exceed $4,000,000 for any calendar year.</text> </paragraph> <paragraph num="B."> <text>For any calendar year, if the total amount of basic credits applied for by all business entities is less than $4,000,000, the maximum growth credit specified under §C of this regulation shall be increased for that calendar year by the amount equal to $4,000,000 minus the total amount of the basic credits applied for by all business entities.</text> </paragraph> <paragraph num="C."> <text>Except as provided in §B of this regulation, the total amount of growth credits approved by the Department under Regulations .02C(2) and .03C(2) of this chapter may not exceed $4,000,000 for any calendar year.</text> </paragraph> <paragraph num="D."> <text>For any calendar year, if the total amount of growth credits applied for by all business entities is less than $4,000,000, the maximum basic credit specified under §A of this regulation shall be increased for that calendar year by the amount equal to $4,000,000 minus the total amount of the growth credits applied for by all business entities.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Application for Credit."> <paragraph num="A."> <text>Application. By September 15 of the calendar year following the end of the taxable year in which the Maryland qualified research and development expenses were incurred, a business entity shall submit to the Department a completed application for certification on the form prescribed by the Department. The business entity shall provide the following information:</text> <paragraph num="(1)"> <text>The business entity's name and address;</text> </paragraph> <paragraph num="(2)"> <text>The business entity's federal identification number;</text> </paragraph> <paragraph num="(3)"> <text>The beginning and ending dates of the business entity's fiscal year, or, if a partial year, then the fraction of a year for which the credit is being claimed;</text> </paragraph> <paragraph num="(4)"> <text>The North American Industrial Classification System (NAICS) code number for the business entity;</text> </paragraph> <paragraph num="(5)"> <text>The amount of the research and development expenses eligible for the federal research and development credit for the current and each of the previous 4 tax years and the corresponding average for the previous 4 tax years;</text> </paragraph> <paragraph num="(6)"> <text>The amount of Maryland qualified research and development expenses for the current tax year, the previous 4 tax years, and the corresponding average for the previous 4 tax years;</text> </paragraph> <paragraph num="(7)"> <text>The basic credit being applied for in the current tax year, before allocation and certification by the Department;</text> </paragraph> <paragraph num="(8)"> <text>The growth credit being applied for in the current tax year;</text> </paragraph> <paragraph num="(9)"> <text>The Maryland base percentage;</text> </paragraph> <paragraph num="(10)"> <text>The Maryland base amount or Maryland adjusted base amount; and</text> </paragraph> <paragraph num="(11)"> <text>Any other information required by the Department.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The Department may require that the information required by this regulation be verified by an independent auditor retained by the business entity.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Certification of Credit."> <paragraph num="A."> <text>The Department shall certify to the taxpayer the amount of the basic and growth research and development tax credits approved by the Department for the taxpayer. The Department shall issue this certification by December 15 of the calendar year following the end of the taxable year in which the Maryland qualified research and development expenses were incurred.</text> </paragraph> <paragraph num="B."> <text>If the total amount of the credits applied for by all business entities under Regulation .05 of this chapter exceeds the maximum credit amounts available under Regulation .04 of this chapter, then the Department shall approve a credit for each applicant in an amount equal to the product of multiplying the credit applied for by the applicant times a fraction:</text> <paragraph num="(1)"> <text>The numerator of which is the maximum specified under Regulation .04 of this chapter; and</text> </paragraph> <paragraph num="(2)"> <text>The denominator of which is the total of all credits applied for by all applicants under Regulation .05 of this chapter in the calendar year.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Claiming the Credit."> <text>To claim the credits approved by the Department, a taxpayer shall:</text> <paragraph num="A."> <text>File an amended income tax return for the taxable year in which the Maryland qualified research and development expense was incurred; and</text> </paragraph> <paragraph num="B."> <text>Attach a copy of the Department's certification to the amended income tax return.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Carryover of Tax Credits."> <paragraph num="A."> <text>Except as provided in §C of this regulation, if the credit allowed in any taxable year exceeds the State income tax for that taxable year, a taxpayer may apply the excess as a credit against the State income tax for succeeding taxable years until the earlier of:</text> <paragraph num="(1)"> <text>The full amount of the excess is used;</text> </paragraph> <paragraph num="(2)"> <text>For credits certified by the Department before July 1, 2005, the expiration of the 15th taxable year after the taxable year in which the Maryland qualified research and development expense was incurred; or</text> </paragraph> <paragraph num="(3)"> <text>For credits certified by the Department after June 30, 2005, the expiration of the 7th taxable year after the taxable year in which the Maryland qualified research and development expense was incurred.</text> </paragraph> </paragraph> <paragraph num="B."> <text>A tax credit may not be carried back to a preceding taxable year.</text> </paragraph> <paragraph num="C."> <text>If the credit allowed in any taxable year exceeds the State income tax for that taxable year, a small business may claim a refund in the amount of the excess.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Affiliated Corporations and Entities Under Common Control."> <paragraph num="A."> <text>All members of the same controlled group of corporations, as defined in §41(f) of the Internal Revenue Code, and all entities under common control, whether incorporated or not, shall be treated as a single taxpayer for purposes of these tax credits.</text> </paragraph> <paragraph num="B."> <text>The credits allowable to each member shall be determined by multiplying the total credits certified by the Department for the controlled group by a fraction:</text> <paragraph num="(1)"> <text>The numerator of which is the Maryland qualified research and development expenses incurred by the separate member; and</text> </paragraph> <paragraph num="(2)"> <text>The denominator of which is the total Maryland qualified research and development expenses incurred by all members of the controlled group.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The computation of the Maryland base amount or the Maryland adjusted base amount shall include all of the qualified research and development expenses of an acquired, consolidated, restructured, or merged entity.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Mergers and Acquisitions."> <paragraph num="A."> <text>In determining the carryover of unused credits and the effect of a merger or acquisition, federal law shall be applied to the corporations as if they were separate corporations. Any provisions under federal law that would allow separate corporations that are merged or acquired to carry forward unused credits on the surviving corporation's returns shall apply to the carryover of this credit for State purposes.</text> </paragraph> <paragraph num="B."> <text>Unused Credits.</text> <paragraph num="(1)"> <text>In a transaction involving an asset purchase, unused credits:</text> <paragraph num="(a)"> <text>Do not transfer from the target company to the purchaser; and</text> </paragraph> <paragraph num="(b)"> <text>Remain with the target company.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Unused credits may not be sold or purchased.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Short Taxable Years."> <paragraph num="A."> <text>Eligible Expenses. A taxpayer may only claim the credit for Maryland qualified research and development expenses incurred during its taxable year. If the business entity has a short taxable year, only the Maryland qualified research and development expenses incurred during the short taxable year are allowed on the short year return.</text> </paragraph> <paragraph num="B."> <text>If the taxpayer incurs Maryland qualified research and development expenses in 2 taxable years during a calendar year, one of which is a short taxable year, the business entity may only claim a credit on the short taxable year return in an amount equal to the total credits certified by the Department multiplied by a fraction:</text> <paragraph num="(1)"> <text>The numerator of which is the Maryland qualified research and development expenses incurred during the short taxable year; and</text> </paragraph> <paragraph num="(2)"> <text>The denominator of which is the Maryland qualified research and development expenses incurred during the entire calendar year.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".12" heading="Addition Modifications."> <paragraph num="A."> <text>Individuals. To the extent an individual is allowed a credit on the Maryland individual income tax return under Regulation .05 of this chapter, the amount of the credit claimed shall be added to federal adjusted gross income to calculate the individual's Maryland adjusted gross income.</text> </paragraph> <paragraph num="B."> <text>Corporations. To the extent a corporation is allowed a credit on its Maryland income tax return under Regulation .05 of this chapter, the amount of the credit claimed shall be added to federal taxable income to calculate the corporation's Maryland modified income.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".13" heading="Partnerships, S Corporations, Limited Liability Companies, Business Trusts, Estates, and Trusts."> <paragraph num="A."> <text>Partnerships, S Corporations, Limited Liability Companies, and Business Trusts. In the case of a subchapter S corporation, partnership, limited liability company, or business trust, the amount of the credits computed for the pass-through entity shall be allocated among the owners as agreed to in writing by the owners. If there is no written agreement governing the allocation of this credit, the credit shall be allocated in the same proportion as other items are allocated for the taxable year.</text> </paragraph> <paragraph num="B."> <text>Estates and Trusts. In the case of an estate or trust, the amount of the credits computed for the estate or trust for any taxable year shall be apportioned among the estate or trust and the beneficiaries on the basis of the income of the estate or trust allocable to each.</text> </paragraph> <paragraph num="C."> <text>Statements to Partners, Shareholders, Members, and Beneficiaries.</text> <paragraph num="(1)"> <text>Requirements. A partnership, S Corporation, limited liability company, business trust, estate, or trust shall provide each of its partners, shareholders, members, or beneficiaries with an income tax statement.</text> </paragraph> <paragraph num="(2)"> <text>Form and Contents of Statement.</text> <paragraph num="(a)"> <text>Form. A partnership, S corporation, limited liability company, business trust, estate, or trust may elect to use a:</text> <paragraph num="(i)"> <text>Maryland Form 510, Schedule K-1;</text> </paragraph> <paragraph num="(ii)"> <text>Modified federal Schedule K-1; or</text> </paragraph> <paragraph num="(iii)"> <text>Statement prepared on its own form.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Contents. In addition to the contents required under COMAR 03.04.07.04B(2), the statement shall contain the amount of each credit apportioned to the individual partner, shareholder, member, or beneficiary.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Statement Attached to Return. A partner, shareholder, member, or beneficiary shall attach a copy of the statement to the income tax return on which the credit is claimed.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Year in which Credits are Claimed. The credit apportioned to a taxpayer under this regulation shall be claimed on the taxpayer's Maryland tax return in the taxable year of the taxpayer within which the taxable year of the pass-through entity ends.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".14" heading="Continuity if Federal Provisions Repealed or Terminate."> <text>If the provisions of §41 of the Internal Revenue Code governing the federal research and development tax credit are repealed or terminate, the provisions of this chapter shall continue to operate as if the provisions of §41 of the Internal Revenue Code remain in effect, and the Maryland research and development tax credit under this chapter shall continue to be available.</text> </regulation> <annotations> <annotation type="Authority">Tax-General Article, §§2-103 and 10-721, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: March 4, 2002 (29:4 Md. R. 416)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01B amended effective March 31, 2014 (41:6 Md. R. 377)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04 amended effective March 31, 2014 (41:6 Md. R. 377)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08A amended effective October 9, 2006 (33:20 Md. R. 1613); March 31, 2014 (41:6 Md. R. 377)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08C adopted effective March 31, 2014 (41:6 Md. R. 377)</annotation> <annotation type="History" subtype="Administrative History">Regulation .13C amended effective March 21, 2011 (38:6 Md. R. 393)</annotation> <annotation type="History" subtype="Administrative History">Regulation .14 adopted effective February 9, 2009 (36:3 Md. R. 207)</annotation> </annotations> </chapter> <chapter num="11" heading="Arts and Entertainment Districts"> <regulation prefix="Regulation" num=".01" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Artist” means a qualifying residing artist as defined in Economic Development Article, §4-701(f), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>“Artistic work” has the meaning stated in Economic Development Article, §4-701(b), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(3)"> <text>“District” means an arts and entertainment district as defined in Economic Development Article, §4-701(c), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(4)"> <text>“Subtraction” means the modification to federal adjusted gross income as set forth in Tax-General Article, §10-207(v), Annotated Code of Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Sales and Publication of Artistic Work."> <paragraph num="A."> <text>To the extent included in federal adjusted gross income, the amount of income derived by an artist from the sale or publication of an artistic work within the district located in the county where the artist owns or rents residential real property and in which the artist conducts a business is allowed as a subtraction from federal adjusted gross income.</text> </paragraph> <paragraph num="B."> <text>Income that an artist earns from the sale or publication of artistic work created by the artist within the district and sold within the district qualifies for the subtraction.</text> </paragraph> <paragraph num="C."> <text>Income that an artist earns from the sale or publication of artistic work created by the artist within the district and sold outside the district does not qualify for the subtraction.</text> </paragraph> <paragraph num="D."> <text>Income that an artist earns from the sale or publication of artistic work created by the artist outside the district and sold within the district does not qualify for the subtraction.</text> </paragraph> <paragraph num="E."> <text>Income that an artist earns from the sale or publication of artistic work created by the artist outside the district and sold outside the district does not qualify for the subtraction.</text> </paragraph> <paragraph num="F."> <text>Income received by an artist from internet, mail order, and catalog sales of artistic work created within the district by the artist that is shipped from within the district qualifies for the subtraction.</text> </paragraph> <paragraph num="G."> <text>Income in the nature of royalties, licenses, or other future revenues from the sale of reproduction or publishing rights does not qualify for the subtraction.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Production and Performance of Artistic Work."> <paragraph num="A."> <text>To the extent included in federal adjusted gross income, the amount of income derived by an artist from the production or performance of an artistic work within the district located in the county where the artist owns or rents residential real property and in which the artist conducts a business is allowed as a subtraction from federal adjusted gross income.</text> </paragraph> <paragraph num="B."> <text>Income that an artist earns from a musical performance, the performance of a play or dance, the showing of a film produced within the district by the artist, or acting in a film within the district qualifies for the subtraction.</text> </paragraph> <paragraph num="C."> <text>Income that an artist earns from a musical performance, the performance of a play or dance, the showing of a film, or acting in a film outside the district does not qualify for the subtraction.</text> </paragraph> <paragraph num="D."> <text>Income that an artist earns from the creation, choreography, composition, or production of a play, dance, music, or film within the district qualifies for the subtraction.</text> </paragraph> <paragraph num="E."> <text>Income that an artist earns from the creation, choreography, composition, or production of a play, dance, music, or film outside the district does not qualify for the subtraction.</text> </paragraph> <paragraph num="F."> <text>Income received by an artist from the internet broadcast of an artistic work from within the district qualifies for the subtraction.</text> </paragraph> <paragraph num="G."> <text>Income in the nature of royalties, licenses, or other future revenues from the creation or choreography of a play or dance, the composition of music, or the production of a film does not qualify for the subtraction.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Availability of Subtraction."> <paragraph num="A."> <text>Except as provided in §B of this regulation, the subtraction provided in Regulations .02 and .03 of this chapter is available only to individuals.</text> </paragraph> <paragraph num="B."> <text>The subtraction provided in Regulations .02 and .03 of this chapter is available to a single-member limited liability company, whose sole member is an individual, if the limited liability company is disregarded as an entity separate and apart from its member for federal income tax purposes and as such, the profit or loss of the limited liability company is reflected on the income tax return filed by the member of the limited liability company.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Procedures."> <paragraph num="A."> <text>An individual claiming the subtraction shall complete Form 502AE and attach the form to the Maryland individual income tax return.</text> </paragraph> <paragraph num="B."> <text>Individuals claiming the subtraction shall maintain receipts, books, accounts, and any other documentation relating to the sale, publication, production, or performance of artistic work by an artist.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Tax-General Article, §2-103, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: November 10, 2003 (30:22 Md. R. 1577)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01B amended effective February 9, 2009 (36:3 Md. R. 207)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02A, D amended effective October 9, 2006 (33:20 Md. R. 1613)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02F amended effective February 9, 2009 (36:3 Md. R. 207)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03A—C amended effective October 9, 2006 (33:20 Md. R. 1613)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05A amended effective October 9, 2006 (33:20 Md. R. 1613)</annotation> </annotations> </chapter> <chapter num="12" heading="Nonresident Real Estate Withholding Tax"> <regulation prefix="Regulation" num=".01" heading="Applicability."> <text>Effective Date. This chapter applies to all deeds and other instruments of transfer recorded with the clerk or filed with the Department on or after October 1, 2003.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Clerk” means clerk of the circuit court for any county of the State or Baltimore City.</text> </paragraph> <paragraph num="(2)"> <text>“Debt incurred in contemplation of sale” means a debt secured by a mortgage, deed of trust, or other instrument on the property being sold with an effective date of not earlier than 90 days before the date of sale.</text> </paragraph> <paragraph num="(3)"> <text>“Department” means the Department of Assessments and Taxation.</text> </paragraph> <paragraph num="(4)"> <text>“Installment sale” means any sale:</text> <paragraph num="(a)"> <text>In which at least one payment is scheduled after the end of the tax year in which the transfer occurred; and</text> </paragraph> <paragraph num="(b)"> <text>Treated as an installment sale for federal income tax purposes under §453 of the Internal Revenue Code (26 U.S.C. §453).</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>“Like-kind exchange” means an exchange of property within the provisions of §1031 of the Internal Revenue Code (26 U.S.C. §1031).</text> </paragraph> <paragraph num="(6)"> <text>Net Proceeds.</text> <paragraph num="(a)"> <text>“Net proceeds” means the total sales price paid to the transferor less:</text> <paragraph num="(i)"> <text>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, except debts incurred in contemplation of sale; and</text> </paragraph> <paragraph num="(ii)"> <text>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.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>“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.</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>“Nonresident entity” means an entity that:</text> <paragraph num="(a)"> <text>Is not formed under the laws of the State more than 90 days before the date of sale of the property; and</text> </paragraph> <paragraph num="(b)"> <text>Is not qualified by or registered with the Department of Assessments and Taxation to do business in the State more than 90 days before the date of sale of the property.</text> </paragraph> </paragraph> <paragraph num="(8)"> <text>“Principal residence” means a residence that is described in §121 of the Internal Revenue Code (26 U.S.C. §121).</text> </paragraph> <paragraph num="(9)"> <text>“Real estate reporting person” has the meaning stated in §6045(e)(2) of the Internal Revenue Code (26 U.S.C. §6045(e)(2)).</text> </paragraph> <paragraph num="(10)"> <text>“Resident” means an individual as defined in Tax-General Article, §10-101(k), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(11)"> <text>“Resident entity” means an entity that:</text> <paragraph num="(a)"> <text>Is formed under the laws of the State more than 90 days before the date of sale of the property; or</text> </paragraph> <paragraph num="(b)"> <text>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 more than 90 days before the date of sale of the property.</text> </paragraph> </paragraph> <paragraph num="(12)"> <text>“Transferor” means:</text> <paragraph num="(a)"> <text>The person or entity named as grantor on the deed that records the sale or exchange of the property; or</text> </paragraph> <paragraph num="(b)"> <text>In the case of an LLC, where the sole member is an individual or two married individuals, the entity described in §B(12)(a) of this regulation or the member or members of the LLC.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Withholding Requirements."> <paragraph num="A."> <text>Except as provided in §B of this regulation, a deed or other instrument transferring title may not be:</text> <paragraph num="(1)"> <text>Recorded with the clerk; or</text> </paragraph> <paragraph num="(2)"> <text>Filed with the Department.</text> </paragraph> </paragraph> <paragraph num="B."> <text>A deed or other instrument transferring title may be recorded with the clerk or filed with the Department when:</text> <paragraph num="(1)"> <text>Payment is made to the clerk or Department in an amount equal to the applicable percentage of the total payment to a nonresident or nonresident entity, respectively, as stated in Tax-General Article, §10-912(c), Annotated Code of Maryland;</text> </paragraph> <paragraph num="(2)"> <text>The transferor certifies under the penalties of perjury in the transfer document or an attached affidavit that the transferor is a resident or resident entity;</text> </paragraph> <paragraph num="(3)"> <text>The transferor certifies under the penalties of perjury in the transfer document or an attached affidavit that the property being transferred is the transferor's principal residence as defined in Regulation .02 of this chapter;</text> </paragraph> <paragraph num="(4)"> <text>The transferor presents to the clerk or the Department:</text> <paragraph num="(a)"> <text>A Certificate of Full or Partial Exemption (Form MW506E) issued by the Comptroller in accordance with Regulation .04 of this chapter; and</text> </paragraph> <paragraph num="(b)"> <text>If a partial exemption is issued by the Comptroller, payment in the amount shown as due on the Certificate of Full or Partial Exemption;</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>The transfer is:</text> <paragraph num="(a)"> <text>A transfer pursuant to a foreclosure of a mortgage, deed of trust, or other lien instrument; or</text> </paragraph> <paragraph num="(b)"> <text>A transfer pursuant to a deed in lieu of foreclosure;</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>The transferor is an agency or instrumentality of the United States;</text> </paragraph> <paragraph num="(7)"> <text>The transferor is:</text> <paragraph num="(a)"> <text>The State;</text> </paragraph> <paragraph num="(b)"> <text>A unit of the State; or</text> </paragraph> <paragraph num="(c)"> <text>A political subdivision of the State; or</text> </paragraph> </paragraph> <paragraph num="(8)"> <text>The property is transferred pursuant to a deed or other instrument of writing that includes a statement of consideration required by Tax-Property Article, §12-104, Annotated Code of Maryland, indicating that the consideration payable is zero.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Certificate of Full or Partial Exemption."> <paragraph num="A."> <text>The transferor may file an Application for Certificate of Full or Partial Exemption (Form MW506AE) with the Comptroller.</text> </paragraph> <paragraph num="B."> <text>The transferor shall:</text> <paragraph num="(1)"> <text>File the Application for Certificate of Full or Partial Exemption with the Comptroller at least 21 days before the settlement date;</text> </paragraph> <paragraph num="(2)"> <text>Indicate on the Application for Certificate of Full or Partial Exemption the reason or reasons the transfer qualifies for a full or partial exemption from the withholding tax; and</text> </paragraph> <paragraph num="(3)"> <text>Include with the Application for Certificate of Full or Partial Exemption sufficient documentation to support the request.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The Comptroller may issue a Certificate of Full or Partial Exemption for any of the following reasons:</text> <paragraph num="(1)"> <text>The tax due has been paid in full to the Comptroller;</text> </paragraph> <paragraph num="(2)"> <text>The transfer is to a corporation controlled by the transferor under §351 of the Internal Revenue Code (26 U.S.C. §351);</text> </paragraph> <paragraph num="(3)"> <text>The transfer is pursuant to a tax-free reorganization as described in §361 of the Internal Revenue Code (26 U.S.C. §361);</text> </paragraph> <paragraph num="(4)"> <text>The transfer is being made on an installment sale basis under §453 of the Internal Revenue Code (26 U.S.C. §453);</text> </paragraph> <paragraph num="(5)"> <text>The transfer is by a tax-exempt entity in accordance with §501(a) of the Internal Revenue Code (26 U.S.C. §501(a)) involving no unrelated business taxable income under §12 of the Internal Revenue Code (26 U.S.C. §12);</text> </paragraph> <paragraph num="(6)"> <text>The transfer is to a partnership in exchange for an interest in the partnership such that no gain or loss is recognized under §721 of the Internal Revenue Code (26 U.S.C. §721);</text> </paragraph> <paragraph num="(7)"> <text>The transfer is by a partnership to a partner of the partnership in accordance with §731 of the Internal Revenue Code (26 U.S.C. §731);</text> </paragraph> <paragraph num="(8)"> <text>The transfer is by a real estate investment trust under §857 of the Internal Revenue Code (26 U.S.C. §857);</text> </paragraph> <paragraph num="(9)"> <text>The transfer is a like-kind exchange under §1031 of the Internal Revenue Code (26 U.S.C. §1031);</text> </paragraph> <paragraph num="(10)"> <text>The transfer is occurring because of a condemnation and conversion into a similar property under §1033 of the Internal Revenue Code (26 U.S.C. §1033);</text> </paragraph> <paragraph num="(11)"> <text>The transfer is between spouses, or incident to a divorce in accordance with §1041 of the Internal Revenue Code (26 U.S.C. §1041);</text> </paragraph> <paragraph num="(12)"> <text>The transfer is by an S-corporation in accordance with §1368 of the Internal Revenue Code (26 U.S.C. §1368);</text> </paragraph> <paragraph num="(13)"> <text>The transfer is to a disregarded entity, classified as such under 26 CFR §301.7701-3, that is solely owned by the transferor;</text> </paragraph> <paragraph num="(14)"> <text>All or a portion of the gain from the transfer qualifies for the principal residence exclusion from gross income in accordance with §121 of the Internal Revenue Code (26 U.S.C. §121); or</text> </paragraph> <paragraph num="(15)"> <text>The transfer is otherwise exempt as documented by the transferor.</text> </paragraph> </paragraph> <paragraph num="D."> <text>The Comptroller's decision to issue or deny a Certificate of Full or Partial Exemption and the determination of the amount of tax to be withheld if a partial exemption is granted are final and not subject to appeal.</text> </paragraph> <paragraph num="E."> <text>Like-Kind Exchange.</text> <paragraph num="(1)"> <text>Except as provided in §E(2) of this regulation, a like-kind exchange that qualifies under the provisions of §1031 of the Internal Revenue Code (26 U.S.C. §1031) and for which a Certificate of Full or Partial Exemption has been issued is not subject to the withholding requirements.</text> </paragraph> <paragraph num="(2)"> <text>If at the time of settlement it is known that the property does not qualify as a like-kind exchange under the provisions of §1031 of the Internal Revenue Code (26 U.S.C. §1031) or the transferor will receive taxable boot, then notwithstanding the issuance of the Certificate of Full or Partial Exemption, Regulation .03B(1) of this chapter applies to:</text> <paragraph num="(a)"> <text>The total payment; or</text> </paragraph> <paragraph num="(b)"> <text>The taxable boot.</text> </paragraph> </paragraph> </paragraph> <paragraph num="F."> <text>Installment Sale.</text> <paragraph num="(1)"> <text>Except as provided in §F(2) of this regulation, an installment sale for which a Certificate of Full or Partial Exemption has been issued is not subject to the withholding requirements.</text> </paragraph> <paragraph num="(2)"> <text>Regulation .03B(1) of this chapter applies to that portion of the total payment that the transferor receives before, at, or within 60 days of settlement.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Responsibilities of Transferee and Real Estate Reporting Person at Settlement."> <paragraph num="A."> <text>Unless the transfer is fully exempt from the withholding requirements of this chapter, the transferee or real estate reporting person shall:</text> <paragraph num="(1)"> <text>Withhold at settlement the tax required under Regulation .03B(1) of this chapter; and</text> </paragraph> <paragraph num="(2)"> <text>Remit the tax to the clerk or to the Department in accordance with Regulation .06 of this chapter.</text> </paragraph> </paragraph> <paragraph num="B."> <text>A Return of Income Tax Withholding for Nonresident Sale of Real Property (Form MW506NRS) is required for each transferor for each transfer in which tax was withheld.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Additional Requirements for Recordation or Filing."> <paragraph num="A."> <text>If a payment is required pursuant to Regulation .03B(1) of this chapter, the person presenting the deed or other instrument of transfer shall present the following additional documents to the clerk or the Department:</text> <paragraph num="(1)"> <text>Copies A and B of the Return of Income Tax Withholding for Nonresident Sale of Real Property;</text> </paragraph> <paragraph num="(2)"> <text>If issued by the Comptroller, the Certificate of Full or Partial Exemption; and</text> </paragraph> <paragraph num="(3)"> <text>A separate check in the amount of the tax required to be withheld that is made payable to the clerk or to the Department.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The Return of Income Tax Withholding for Nonresident Sale of Real Property required under §A(1) of this regulation shall be signed under oath by:</text> <paragraph num="(1)"> <text>The transferor of the property;</text> </paragraph> <paragraph num="(2)"> <text>An agent of the transferor; or</text> </paragraph> <paragraph num="(3)"> <text>The real estate reporting person.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Duties of the Clerk or the Department."> <paragraph num="A."> <text>The clerk or the Department shall review the documents presented for recordation or filing for compliance with the requirements of this chapter.</text> </paragraph> <paragraph num="B."> <text>If applicable, the clerk or the Department shall collect any tax due on the transfer.</text> </paragraph> <paragraph num="C."> <text>On or before the 21st day of the month following the month in which the clerk or the Department receives the payment of tax under Regulation .03B(1) of this chapter, the clerk or the Department shall:</text> <paragraph num="(1)"> <text>Pay over to the Comptroller the amount of tax collected;</text> </paragraph> <paragraph num="(2)"> <text>Submit to the Comptroller:</text> <paragraph num="(a)"> <text>The Monthly Reconciliation Report for Sales of Real Property by Nonresidents (Form MW508NRS);</text> </paragraph> <paragraph num="(b)"> <text>The Sales of Real Property by Nonresidents Schedule of Withholding Receipts that includes the:</text> <paragraph num="(i)"> <text>Name of the transferor;</text> </paragraph> <paragraph num="(ii)"> <text>Address of the transferor;</text> </paragraph> <paragraph num="(iii)"> <text>Social Security number or federal employer identification number of the transferor;</text> </paragraph> <paragraph num="(iv)"> <text>Validation number of the transfer; and</text> </paragraph> <paragraph num="(v)"> <text>Amount of tax collected; and</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>Copy A of each Return of Income Tax Withholding for Nonresident Sale of Real Property.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Procedures for Requesting Early Refunds."> <paragraph num="A."> <text>An individual or a corporation that has paid withholding tax in excess of the amount owed may file an Application for Tentative Refund of Withholding on Sales of Real Property by Nonresidents (MW506R) with the Comptroller 60 days after the date the tax was paid to the clerk or the Department, but not later than December 1 of the calendar year in which the tax was paid.</text> </paragraph> <paragraph num="B."> <text>When the transferor of real property is a pass-through entity:</text> <paragraph num="(1)"> <text>A member or a shareholder of a pass-through entity may file an Application for Tentative Refund of Withholding on Sales of Real Property by Nonresidents if the applicant provides sufficient documentation of their status as a member of the pass-through entity and:</text> <paragraph num="(a)"> <text>The member or shareholder is the sole member or shareholder of the transferor pass-through entity; or</text> </paragraph> <paragraph num="(b)"> <text>The members or shareholders is one of two members or shareholders and the two members or shareholders are a married couple.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>A pass-through entity or partner of a pass-through entity may not file an Application for Tentative Refund of Withholding on Sales of Real Property by Nonresidents.</text> </paragraph> </paragraph> <paragraph num="C."> <text>An individual or a corporation shall attach to the Application for Tentative Refund of Withholding on Sales of Real Property by Nonresidents:</text> <paragraph num="(1)"> <text>Copy C of the Return of Income Tax Withholding for Nonresident Sale of Real Property;</text> </paragraph> <paragraph num="(2)"> <text>A copy of the HUD 1 Settlement Statement; and</text> </paragraph> <paragraph num="(3)"> <text>Any other document as required by the Comptroller.</text> </paragraph> </paragraph> <paragraph num="D."> <text>The Comptroller may issue a tentative refund of withholding for any of the reasons found in Regulation .04C of this chapter.</text> </paragraph> <paragraph num="E."> <text>The Comptroller's decision to deny or grant in part an Application for Tentative Refund of Withholding on Sales of Real Property by Nonresidents is final and not subject to appeal.</text> </paragraph> <paragraph num="F."> <text>The filing of the Application for Tentative Refund of Withholding on Sales of Real Property by Nonresidents does not relieve an individual or a corporation of the requirement to file a State income tax return.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Tax-General Article, §§2-103 and 10-912, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date:</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.08 adopted as an emergency provision effective October 1, 2003 (30:22 Md. R. 1574); emergency status extended at 31:22 Md. R. 1594; emergency status expired March 31, 2005</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.08 adopted as an emergency provision effective April 1, 2005 (32:11 Md. R. 981); adopted permanently effective July 18, 2005 (32:14 Md. R. 1275)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 amended effective October 22, 2007 (34:21 Md. R. 1913)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective October 22, 2007 (34:21 Md. R. 1913); May 2, 2022 (49:9 Md. R. 529)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03B amended effective March 21, 2011 (38:6 Md. R. 393)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04C amended effective May 2, 2022 (49:9 Md. R. 529)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08 amended effective May 2, 2022 (49:9 Md. R. 529)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08A amended effective October 22, 2007 (34:21 Md. R. 1913); April 19, 2010 (37:8 Md. R. 614); July 8, 2013 (40:13 Md. R. 1073)</annotation> </annotations> </chapter> <chapter num="13" heading="Credit for Wages Paid to a Qualified Ex-Felon Employee" reason="Repealed."> <annotations> <annotation type="History" subtype="Administrative History">Effective date: October 22, 2007 (34:21 Md. R. 1913)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01B amended effective April 19, 2010 (37:8 Md. R. 614)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective April 19, 2010 (37:8 Md. R. 614)</annotation> <annotation type="History" subtype="Administrative History">Chapter repealed effective May 2, 2022 (49:9 Md. R. 529)</annotation> </annotations> </chapter> <chapter num="14" heading="Corporate Income Tax Reporting"> <regulation prefix="Regulation" num=".01" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Commercial domicile” means the principal place from which the trade or business of the taxpayer is directed or managed.</text> </paragraph> <paragraph num="(2)"> <text>“Corporate group” has the meaning stated in Tax-General Article, §10-804.1(a)(1) and (2), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(3)"> <text>“Finnigan” means a method of apportioning taxable income of a corporate group whereby the numerator consists of the Maryland receipts, property, and payroll of all members of the corporate group regardless of whether the members have nexus with Maryland and are required to file a Maryland corporate income tax return.</text> </paragraph> <paragraph num="(4)"> <text>“Joyce” means a method of apportioning taxable income of a corporate group whereby the numerator consists of the Maryland receipts, property and payroll of all members of the group having nexus in Maryland and required to file a Maryland corporate income tax return.</text> </paragraph> <paragraph num="(5)"> <text>“Nonoperational” means income of a corporation that is not earned as a part of the corporation's unitary business.</text> </paragraph> <paragraph num="(6)"> <text>“Unitary business” means a business in which the activities of the corporations comprising the business, whether related as a parent and subsidiary or as affiliated corporations related through common ownership, are economically interdependent as demonstrated by the following factors:</text> <paragraph num="(a)"> <text>Strong centralized management;</text> </paragraph> <paragraph num="(b)"> <text>Functional integration; and</text> </paragraph> <paragraph num="(c)"> <text>Attainment of operational economies of scale.</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>“Water's edge” means a method for preparing a combined income tax report that includes the income and activities of all members of a corporate group that are in a unitary business and are:</text> <paragraph num="(a)"> <text>Corporations organized or incorporated in the United States, including those corporations qualifying for the Puerto Rico and Possession Tax Credit as provided in IRC Section 936 (26 U.S.C. 936); and</text> </paragraph> <paragraph num="(b)"> <text>Corporations organized or incorporated outside of the United States whose business activity in the United States is 20 percent or more of the corporation's total business activity. Foreign corporations that conduct 20 percent or more of their business activity in the United States, as measured by the average of the property and payroll factors, shall be included 100 percent in a water's edge combined report. Any business activity in Maryland subjects a foreign corporation to Maryland income tax. The threshold test for purposes of combined reporting determines whether the foreign corporation is a member of a unitary group.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Reports Required."> <paragraph num="A."> <text>The reports described in this regulation shall be submitted electronically, using the form and instructions available on the Comptroller's website at www.marylandtaxes.com.</text> </paragraph> <paragraph num="B."> <text>Every corporate group shall file the following reports with the Comptroller:</text> <paragraph num="(1)"> <text>A pro forma water's edge combined corporate income tax report, including taxable income of the corporate group, eliminations to account for intercompany transactions within the corporate group, and apportionment factors computed under both Joyce and Finnigan methods of apportionment;</text> </paragraph> <paragraph num="(2)"> <text>A report that reflects the dollar value of all property that is shipped from an office, store, warehouse, factory, or other place of storage in this State where the purchaser is the United States government;</text> </paragraph> <paragraph num="(3)"> <text>A report that reflects the dollar value of all property that is shipped from an office, store, warehouse, factory, or other place of storage in this State where the seller is not taxable in the state in which the purchaser takes possession; and</text> </paragraph> <paragraph num="(4)"> <text>A report that reflects the amount and source of nonoperational income of each member of the corporate group whose commercial domicile is in this State.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The reports required hereunder shall be submitted for all taxable years beginning after December 31, 2005 and before January 1, 2011, as follows:</text> <paragraph num="(1)"> <text>The report to be submitted for a taxable year beginning after December 31, 2005 and before January 1, 2007 shall be submitted on or before November 29, 2008; and</text> </paragraph> <paragraph num="(2)"> <text>The reports to be submitted for taxable years beginning after December 31, 2006 and before January 1, 2011 shall be submitted on or before November 29, 2008 or 7 months after the original due date of the corporation's Maryland tax return for the corresponding taxable year, whichever is later.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Every report required under this regulation shall be made under oath and signed in the manner required for the signature of a tax return filed under Tax-General Article, §10-804, Annotated Code of Maryland.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Penalties."> <paragraph num="A."> <text>Failure to File Required Reports.</text> <paragraph num="(1)"> <text>Subject to §A(3) of this regulation, if a corporate group fails to file the reports required under this chapter, the Comptroller shall assess the penalties set forth in this section.</text> </paragraph> <paragraph num="(2)"> <text>The penalties to be assessed are:</text> <paragraph num="(a)"> <text>Up to $5,000 per day for each of the first 30 days following the due date during which a report has not been filed; and</text> </paragraph> <paragraph num="(b)"> <text>Up to $10,000 per day for each day after the first 30 days that a report has not been filed.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The Comptroller may, for any reason, issue an order abating or decreasing the penalty established under this section.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Failure to File Reports Accurately.</text> <paragraph num="(1)"> <text>If the Comptroller determines that a report filed under this chapter has not been filed accurately, the Comptroller shall provide written notice to the corporate group of the determination.</text> </paragraph> <paragraph num="(2)"> <text>The notice from the Comptroller shall identify the parts of the report determined to be inaccurate.</text> </paragraph> <paragraph num="(3)"> <text>The notice from the Comptroller shall inform the corporate group that it has 30 days from the date of the Comptroller's notice to file an accurate report.</text> </paragraph> <paragraph num="(4)"> <text>If following receipt of notice from the Comptroller of an inaccurate filing, the corporate group does not file an accurate report on or before the date specified in the Comptroller's notice, then the corporate group shall:</text> <paragraph num="(a)"> <text>Be deemed to have failed to file the required report; and</text> </paragraph> <paragraph num="(b)"> <text>Be subject to the penalties set forth in §A of this regulation.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>For purposes of assessing the penalties under §B of this regulation, the first violation will be deemed to have occurred on the first day following the due date for filing of an accurate report as specified in the notice from the Comptroller issued pursuant to §B(1) of this regulation.</text> </paragraph> </paragraph> <paragraph num="C."> <text>All penalties assessed hereunder are collectible from all members of the corporate group.</text> </paragraph> <paragraph num="D."> <text>All penalties assessed hereunder may be appealed by the corporate group by seeking revision with the Comptroller pursuant to Tax-General Article, §13-508, Annotated Code of Maryland.</text> </paragraph> <paragraph num="E."> <text>All statutes and regulations applicable to the informal hearing procedures set forth in Tax-General Article, §13-508, Annotated Code of Maryland shall apply.</text> </paragraph> <paragraph num="F."> <text>After the Comptroller's hearing officer issues a notice of final determination, the provisions of Maryland law regarding administrative and judicial review shall apply.</text> </paragraph> <paragraph num="G."> <text>If no timely appeal is filed to the imposition of a penalty or if the taxpayer waives its right to an appeal of the imposition of a penalty, the Comptroller may issue an order abating or decreasing the penalty assessed to correct an erroneous assessment as contemplated in Tax-General Article, §13-509, Annotated Code of Maryland.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Tax-General Article, §§2-103 and 10-804.1, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date:</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.03 adopted as an emergency provision effective October 14, 2008 (35:23 Md. R. 2010); emergency status expired November 30, 2008</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.03 adopted effective January 12, 2009 (36:1 Md. R. 20)</annotation> </annotations> </chapter> <chapter num="15" heading="Electronic Filing Requirements for Business Tax Credits"> <regulation prefix="Regulation" num=".01" heading="Definition."> <paragraph num="A."> <text>In this chapter, the following term has the meaning indicated.</text> </paragraph> <paragraph num="B."> <text>Term Defined. “Business tax credit” means:</text> <paragraph num="(1)"> <text>Aerospace, Electronics, or Defense Contract Tax Credit;</text> </paragraph> <paragraph num="(2)"> <text>Apprentice Employee Tax Credit;</text> </paragraph> <paragraph num="(3)"> <text>Biotechnology Investment Incentive Tax Credit;</text> </paragraph> <paragraph num="(4)"> <text>Businesses That Create New Jobs Tax Credit;</text> </paragraph> <paragraph num="(5)"> <text>Clean Energy Incentive Tax Credit;</text> </paragraph> <paragraph num="(6)"> <text>Community Investment Tax Credit;</text> </paragraph> <paragraph num="(7)"> <text>Commuter Tax Credit;</text> </paragraph> <paragraph num="(8)"> <text>Cybersecurity Incentive Tax Credit;</text> </paragraph> <paragraph num="(9)"> <text>Electric Vehicle Recharging Equipment Tax Credit;</text> </paragraph> <paragraph num="(10)"> <text>Employer-Provided Long-Term Care Insurance Tax Credit;</text> </paragraph> <paragraph num="(11)"> <text>Employment Opportunity Tax Credit;</text> </paragraph> <paragraph num="(12)"> <text>Endow Maryland Tax Credit;</text> </paragraph> <paragraph num="(13)"> <text>Endowments for Historically Black Colleges and Universities Tax Credit;</text> </paragraph> <paragraph num="(14)"> <text>Enterprise Zone Tax Credit;</text> </paragraph> <paragraph num="(15)"> <text>Film Production Activity Tax Credit;</text> </paragraph> <paragraph num="(16)"> <text>Green Building Tax Credit;</text> </paragraph> <paragraph num="(17)"> <text>Health Enterprise Zone Hiring Credit;</text> </paragraph> <paragraph num="(18)"> <text>Heritage Structure Rehabilitation Tax Credit;</text> </paragraph> <paragraph num="(19)"> <text>Job Creation Tax Credit;</text> </paragraph> <paragraph num="(20)"> <text>Maryland Disability Employment Tax Credit;</text> </paragraph> <paragraph num="(21)"> <text>Maryland Employer Security Clearance Costs Tax Credit;</text> </paragraph> <paragraph num="(22)"> <text>Maryland-Mined Coal Tax Credit;</text> </paragraph> <paragraph num="(23)"> <text>One Maryland Economic Development Tax Credit;</text> </paragraph> <paragraph num="(24)"> <text>Oyster Shell Recycling Tax Credit;</text> </paragraph> <paragraph num="(25)"> <text>Qualified Vehicle Tax Credit;</text> </paragraph> <paragraph num="(26)"> <text>Research and Development Tax Credit; and</text> </paragraph> <paragraph num="(27)"> <text>Wineries and Vineyards Tax Credit.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Electronic Filing Requirements."> <paragraph num="A."> <text>Any taxpayer claiming a business tax credit, an excess carryover of a business tax credit, or a recapture of a business tax credit shall claim the credit on an electronically filed original or amended Maryland income tax return.</text> </paragraph> <paragraph num="B."> <text>Any taxpayer claiming any business tax credit requiring certification, any excess carryover of a business tax credit requiring certification, or any recapture of a business tax credit requiring certification shall electronically file the required certification and any required attachments for the credit as a binary attachment with the electronically filed original or amended Maryland income tax return.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Exceptions."> <paragraph num="A."> <text>An organization exempt from taxation under §501(c)(3) or (4) of the Internal Revenue Code claiming a credit against the payment to the Comptroller of taxes that the organization is required to withhold from the wages of employees is exempt from the electronic filing requirements under this chapter.</text> </paragraph> <paragraph num="B."> <text>A taxpayer claiming a business tax credit against fiduciary income tax is exempt from the electronic filing requirements under this chapter.</text> </paragraph> <paragraph num="C."> <text>An individual claiming the Sustainable Communities Tax Credit is exempt from the electronic filing requirements under this chapter.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Tax-General Article, §§2-103 and 10-804, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: January 20, 2014 (41:1 Md. R. 12)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01B amended effective May 2, 2022 (49:9 Md. R. 529)</annotation> </annotations> </chapter> </subtitle> <subtitle num="05" heading="Miscellaneous Revenue"> <chapter num="01" heading="Abandoned Property Regulations"> <regulation prefix="Regulation" num=".01" heading="Abandoned Funds."> <paragraph num="A."> <text>Repealed.</text> </paragraph> <paragraph num="B."> <text>Repealed.</text> </paragraph> <paragraph num="C."> <text>Effective June 1, 2003, for reporting periods ending on or after June 30, 2003, any checking, savings, share, negotiable order of withdrawal, automatic transfer, share draft, electronic terminal account, or other similar type of account held by a banking or financial organization is presumed abandoned after 3 years, if the depositor or shareholder has not actively deposited, withdrawn, or otherwise indicated an interest in the funds or deposit as evidenced by memorandum or correspondence from the depositor on file with the banking or financial organization.</text> </paragraph> <paragraph num="D."> <text>Effect of Automatic Deposits and Withdrawals on Presumption of Abandonment.</text> <paragraph num="(1)"> <text>A depositor or shareholder shall be deemed to have actively deposited or withdrawn funds from an account covered by this regulation, thereby overcoming the presumption of abandonment described in §C of this regulation, if:</text> <paragraph num="(a)"> <text>The depositor or shareholder authorized and established an automatic deposit or withdrawal;</text> </paragraph> <paragraph num="(b)"> <text>The authorization has not been cancelled, revoked, rescinded, or otherwise terminated; and</text> </paragraph> <paragraph num="(c)"> <text>Funds are deposited or withdrawn automatically based on the depositor or shareholder’s effective authorization.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>A depositor or shareholder may not be deemed to have actively deposited or withdrawn funds from an account covered by this regulation if:</text> <paragraph num="(a)"> <text>The bank or financial organization automatically deposits interest or dividends earned on the account; or</text> </paragraph> <paragraph num="(b)"> <text>The bank or financial organization automatically withdraws a service charge.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Service Charges."> <paragraph num="A."> <text>A service charge of any type may not be made by a holder of any property presumed abandoned under Commercial Law Article, Title 17, during the period of time giving rise to presumption of abandonment unless the holder complies with the requirements set forth in Commercial Law Article, §17-308.1.</text> </paragraph> <paragraph num="B."> <text>Except in those instances in which a service charge is properly made pursuant to §17-308.1, a holder shall report, pursuant to §17-310, the full amount appearing on the face of every instrument presumed abandoned. By way of illustration but not of limitation, instruments subject to these provisions include certificates of deposit, drafts, traveler's checks, and money orders.</text> </paragraph> <paragraph num="C."> <text>Repealed.</text> </paragraph> <paragraph num="D."> <text>Repealed.</text> </paragraph> <paragraph num="E."> <text>Effective June 30, 2003, for purposes of Commercial Law Article, §17-308.1, Annotated Code of Maryland, an account shall be considered dormant or inactive, if, with respect to that account, the owner has for a period of 1 year, taken none of the actions set forth in Commercial Law Article, §17-301, Annotated Code of Maryland. When a service charge is permitted, the maximum amount of the charge shall be $10 per year for an account that does not exceed $50 and $20 per year for an account that exceeds $50.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Liability for Interest."> <text>A holder may not cease payment or accrual of any benefits, including dividends or interest on property, under this title, unless the holder complies with the requirements as set forth in Commercial Law Article, §17-308.1.</text> </regulation> <regulation prefix="Regulation" num=".04" heading="Prohibited Agreements."> <text>Contractual agreements are not permitted which tend to circumvent the intention of the Maryland General Assembly and provide any holder subject to this Article with a windfall or private escheat practice. The total reported shall be the amount the owner would have received had the property not been abandoned.</text> </regulation> <regulation prefix="Regulation" num=".05" heading="Voluntary Reporting."> <text>Since the Maryland law is purely custodial, any holder of unclaimed property may voluntarily report funds before the statutory due dates and be relieved of all accountability and responsibility upon delivery of the unclaimed property to this office.</text> </regulation> <regulation prefix="Regulation" num=".06" heading="Retirement Accounts."> <text>The period of abandonment for accounts established pursuant to 26 U.S.C. §401(a), et seq. (commonly known as Self-Employed Retirement, or Keogh, Plans) and 26 U.S.C. §408(a), et seq. (commonly known as Individual Retirement Accounts or IRA's) may not begin until such time as distribution of all or part of the property constituting the respective account shall be, under the terms of the retirement plan, mandatory.</text> </regulation> <regulation prefix="Regulation" num=".07" heading="Automatically Renewable Certificates of Deposit."> <text>The period of abandonment for any property automatically renewable according to its terms that is subject to §§17-301 and 17-308 shall commence after the expiration of its initial term. If, at the time provided for delivery in §17-312, a penalty or forfeiture in payment of interest would result from the delivery of that property, the time for delivery shall be extended until such time as no penalty or forfeiture would result.</text> </regulation> <annotations> <annotation type="Authority">Commercial Law Article, §17-103, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: October 17, 1974 (1:1 Md. R. 13)</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.05 amended effective October 1, 1975 (2:22 Md. R. 1369)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06 adopted effective October 1, 1975 (2:22 Md. R. 1369)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective January 7, 1982 (8:26 Md. R. 2104)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 amended effective September 30, 2002 (29:19 Md. R. 1523); September 19, 2022 (49:19 Md. R. 867)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02 amended effective September 19, 2022 (49:19 Md. R. 867)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02C amended effective September 30, 2002 (29:19 Md. R. 1523)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02D adopted effective September 30, 2002 (29:19 Md. R. 1523)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02E adopted effective September 30, 2002 (29:19 Md. R. 1523)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02E amended effective September 1, 2003 (30:16 Md. R. 1073)</annotation> <annotation type="History" subtype="Administrative History">Annotation: COMAR 03.05.01.02 cited in Attorney General Opinion No. 81-035</annotation> <annotation type="History" subtype="Administrative History">(November 24, 1981)</annotation> </annotations> </chapter> <chapter num="02" heading="Abandoned Property Regulations—Notice of Assessment for Unclaimed Property"> <regulation prefix="Regulation" num=".01" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Administrator” means the State Comptroller.</text> </paragraph> <paragraph num="(2)"> <text>“State Comptroller”, unless expressly provided otherwise, includes:</text> <paragraph num="(a)"> <text>An employee of the Comptroller acting within the scope of employment; and</text> </paragraph> <paragraph num="(b)"> <text>An agent or representative of the Comptroller acting within the scope of the Comptroller's authority.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Examination of Records and Notice of Assessment."> <paragraph num="A."> <text>During normal business hours, the Administrator may examine the records of a person if there is reason to believe that the person failed to report property that should have been reported under Commercial Law Article, Title 17, Annotated Code of Maryland.</text> </paragraph> <paragraph num="B."> <text>If the Administrator, after conducting an examination of the records of a person, determines that the person has failed to pay or deliver abandoned property to the administrator as required under Commercial Law Article, Title 17, Annotated Code of Maryland, the Administrator shall issue a Notice of Assessment for Unclaimed Property.</text> </paragraph> <paragraph num="C."> <text>The Notice of Assessment for Unclaimed Property shall be dated and mailed to the person against whom the assessment is made.</text> </paragraph> <paragraph num="D."> <text>A Notice of Assessment for Unclaimed Property is considered a decision of the administrator.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Review of a Notice of Assessment for Unclaimed Property."> <paragraph num="A."> <text>Upon receipt of a Notice of Assessment for Unclaimed Property, the person shall promptly:</text> <paragraph num="(1)"> <text>Pay or deliver to the Administrator the abandoned property;</text> </paragraph> <paragraph num="(2)"> <text>File a written Request for Revision; or</text> </paragraph> <paragraph num="(3)"> <text>Commence an action in the circuit court.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Requests for Revision of Assessment.</text> <paragraph num="(1)"> <text>A person may make a request to revise a Notice of Assessment for Unclaimed Property by submitting a written Request for Revision to the Hearings and Appeals Section of the Comptroller's Office within 90 days of the date of the Notice of Assessment for Unclaimed Property.</text> </paragraph> <paragraph num="(2)"> <text>The person's Request for Revision shall:</text> <paragraph num="(a)"> <text>Itemize the specific objections the person has to the Notice of Assessment for Unclaimed Property; and</text> </paragraph> <paragraph num="(b)"> <text>Attach to it a copy of the Notice of Assessment for Unclaimed Property.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>A Request for Revision shall stay the decision of the Administrator included in the Notice of Assessment for Unclaimed Property until:</text> <paragraph num="(a)"> <text>A Notice of Final Determination is issued;</text> </paragraph> <paragraph num="(b)"> <text>The Request for Revision is dismissed; or</text> </paragraph> <paragraph num="(c)"> <text>The Request for Revision is withdrawn.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Hearings.</text> <paragraph num="(1)"> <text>After receipt of a timely Request for Revision, the Comptroller's Hearings and Appeals Section shall schedule a hearing.</text> </paragraph> <paragraph num="(2)"> <text>The Hearings and Appeals Section shall notify the person:</text> <paragraph num="(a)"> <text>Of the date, time, and place of the hearing;</text> </paragraph> <paragraph num="(b)"> <text>That the person may present witnesses and documents at the hearing; and</text> </paragraph> <paragraph num="(c)"> <text>That failure to appear for the scheduled hearing shall be treated as a withdrawal of the Request for Hearing.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Postponements.</text> <paragraph num="(a)"> <text>The hearing officer shall consider a request for postponement only if the person establishes good cause for the postponement.</text> </paragraph> <paragraph num="(b)"> <text>Except as provided in §C(3)(d) of this regulation, a request for postponement shall be made in writing and be received by the Hearings and Appeals Section not less than 5 business days before the scheduled hearing.</text> </paragraph> <paragraph num="(c)"> <text>The hearing officer may request documentation of the reasons for the postponement request from the person.</text> </paragraph> <paragraph num="(d)"> <text>Emergency Request for Postponement.</text> <paragraph num="(i)"> <text>For purposes of this paragraph, “emergency” means a sudden, unforeseen occurrence requiring immediate attention which arises within 5 business days of the hearing.</text> </paragraph> <paragraph num="(ii)"> <text>In an emergency, a request for postponement may be made by telephone.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(4)"> <text>Failure to Attend Hearing. If a person fails to attend a scheduled hearing, the decision of the Administrator as stated in the Notice of Assessment for Unclaimed Property becomes effective as of the date of the scheduled hearing.</text> </paragraph> <paragraph num="(5)"> <text>Prehearing Procedure. Before a hearing, the hearing officer may:</text> <paragraph num="(a)"> <text>Review or request materials relevant to the proceedings; and</text> </paragraph> <paragraph num="(b)"> <text>Hold a prehearing conference.</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>Procedures.</text> <paragraph num="(a)"> <text>The hearing officer shall record all hearings.</text> </paragraph> <paragraph num="(b)"> <text>A person may produce witnesses and documents in support of the person's position.</text> </paragraph> <paragraph num="(c)"> <text>Subpoenas.</text> <paragraph num="(i)"> <text>A person may request that the hearing officer subpoena witnesses.</text> </paragraph> <paragraph num="(ii)"> <text>A person shall make the request in writing, not later than 10 days before the hearing, explaining why the subpoena is necessary.</text> </paragraph> <paragraph num="(iii)"> <text>The hearing officer may decline to issue the subpoena.</text> </paragraph> </paragraph> <paragraph num="(d)"> <text>The hearing officer may question any witnesses and may produce, by subpoena or otherwise, additional witnesses.</text> </paragraph> <paragraph num="(e)"> <text>A person may question any witnesses called by the hearing officer.</text> </paragraph> <paragraph num="(f)"> <text>The hearing officer may allow a person time to provide additional evidence or written arguments, and may reconvene the hearing if the hearing officer considers it necessary.</text> </paragraph> <paragraph num="(g)"> <text>The hearing officer may consult with any employee of the Administrator and with the person before making a decision in a case.</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>Evidence.</text> <paragraph num="(a)"> <text>The hearing officer shall consider probative evidence without regard to any technical rules, but may reject evidence which is incompetent, irrelevant, immaterial, unduly repetitious, or not responsive.</text> </paragraph> <paragraph num="(b)"> <text>Copies of documents may be admitted, although the hearing officer may require production of originals.</text> </paragraph> <paragraph num="(c)"> <text>The hearing officer shall retain documentary or other evidence for at least 60 days after the case is finally resolved. The evidence may then be destroyed unless the owner or person producing it makes a written request for its return.</text> </paragraph> </paragraph> <paragraph num="(8)"> <text>Witnesses shall be under oath or affirmation.</text> </paragraph> <paragraph num="(9)"> <text>Notice of Final Determination.</text> <paragraph num="(a)"> <text>The hearing officer shall issue a Notice of Final Determination on behalf of the Administrator.</text> </paragraph> <paragraph num="(b)"> <text>The Notice of Final Determination shall be mailed to the person and shall state the:</text> <paragraph num="(i)"> <text>Substance of the evidence heard;</text> </paragraph> <paragraph num="(ii)"> <text>Decision; and</text> </paragraph> <paragraph num="(iii)"> <text>Reasons for the decision.</text> </paragraph> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>If the Notice of Final Determination concludes that the person has failed to pay or deliver abandoned property to the administrator as required under Commercial Law Article, Title 17, Annotated Code of Maryland, the person shall pay or deliver to the Administrator the abandoned property within 30 days of the date on the Notice of Final Determination.</text> </paragraph> <paragraph num="E."> <text>A person aggrieved by a decision of the Administrator may commence an action in the circuit court for the county:</text> <paragraph num="(1)"> <text>Within 90 days of the decision of the Administrator;</text> </paragraph> <paragraph num="(2)"> <text>In the event of the filing of a Request for Revision, within 90 days of the date of the Notice of Final Determination; or</text> </paragraph> <paragraph num="(3)"> <text>In the event that a Request for Revision was filed and subsequently dismissed or withdrawn, within 90 days of the dismissal or withdrawal.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Enforcement by the Administrator."> <text>The Administrator may bring any action allowed by law, including but not limited to an enforcement action in the circuit court, to enforce the Notice of Assessment for Unclaimed Property or the Notice of Final Determination, or both.</text> </regulation> <annotations> <annotation type="Authority">Commercial Law Article, §17-103, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: September 3, 2001 (28:17 Md. R. 1554)</annotation> </annotations> </chapter> </subtitle> <subtitle num="06" heading="Sales and Use Tax"> <chapter num="01" heading="Sales and Use Tax"> <regulation prefix="Regulation" num=".01" heading="Personal, Professional, or Insurance Services."> <paragraph num="A."> <text>Except for taxable services set forth in Tax-General Article, §11-101(m), Annotated Code of Maryland, the tax does not apply to a personal, professional, or insurance service that involves a sale as an inconsequential element for which no separate charge is made. Examples of services to which the tax does not apply are services customarily rendered by physicians, dentists, lawyers, accountants, insurance agents, pest exterminators, barbers, beauticians, funeral directors, and storage warehouseperson.</text> </paragraph> <paragraph num="B."> <text>Purchases.</text> <paragraph num="(1)"> <text>A person providing nontaxable services shall pay the tax on all purchases of materials, supplies, tools, and equipment used by the person or transferred by the person as part of the nontaxable service unless a specific statutory exemption applies, such as that for medicines and medical supplies. Examples of purchases to which the tax applies are purchases of forms, office supplies, insurance policy blanks and jackets, insecticides, grooming supplies, packing materials, and utilities.</text> </paragraph> <paragraph num="(2)"> <text>A person providing taxable services shall pay tax on purchases of materials, supplies, tools, equipment, digital codes, digital products, and taxable services used by the person.</text> </paragraph> <paragraph num="(3)"> <text>A person providing taxable services may, however, issue a resale certificate for the purchase of:</text> <paragraph num="(a)"> <text>Tangible personal property, digital codes, or digital products transferred as part of a taxable service if the person has not used the tangible personal property, digital codes, or digital products and the tangible personal property, digital codes, or digital products are resold in unchanged form; and</text> </paragraph> <paragraph num="(b)"> <text>Taxable services that the person has not used and that are resold in unchanged form.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Examples.</text> <paragraph num="(a)"> <text>A janitorial company may purchase paper towels tax-free by issuing a resale certificate if those towels are used to stock the bathroom of a customer receiving taxable cleaning services. The janitorial company shall pay tax on its purchase of cleaning agents which the janitorial company uses to clean the bathroom of a customer receiving taxable cleaning services.</text> </paragraph> <paragraph num="(b)"> <text>A web hosting company may rent server space from a cloud storage company tax-free by issuing a resale certificate if the server space is used to provide cloud storage for a customer purchasing web hosting services and the web hosting company has made or makes no use of the server space being resold.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Sales.</text> <paragraph num="(1)"> <text>If a person providing personal, professional, or insurance services also makes independent sales of tangible personal property, digital codes, digital products, or taxable services, that person shall collect and remit the sales and use tax on those sales unless a specific statutory exemption applies.</text> </paragraph> <paragraph num="(2)"> <text>Examples of sales subject to tax are sales of:</text> <paragraph num="(a)"> <text>Packaged cosmetics, hair tonics, and lotions sold by barbers and beauticians.</text> </paragraph> <paragraph num="(b)"> <text>A web design service by a graphic design company that is sold independently from the sale of a nontaxable logo design service.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Combined Sales."> <paragraph num="A."> <text>General. A vendor shall compute and impose the tax on the total taxable price of all sales to a buyer in the same licensed business location on the same business day, whether or not at different counters or departments, without regard to the individual taxable prices of the separate items comprising the total.</text> </paragraph> <paragraph num="B."> <text>Exception.</text> <paragraph num="(1)"> <text>A vendor is not required to add the combined total of the taxable prices of a current sale with those of prior sales made to a buyer on the same day when it is impractical to determine whether in fact prior sales have been made to that buyer unless the buyer demonstrates prior purchases on that day, and requests that a combination of all taxable prices be made.</text> </paragraph> <paragraph num="(2)"> <text>A vendor who, for any reason, fragments essentially unitary sales (such as a restaurateur who requires that food and beverages be paid for separately) may not rely on this exception.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Repairs of Tangible Personal Property, Digital Codes, Digital Products, and Taxable Services."> <paragraph num="A."> <text>General.</text> <paragraph num="(1)"> <text>The charge for labor to repair or alter existing tangible personal property, a digital code, or a digital product belonging to another for the purpose of restoring the property, digital code, or digital product to its original condition or usefulness is not subject to tax, unless the labor constitutes a taxable service described in Tax General Article, §11–101(m), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>The tax does apply if the labor expended results in the creation of a new or different item.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Persons engaged in repairing tangible personal property, digital codes, digital products, or taxable services of others for a consideration may handle the sales and use tax on their transactions in either of the following ways:</text> <paragraph num="(1)"> <text>If separate charges are made for materials incorporated in the property, digital code, digital product, or taxable service being repaired, the tax shall be applied to the charges for the materials. The resale exclusion may be claimed on purchases of materials transferred to customers under these circumstances, so long as the person transferring the materials made no use of them.</text> </paragraph> <paragraph num="(2)"> <text>If separate charges are not made for materials incorporated in the property, digital code, digital product, or taxable service being repaired, that is, the repair and materials used in repair are charged for on a lump-sum basis, the tax may not apply to any portion of the charge to the customer. The resale exclusion may not be claimed on purchases of materials transferred to customers under these circumstances. A person making a repair of tangible personal property, a digital code, a digital product, or a taxable service who charges for the repair and materials used in repair on a lump-sum basis shall pay the tax on purchases of materials used in performing the repair. The taxability of purchases for lump-sum contracts is not affected by the fact that the person for whom the repair work is performed would not have been required to pay the tax on a separately stated charge for materials.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Maintenance Contracts.</text> <paragraph num="(1)"> <text>The tax does not apply to a charge for a maintenance contract unless it is required to be purchased as a condition of a sale of other tangible personal property, digital code, digital product, or taxable service.</text> </paragraph> <paragraph num="(2)"> <text>An optional maintenance contract for computer software is subject to the tax if the contract entitles the purchaser to receive without charge software products which are otherwise separately priced and marketed by the seller. In this situation, the customer shall be charged the tax on the total charge for the maintenance contract.</text> </paragraph> <paragraph num="(3)"> <text>A person performing repairs under an optional maintenance contract, except as stated in §C(2) of this regulation, shall pay the tax on materials passing to customers, unless a separate charge is made for materials. In this latter situation, the tax shall be charged to the customer and the purchase of the materials by the person performing the repair is entitled to the resale exclusion as described in §B(1) of this regulation.</text> </paragraph> <paragraph num="(4)"> <text>A person performing repairs under a mandatory maintenance contract or a taxable optional maintenance contract as described in §C(2) of this regulation may claim the resale exclusion on all materials passing to customers.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Persons engaged in repairing tangible personal property, digital codes, digital products, or taxable services shall pay the tax on all purchases of equipment, tools, consumables, taxable services, and other materials used in performing the repair work which are not transferred to customers, without regard to the method of billing employed.</text> </paragraph> <paragraph num="E."> <text>The circumstances under which resale certificates may be issued by persons engaged in repairing tangible personal property, digital codes, digital products, or taxable services who utilize both separately stated materials and lump-sum charge bases for those repairs are set forth in Regulation .07 of this chapter.</text> </paragraph> <paragraph num="F."> <text>The sales and use tax treatment of repairs to real property is described in Regulation .19 of this chapter.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Published Material."> <paragraph num="A."> <text>Definition.</text> <paragraph num="(1)"> <text>In this regulation, the following term has the meaning indicated.</text> </paragraph> <paragraph num="(2)"> <text>Term Defined — Published Material.</text> <paragraph num="(a)"> <text>“Published material” means any textual or graphic material disseminated to another person or persons through printed, electronic, or other media.</text> </paragraph> <paragraph num="(b)"> <text>“Published material” includes a newspaper, magazine, periodical, chat room discussion, weblog, or any other similar product.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>The sale of published material for a charge is subject to the sales and use tax, except as described in §C of this regulation.</text> </paragraph> <paragraph num="C."> <text>Printing and Sale of Newspapers.</text> <paragraph num="(1)"> <text>The printing and sale of newspapers that are distributed by the publisher at no charge are not subject to the sales and use tax.</text> </paragraph> <paragraph num="(2)"> <text>The sale of an item which is to be distributed as a component part of a newspaper, such as an advertising supplement, is not subject to the tax.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Requirements for Classification as a Newspaper.</text> <paragraph num="(1)"> <text>A publication is not a newspaper unless:</text> <paragraph num="(a)"> <text>It is published and distributed not less frequently than once each month;</text> </paragraph> <paragraph num="(b)"> <text>It does not, when its successive issues are put together, constitute a book;</text> </paragraph> <paragraph num="(c)"> <text>It is intended for circulation among the general public;</text> </paragraph> <paragraph num="(d)"> <text>It contains news items, legal and general intelligence, reports of current events, editorial comments, advertising matter, or other miscellaneous information of public interest.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The criteria set forth in §D(1) of this regulation are minimum requirements, the meeting of which does not necessarily result in a publication being classified as a newspaper. A publication which meets the criteria set forth in §D(1) of this regulation, but which is in fact a magazine, shopping advertiser, community newsletter, tip sheet, or other publication which is not a newspaper in the common and popularly accepted usage of the term, is not a newspaper for the purpose of this exemption. A publication is not disqualified solely because it is devoted primarily to matters of specialized interest, such as legal, mercantile, political, religious, or sporting matters.</text> </paragraph> </paragraph> <paragraph num="E."> <text>The taxability of sales of photographic materials and certain other tangible personal property used in the publication of published material is described in Regulation .11 of this chapter.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Food for Human Consumption."> <paragraph num="A."> <text>In this regulation, the following terms have the meanings indicated:</text> <paragraph num="(1)"> <text>“Premises” means any building, grounds, parking lot, or other area that a food vendor owns or controls or another person makes available primarily for the use of the patrons of one or more food vendors.</text> </paragraph> <paragraph num="(2)"> <text>“Facilities for food consumption” means items such as tables, chairs, booths, benches, counters, and stands set aside or made available for the consumption of food sold. The term does not include parking spaces for vehicles as the sole accommodation. If, however, any of the above-described equipment is located on a parking lot, this equipment constitutes “facilities for food consumption”.</text> </paragraph> <paragraph num="(3)"> <text>“Substantial grocery or market business” means a business at which at least 10 percent of all sales of food are sales of grocery or market food items. Among other things, the sale of food that is of a type normally consumed on the premises of a restaurant, but which is packaged to carry out, does not constitute the sale of “grocery or market food items”.</text> </paragraph> <paragraph num="(4)"> <text>“Food concessionaire under contract with the school or college or its designated contract agent” means a person who has been granted the right by a school or college to use school or college premises for the purpose of selling food.</text> </paragraph> <paragraph num="(5)"> <text>“Educationally related” means those events where the net proceeds are used for the benefit of the school or college or which provide educational benefit to the participants.</text> </paragraph> <paragraph num="(6)"> <text>“Crabs” means hard and soft shell crabs, but does not include crab dishes, such as crab cakes and crab soup, which are, instead, “seafood”.</text> </paragraph> <paragraph num="(7)"> <text>“Food for immediate consumption” means:</text> <paragraph num="(a)"> <text>Food obtained from a salad, soup, or dessert bar;</text> </paragraph> <paragraph num="(b)"> <text>Party platters;</text> </paragraph> <paragraph num="(c)"> <text>Heated food;</text> </paragraph> <paragraph num="(d)"> <text>Sandwiches suitable for immediate consumption; or</text> </paragraph> <paragraph num="(e)"> <text>Ice cream, frozen yogurt, and other frozen desserts, sold in containers of less than 1 pint.</text> </paragraph> </paragraph> <paragraph num="(8)"> <text>“Cannabis products” means products that are composed of cannabis, cannabis concentrate, cannabis extract, or other ingredients and are intended for use or consumption, including cannabinoid beverages, edible products, oils, and tinctures.</text> </paragraph> <paragraph num="(9)"> <text>“Food” does not include</text> <paragraph num="(a)"> <text>Cannabis as defined in the Alcoholic Beverages and Cannabis Article, §1–101, Annotated Code of Maryland; or</text> </paragraph> <paragraph num="(b)"> <text>Cannabis products.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Sales of food for human consumption are not subject to the tax in the following circumstances:</text> <paragraph num="(1)"> <text>Sales for consumption off the premises by a food vendor who operates a substantial grocery or market business at the same location where the food is sold, except that this exemption does not apply to food:</text> <paragraph num="(a)"> <text>That the vendor serves for consumption on the premises of the buyer or of a third party, and</text> </paragraph> <paragraph num="(b)"> <text>For immediate consumption;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Sales by a church or religious organization;</text> </paragraph> <paragraph num="(3)"> <text>Sales by a school, other than an institution of postsecondary education, including sales at a school by a food concessionaire that is under contract with the school or its designated contract agent, but not including sales at events that are not sponsored by the school or are not educationally related;</text> </paragraph> <paragraph num="(4)"> <text>Sales to students at an institution of postsecondary education if the food charge is for a meal plan or is included in the regular charge for room and board;</text> </paragraph> <paragraph num="(5)"> <text>Sales to patients in a hospital, including a nursing home, when the food charge is included in the regular room rate;</text> </paragraph> <paragraph num="(6)"> <text>Sales including sales of any beverage, made in a vehicle that is being operated in the State while in the course of interstate commerce;</text> </paragraph> <paragraph num="(7)"> <text>If the proceeds of the sale are used to support a volunteer fire company or department or its auxiliary, or a volunteer ambulance company or rescue squad or its auxiliary, a sale of food served by the company, department, squad, or auxiliary;</text> </paragraph> <paragraph num="(8)"> <text>If the proceeds of the sale are used to support a bona fide nationally organized and recognized organization of veterans of the armed forces of the United States or auxiliary of the organization or one of its units, a sale of food or meals for consumption only on the premises, served by the organization or auxiliary;</text> </paragraph> <paragraph num="(9)"> <text>Sales for consumption off the premises of:</text> <paragraph num="(a)"> <text>Crabs, or</text> </paragraph> <paragraph num="(b)"> <text>Seafood that is not prepared for immediate consumption;</text> </paragraph> </paragraph> <paragraph num="(10)"> <text>Sales of food stamp eligible food bought with a federal food stamp coupon;</text> </paragraph> <paragraph num="(11)"> <text>Sales of food by a nonprofit food vendor if there are no facilities for food consumption on the premises, unless the food is sold within an enclosure for which a charge is made for admission; or</text> </paragraph> <paragraph num="(12)"> <text>Sales of milk, fresh fruit, fresh vegetables, or yogurt through a vending machine.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The payment of a separately stated cover charge, which does not entitle the buyer to obtain tangible personal property is not subject to tax. A minimum charge which does entitle the buyer to receive tangible personal property is subject to tax, even if the buyer does not take full advantage of it.</text> </paragraph> <paragraph num="D."> <text>The payment by a buyer of food or beverages for human consumption on the premises of the vendor of a separately stated and identified mandatory gratuity or service charge which is in the nature of a tip is not subject to tax if the food or beverages are served to a group of not more than 10 persons. Mandatory gratuities or service charges on sales of food or beverages to a group of more than 10 persons are subject to the tax whether or not separately stated.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Cancelled and Returned Sales."> <paragraph num="A."> <text>A vendor shall refund to a buyer the proportionate amount of sales and use tax that the buyer has paid if a sale is rescinded or cancelled or the property sold is returned to the vendor and the purchase price is wholly or partially repaid or credited. If, in lieu of a refund of the sales price, the vendor credits the amount on the buyer's account, a corresponding credit for sales and use tax previously paid by the buyer shall be made.</text> </paragraph> <paragraph num="B."> <text>Whenever any vendor has refunded the tax paid by a buyer on a cancelled or returned sale, the vendor may deduct the amount of the purchase price refunded from the total amount reported as taxable sales and the amount of tax refunded from the total amount reported as tax collected on the vendor's sales and use tax return, provided accurate records of the transaction are maintained. Alternatively, the vendor may apply to the Comptroller for a refund of the tax properly refunded to the buyer if application for it is made in writing within 4 years from the payment of the tax.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Sales Where It Is Impractical to Establish the Amount of Property to Be Resold."> <paragraph num="A."> <text>Except as provided in §D of this regulation, if at the time of a sale, it is impractical for the buyer to establish the actual amount of the property, digital code, digital product, or taxable service being purchased which is to be resold, the tax shall be paid on the entire amount of the sale, either if the buyer has reason to believe that a majority of the tangible personal property, digital code, digital product, or taxable service will not be resold, or if the buyer cannot determine whether or not a majority of the tangible personal property, taxable service, digital code, or digital product will be resold. If any portion of the property is later resold without having first been used by the buyer, the buyer may apply for a refund of the taxes attributable to this property, digital code, digital product, or taxable service within 4 years of the date of purchase.</text> </paragraph> <paragraph num="B."> <text>If no tax is paid upon the purchase of tangible personal property, digital codes, digital products, or taxable services pursuant to §A of this regulation, the buyer shall include the cost of that portion converted to the buyer's personal use as a purchase subject to the sales and use tax on the return to be filed for the period in which the property was converted.</text> </paragraph> <paragraph num="C."> <text>The procedure described in §B shall also be followed by any person who purchases tangible personal property, digital codes, digital products, or taxable services for resale without paying the tax, and who subsequently converts the property, digital codes, digital products, or taxable services to personal use.</text> </paragraph> <paragraph num="D."> <text>A buyer who provides a vendor with a multiple points of use certificate which includes a resale to a related entity as provided for in Regulation .49 of this chapter may not apply for a refund based on a claim that it was impractical at the time of purchase to establish the amount of property to be resold.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="“Taxable Price” Defined."> <paragraph num="A."> <text>The sales and use tax is computed on the “taxable price” of a transaction subject to the tax. The term “taxable price” is broadly defined by statute to include, with certain specific exceptions, the total consideration for the transaction, which may be either in the form of money, rights, property, promises, or anything else of value, or by exchange or barter. The total monetary value of the consideration, that is, of all those things which in fact are, or are promised to be, paid or delivered by or on behalf of the purchaser, to or on behalf of the vendor in the consummation and complete performance of a sale, whether or not the vendor receives any benefit from them, constitutes the “price” on which the tax is to be computed. Deductions are not permitted for any expense or cost, including the cost of any labor or service rendered, any material used or any property, digital code, or digital product sold regardless of how any contract, invoice or other evidence of the transaction is stated or computed, except for those items specifically described in §D, or in Regulation .10 with respect to certain utilities or Regulation .28 with respect to leases.</text> </paragraph> <paragraph num="B."> <text>Components of Taxable Price—Examples.</text> <paragraph num="(1)"> <text>The following illustrate some items which might appear as a separate amount in the vendor's computation of a bill that nevertheless are a part of the “taxable price”, and which therefore may not be deducted before computation of the tax:</text> <paragraph num="(a)"> <text>Any charges for any services to bring the subject of a sale to its finished state ready for delivery and in the condition specified by the buyer, including charges for assembly, fabrication, alteration, lubrication, engraving, monogramming, cleaning, or any other servicing, customizing or dealer preparation.</text> </paragraph> <paragraph num="(b)"> <text>Any discount which is dependent upon an event occurring after consummation of the sale, such as a discount allowed for the prompt payment of a bill.</text> </paragraph> <paragraph num="(c)"> <text>Any charge based on the amount or frequency of a purchase, such as a small order charge, the method of billing, such as a split billing, or the nature of the item sold, such as a slow-moving charge for an item not frequently sold.</text> </paragraph> <paragraph num="(d)"> <text>Excise or other taxes not statutorily imposed directly upon the buyer or act of buying and for which the buyer has no direct legal liability independent of any contractual obligation to the vendor, regardless of how they are stated, such as manufacturer's, wholesaler's, or retailer's taxes, except for certain utility taxes described in Regulation .10 and certain personal property taxes in lease situations as described in Regulation .28.</text> </paragraph> <paragraph num="(e)"> <text>Any commission or other form of compensation for the services of an agent, factor, consultant, broker, or similar person.</text> </paragraph> <paragraph num="(f)"> <text>Any charges for warranties, maintenance or service agreements, or insurance coverage required by the vendor to be taken as a condition of the sale. If the sale could be consummated without the payment of these charges, the charges, unless for a taxable service as described in Tax-General Article, §11-101(m), Annotated Code of Maryland, are not part of the taxable price if separately stated. For example, if the lessee of an automobile who has a contractual obligation to return the automobile undamaged may elect to purchase insurance protecting the lessee against the possibility of having to pay for damages, but need not purchase this insurance in order to lease the vehicle, a separately stated charge for this insurance is not part of the taxable price.</text> </paragraph> <paragraph num="(g)"> <text>Any portion of the price described as a “donation”, when the donation is in fact required by the vendor as a condition of the sale.</text> </paragraph> <paragraph num="(h)"> <text>The amount of any rebate which may be made to the buyer by anyone other than the vendor, or by the vendor upon the performance by the buyer of any condition following the sale.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The following illustrate some forms of consideration that might be tendered by or on behalf of the buyer, the values of which are a part of the “taxable price” and therefore may not be deducted before computation of the tax:</text> <paragraph num="(a)"> <text>The transfer, whether in the nature of a “trade-in”, return, exchange, or otherwise, of anything to the vendor, regardless of whether the buyer may have paid any tax on acquisition of the item or service transferred or whether, in the case of a return or exchange, the buyer may be entitled to any refund of tax previously paid.</text> </paragraph> <paragraph num="(b)"> <text>The assumption of any liabilities of, or attributable to, the vendor.</text> </paragraph> <paragraph num="(c)"> <text>The performance of any personal or other services for or on behalf of the vendor.</text> </paragraph> <paragraph num="(d)"> <text>Except for a federal food coupon, the face value of any coupon, voucher, or similar item issued by any person, including a manufacturer, government agency or the vendor, for which the vendor can be reimbursed or compensated in any form by a third party. This includes compensation in the form of advertising or promotion such as with an online deal-of-the-day eCoupon or similar discount. The presentation of a coupon for which there exists no arrangement for reimbursement to the vendor by any third party, such as a store coupon that in effect establishes a lower price, is not part of the taxable price.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>“Taxable price” includes, for a short-term vehicle rental as defined under Tax-General Article, §11-104(c), Annotated Code of Maryland, all sales and charges made in connection with the short-term vehicle rental, including insurance, freight handling, equipment and supplies, delivery and pickup, cellular telephone, and other accessories, but not including sales of motor fuel subject to the motor fuel tax.</text> </paragraph> <paragraph num="D."> <text>Each of the following items, if made in connection with the sale and clearly identified with the consideration stated separately from any other item by documentary evidence in existence and made known to the buyer at the time of sale, is not a part of the “taxable price” and is therefore deductible from the total consideration before computation of the tax:</text> <paragraph num="(1)"> <text>A charge for labor or service used for application or installation, so long as the charge does not include any amounts described in §B of this regulation, and in particular §B(1)(a), or any other fabrication.</text> </paragraph> <paragraph num="(2)"> <text>A charge for a professional service, except for a taxable service.</text> </paragraph> <paragraph num="(3)"> <text>Any amounts paid by the buyer as a finance charge, interest, or similar charge for credit extended to the buyer.</text> </paragraph> <paragraph num="(4)"> <text>A charge for a delivery, freight, or other transportation service for delivery directly to the buyer by the vendor or by another person acting for the vendor. This does not include any charge:</text> <paragraph num="(a)"> <text>To transport the property from a third party to any location of the vendor;</text> </paragraph> <paragraph num="(b)"> <text>To transport the property from any location of the vendor to another location of the vendor; and</text> </paragraph> <paragraph num="(c)"> <text>For transmission, distribution, or delivery of electricity or natural gas, if the sale or use of the electricity or natural gas is subject to the sales and use tax.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>Any consumer excise taxes imposed by a governmental unit directly upon the buyer or act of purchase.</text> </paragraph> <paragraph num="(6)"> <text>A deposit posted to insure the return of an item taken from the vendor which the vendor expects to have returned, and which will be refunded in full upon the return of the item.</text> </paragraph> <paragraph num="(7)"> <text>Any trade, wholesale, volume, employee, cash, or other discount irrevocably applied at the time of sale which in effect establishes a new price, and which is not dependent on any condition or event subsequent to the sale.</text> </paragraph> <paragraph num="(8)"> <text>Any amount paid by a buyer of food or beverages for human consumption on the premises of the vendor as a mandatory gratuity or service charge which is in the nature of a tip, if the food or beverages are served to a group of not more than 10 persons. Mandatory gratuities or service charges on sales of food or beverages to a group of more than 10 persons are part of the “taxable price” whether or not separately stated, and therefore may not be deducted before computation of the tax.</text> </paragraph> <paragraph num="(9)"> <text>A charge for any service for the operation of equipment used for the production of audio, video, or film recordings.</text> </paragraph> <paragraph num="(10)"> <text>The value of a user component or part (core value) received from a purchaser of the following remanufactured truck parts:</text> <paragraph num="(a)"> <text>An air brake system;</text> </paragraph> <paragraph num="(b)"> <text>An engine;</text> </paragraph> <paragraph num="(c)"> <text>A rear axle carrier; or</text> </paragraph> <paragraph num="(d)"> <text>A transmission.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Sale of Medicines, Medical Supplies, Tobacco Cessation Products, Sickroom Equipment, and Certain Medical Equipment."> <paragraph num="A."> <text>The sales and use tax does not apply to sales of medicines, disposable medical supplies, tobacco cessation products, sickroom equipment, certain medical supplies, and certain medical equipment.</text> </paragraph> <paragraph num="B."> <text>For the purposes of Tax-General Article, Title 11, Annotated Code of Maryland, the following terms have the meanings indicated:</text> <paragraph num="(1)"> <text>Medical Equipment.</text> <paragraph num="(a)"> <text>“Medical equipment” means equipment that:</text> <paragraph num="(i)"> <text>Can withstand repeated use;</text> </paragraph> <paragraph num="(ii)"> <text>Is used exclusively to serve a medical purpose;</text> </paragraph> <paragraph num="(iii)"> <text>Is not useful to a person in the absence of illness or injury; and</text> </paragraph> <paragraph num="(iv)"> <text>Is for use in the home or on the individual's person.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>“Medical equipment” includes, but is not limited to, the following items:</text> <paragraph num="(i)"> <text>Overbed table;</text> </paragraph> <paragraph num="(ii)"> <text>Wheelchair tray;</text> </paragraph> <paragraph num="(iii)"> <text>Pressure or pressure sore relief products;</text> </paragraph> <paragraph num="(iv)"> <text>Bath and toilet safety products;</text> </paragraph> <paragraph num="(v)"> <text>Respiratory equipment;</text> </paragraph> <paragraph num="(vi)"> <text>Trapeze bar;</text> </paragraph> <paragraph num="(vii)"> <text>Traction equipment;</text> </paragraph> <paragraph num="(viii)"> <text>Patient lifts;</text> </paragraph> <paragraph num="(ix)"> <text>Geriatric chair;</text> </paragraph> <paragraph num="(x)"> <text>Thermaphores, heating pads, cervical pillows, medical corsets, elastic bandages;</text> </paragraph> <paragraph num="(xi)"> <text>All types of braces, casts, mastectomy bras and forms;</text> </paragraph> <paragraph num="(xii)"> <text>Apnea monitors, infant breathing monitors, blood glucose monitors, and heart monitors; and</text> </paragraph> <paragraph num="(xiii)"> <text>Stairlifts, unless installed in such a manner that they become part of the real property.</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>“Medical equipment” does not include:</text> <paragraph num="(i)"> <text>Lift chairs;</text> </paragraph> <paragraph num="(ii)"> <text>Exercise equipment;</text> </paragraph> <paragraph num="(iii)"> <text>Air conditioners;</text> </paragraph> <paragraph num="(iv)"> <text>Humidifiers;</text> </paragraph> <paragraph num="(v)"> <text>Dehumidifiers;</text> </paragraph> <paragraph num="(vi)"> <text>Vibrators;</text> </paragraph> <paragraph num="(vii)"> <text>Massagers;</text> </paragraph> <paragraph num="(viii)"> <text>Bedside cabinets;</text> </paragraph> <paragraph num="(ix)"> <text>Receptacles for medical waste;</text> </paragraph> <paragraph num="(x)"> <text>Blood pressure devices;</text> </paragraph> <paragraph num="(xi)"> <text>Thermometers;</text> </paragraph> <paragraph num="(xii)"> <text>Scales of any type; and</text> </paragraph> <paragraph num="(xiii)"> <text>Devices used to obtain or monitor pulse or respiration, such as pulse oximeters, control diascans, Doppler diagnostic equipment, and mini-Dopplers.</text> </paragraph> </paragraph> <paragraph num="(d)"> <text>“For use in the home” includes a nursing home or other assisted care facility, but only to the extent that the equipment remains in the room in which the patient sleeps and is used regularly and exclusively by the patient in that room. Equipment that is used generally for patients throughout the nursing home or other assisted care facility is not considered to be for use in the home. Thus, equipment used in examination, treatment, operating, delivery, and therapy rooms or moved from patient room to patient room in a nursing home or other assisted care facility is not exempt.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>“Medical supplies” means an article used in the cure, mitigation, treatment, prevention, or diagnosis of illnesses. Disposable medical supplies are medical or surgical supplies consumed in a single usage and do not include skin care creams or cleansers. Medical supplies do not include nondisposable surgical supplies, or medical or surgical equipment.</text> </paragraph> <paragraph num="(3)"> <text>“Medicine” means a preparation or substance intended for use in the cure, mitigation, treatment, or prevention of illnesses. The term includes drugs sold on prescription of physicians, drugs for which no prescription is required, and proprietary and patent medicines. The term does not include cosmetics, dentifrices, shaving and hair care products, soaps, deodorants, or skin care creams or cleansers. A product that is primarily cosmetic in nature is not “medicine” even though it may contain medicinal properties.</text> </paragraph> <paragraph num="(4)"> <text>“Sickroom equipment” means “medical equipment” as defined in §B(1) of this regulation.</text> </paragraph> <paragraph num="(5)"> <text>“Tobacco cessation products” means nicotine patches, nicotine gum, or any other product intended for use as an aid in tobacco use cessation and approved by the United States Food and Drug Administration for that purpose.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Natural and Artificial Gas, Electricity, Steam, Oil, and Coal."> <paragraph num="A."> <text>Consumption in Production Activities or to Produce Snow for Commercial Services.</text> <paragraph num="(1)"> <text>The sale of gas, electricity, steam, oil, or coal, consumed directly and predominantly in a production activity or used to operate machinery and equipment used to produce snow for commercial purposes or for use in residential condominiums is not subject to the tax. Production activities do not include processing food or a beverage by a retail food vendor or operating administrative or commercial facilities, such as offices, sales and display rooms, retail outlets and storage facilities, including refrigerated storage facilities.</text> </paragraph> <paragraph num="(2)"> <text>If electricity, gas, or steam is sold through a single meter for both exempt and taxable uses, the purpose which consumes the majority of the electricity, gas, or steam is the basis for determining the taxability of the sale. The buyer shall determine the majority usage, considering the relative connected load for each purpose and the relative time of operation of each over a period of 1 year, unless the circumstances of a particular case require a different period. Similarly, the taxability of purchases of oil or coal is determined by the majority use where it is impracticable to measure separately the amount purchased for each purpose.</text> </paragraph> <paragraph num="(3)"> <text>If the sale of electricity or natural gas is exempt from tax, the sale of the transmission, distribution, or delivery of that electricity or natural gas is also exempt from tax.</text> </paragraph> <paragraph num="(4)"> <text>In order to obtain this exclusion, the buyer of gas, electricity, steam, oil, or coal shall present to the vendor of the commodity and the vendor of the transmission, distribution, or delivery service a certification, upon a form available from the Comptroller, setting forth the basis for the claimed exemption. Upon presentation of the completed and signed form, the vendor may not collect the tax until notified by the Comptroller to resume collection or until the certification is revoked by the buyer. The buyer shall revoke the certification when no longer entitled to an exclusion under the terms of this regulation.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Exempt Buyers.</text> <paragraph num="(1)"> <text>A person operating a nonprofit religious, charitable, or educational organization possessing an exemption certificate issued by the Comptroller under Regulation .22 of this chapter, and other persons possessing an exemption certificate issued by the Comptroller, may claim exemption for the tax on gas, electricity, steam, oil, coal, or the transmission, distribution, or delivery of electricity or natural gas by providing a photocopy of this certificate to the vendor.</text> </paragraph> <paragraph num="(2)"> <text>A member of a foreign diplomatic corps may purchase gas, electricity, steam, oil, coal, or the transmission, distribution, or delivery of electricity or natural gas free of tax by presenting to the vendor the evidence of exemption issued by the United States Department of State.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Tax Basis.</text> <paragraph num="(1)"> <text>The tax on sales of gas, electricity, steam, oil, coal, or on charges for the transmission, distribution, or delivery of electricity or natural gas does not apply to late payment penalties imposed as a gross charge or in any other form.</text> </paragraph> <paragraph num="(2)"> <text>The taxable price on sales of gas, electricity, steam, oil, coal, or on charges for the transmission, distribution, or delivery of electricity or natural gas does not include the amount of a tax imposed by a county with respect to these sales.</text> </paragraph> <paragraph num="(3)"> <text>The taxable price on sales of electricity or on charges for the transmission, distribution, or delivery of electricity does not include the environmental surcharge which may be added to the customers' bills pursuant to Natural Resources Article, §3-302(a), Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Residential Sales.</text> <paragraph num="(1)"> <text>A sale of electricity, steam, or artificial or natural gas that is delivered under a residential or domestic rate schedule on file with the Public Service Commission is not subject to the tax.</text> </paragraph> <paragraph num="(2)"> <text>A sale of coal, firewood, heating oil, or propane gas, or any similar liquefied petroleum gas for use in residential property that contains not more than four units, cooperative housing, condominiums, and other similar residential living arrangements is not subject to the tax. The following apply:</text> <paragraph num="(a)"> <text>If it is impracticable to measure separately the amount of coal, firewood, heating oil, or propane gas or any similar liquefied petroleum gas purchased for both residential and nonresidential purposes, the exemption will apply only if the majority of the usage is for residential purposes.</text> </paragraph> <paragraph num="(b)"> <text>If a vendor is unable to determine that the majority usage test has been met, the tax shall be charged unless the buyer provides a statement to the effect that a majority of the coal, firewood, heating oil, or propane gas, or any similar liquefied petroleum gas will be used for residential purposes. If the coal, firewood, heating oil, or propane gas, or any similar liquefied petroleum gas is used solely for heating purposes, the buyer shall determine majority usage on the basis of the relative space devoted to residential and nonresidential purposes.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>All sales of propane gas in containers less than 60 pounds are presumed to be for recreational, rather than residential, use and are therefore subject to the tax. Sales of propane gas in containers of any size that are not for residential use, or if the majority of the usage is not for residential purposes as set forth in §D(2) of this regulation, are subject to the tax.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Wood and Wood Products. A sale of wood, wood bark or residue, or refuse-derived fuel is not subject to the tax when used for heating purposes.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Printing."> <paragraph num="A."> <text>Printed material means material produced by a mechanical process involving the transfer of text, images, or designs to tangible personal property.</text> </paragraph> <paragraph num="B."> <text>Charges for Printing and Sales of Printed Material.</text> <paragraph num="(1)"> <text>Charges for the printing of tangible personal property by special order and sales of printed material by special order when made to ultimate consumers are subject to tax.</text> </paragraph> <paragraph num="(2)"> <text>Charges for printing and sales of printed material for the purpose of resale in unchanged form or incorporation into a product which is to be sold are not subject to the tax. Examples of nontaxable charges are as follows:</text> <paragraph num="(a)"> <text>Charges for the printing and sale of labels or name plates to a person who will affix them to a product intended for sale;</text> </paragraph> <paragraph num="(b)"> <text>Charges for the printing and sale of tangible personal property used to package products held for sale where the packaging is nonreturnable;</text> </paragraph> <paragraph num="(c)"> <text>Charges for the printing and sale of direction sheets, instruction books, warranties, and other printed matter packaged with or obtainable only with the purchase of products held for sale.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>If the charges for printing or a sale of printed material is subject to the tax, the tax applies to the total charge without deduction for separately itemized charges for property or services required to bring the printed matter to its completed state. Separately itemized delivery charges, including charges for postage, addressing, stamping, sealing, inserting, or wrapping, may be excluded from the charges subject to the tax.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Sales to a Person Engaged in Printing.</text> <paragraph num="(1)"> <text>Tangible personal property or digital products which will be incorporated into printed material which is to be resold, such as ink, paper, staples, stapling wire, binding materials, and digital artwork, or which will be consumed in manufacturing printed material which is to be resold, may be purchased free of tax through the issuance of resale certificates.</text> </paragraph> <paragraph num="(2)"> <text>A sale of artwork, hand or machine compositions, lithographic plates or negatives, or typographies, whether in tangible or digital form, to a person engaged in the printing of tangible personal property for sale and for direct use by the person to produce that property for sale is exempt from the tax. The following apply:</text> <paragraph num="(a)"> <text>A person selling any item referred to above, other than an item which is photographic in nature, shall pay the tax on all materials purchased to produce this item. A printer who produces an exempt item for self use is required to pay the tax on purchases of material used to produce that item.</text> </paragraph> <paragraph num="(b)"> <text>This exemption does not apply to a sale of a described item to a person who will not use it to produce tangible personal property for sale. A person making a taxable sale of this item may buy material which is to be resold, consumed directly and predominantly in production activities, or incorporated in the finished item free of tax through the issuance of resale certificates.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".12" heading="Casual and Isolated Sales."> <text>The sales and use tax does not apply to a casual and isolated sale by a person who regularly does not sell tangible personal property, a digital code, a digital product or a taxable service if the sale price is less than $1,000 and the sale is not made through an auctioneer or a dealer. In determining whether the $1,000 limitation has been exceeded, all sales made on the same occasion or as part of the same transaction by the same vendor to the same buyer shall be combined.</text> </regulation> <regulation prefix="Regulation" num=".13" heading="Certain Capital Transactions."> <paragraph num="A."> <text>Certain specific capital transactions are exempted from taxation.</text> </paragraph> <paragraph num="B."> <text>For the purpose of these exemptions:</text> <paragraph num="(1)"> <text>The term “stock” means equity securities, including any equity security convertible into any other class of equity security, any warrant, and any right to subscribe to or purchase any equity security. The term “stock” does not include any securities which are redeemable for cash at the option of the holder, or which are convertible into any form of debt securities.</text> </paragraph> <paragraph num="(2)"> <text>The term “transfer” means a transfer of personal property, a digital code, or a digital product:</text> <paragraph num="(a)"> <text>Under a reorganization within the meaning of §368(a) of the Internal Revenue Code;</text> </paragraph> <paragraph num="(b)"> <text>Upon organization of a corporation or joint-stock company, to the corporation or company principally in consideration for the issuance of its stock;</text> </paragraph> <paragraph num="(c)"> <text>To a partnership only as a contribution to its capital or in consideration for a partnership interest in the partnership; or</text> </paragraph> <paragraph num="(d)"> <text>To a limited liability company only as a capital contribution or in consideration for an interest in the limited liability company.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>A transfer of tangible personal property, a digital code, or a digital product to a corporation upon its organization is “principally in consideration for the issuance of its stock”, if the aggregate value in money of the consideration other than its stock, issued, paid, or transferred by the corporation in exchange for the tangible personal property, digital code, or digital product is less than 50 percent of the fair market value of the tangible personal property, digital code, or digital product received by the corporation. The transfer to or assumption of liability by a corporation upon its organization is not “consideration other than its stock”, if, without regard to any dollar limitation, the entire transaction would otherwise qualify as an exempt casual and isolated sale.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Transactions Not Subject to the Tax.</text> <paragraph num="(1)"> <text>A transfer of tangible personal property, a digital code, or a digital product to a corporation or joint-stock company upon its organization, principally in consideration for the issuance of its stock, is not subject to tax. The transfer will not be considered to be upon the organization of a corporation unless the Articles of Incorporation were filed for record with the appropriate State authority not more than 6 months before the transfer, and the corporation has not been actively engaged in business for more than 30 days before the transfer.</text> </paragraph> <paragraph num="(2)"> <text>A transfer of tangible personal property, a digital code, or a digital product to a limited liability company only as a capital contribution or in consideration for an interest in the limited liability company is not subject to tax.</text> </paragraph> <paragraph num="(3)"> <text>A transfer of tangible personal property, a digital code, or a digital product made pursuant to a reorganization within the meaning of §368(a) of the Internal Revenue Code is not subject to tax. An Internal Revenue Service ruling or opinion of counsel as to qualification under these sections is evidence of entitlement to this exclusion.</text> </paragraph> <paragraph num="(4)"> <text>A distribution of tangible personal property, a digital code, or a digital product by a corporation to its stockholders as a complete or partial liquidating distribution, whether [or not] made pursuant to the dissolution of the corporation, is not subject to tax. The transfer of tangible personal property, digital codes, or digital products is not a liquidating distribution if any consideration, other than the surrender of stock of the corporation, is paid for the property, digital code, or digital product transferred.</text> </paragraph> <paragraph num="(5)"> <text>A transfer of tangible personal property, a digital code, or a digital product to a partnership solely as a contribution to the capital of a partnership, or in consideration for a partnership interest, made at any time, by any existing or new partner, is not subject to tax. If any consideration is paid for the property transferred other than an interest in the partnership, the transfer is subject to tax. The transfer to or assumption of liability by a partnership is not consideration paid by the partnership, if, without regard to any dollar limitation, the entire transaction would otherwise qualify as an exempt casual and isolated sale.</text> </paragraph> <paragraph num="(6)"> <text>A distribution of tangible personal property, a digital code, or a digital product by a partnership to its partners or by a limited liability company to a member is not subject to tax. A transfer which is not in the nature of a distribution of earnings or profits or a return of capital (such as a sale in the ordinary course of business) is subject to tax.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".14" heading="Resale Certificates."> <paragraph num="A."> <text>Definitions.</text> <paragraph num="(1)"> <text>In this regulation, the following terms have the meaning indicated.</text> </paragraph> <paragraph num="(2)"> <text>Terms Defined.</text> <paragraph num="(a)"> <text>“Antique” means any item of personal property that:</text> <paragraph num="(i)"> <text>Was made in an earlier period;</text> </paragraph> <paragraph num="(ii)"> <text>Has special value because of its age; and</text> </paragraph> <paragraph num="(iii)"> <text>Is at least 70 years old.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Used Collectible.</text> <paragraph num="(i)"> <text>“Used collectible” means an item of personal property that has been previously sold at retail as a new item and in which there is a general interest in collecting the item.</text> </paragraph> <paragraph num="(ii)"> <text>A general interest in the collection of an item is demonstrated by sales of the item at antique and collectible shows and shops or the existence of associations or publications dedicated to the collection of the item.</text> </paragraph> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Except as provided in §§C and D of this regulation, the duty of a vendor to collect the sales and use tax from a buyer is waived if the buyer provides the vendor with a signed resale certificate. The resale certificate need not be in a particular form, but it shall state the name, address, and the Maryland sales and use tax registration number of the buyer, and state that the tangible personal property, digital code, digital product, or taxable service is bought for the purpose of resale.</text> </paragraph> <paragraph num="C."> <text>Purchases for Less Than $200.</text> <paragraph num="(1)"> <text>A vendor may not accept a resale certificate from a buyer for purchases of less than $200 using cash, check, credit card, debit card, or electronic transfer of funds, unless the vendor delivers the goods directly to the buyer's retail place of business.</text> </paragraph> <paragraph num="(2)"> <text>A buyer may obtain a refund of sales and use tax paid on a purchase described in §C(1) of this regulation, if made for resale by claiming a credit on the next sales and use tax return or filing a claim for refund.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Sale of an Antique or Used Collectible.</text> <paragraph num="(1)"> <text>For the sale of an antique or used collectible, the duty of a vendor to collect the sales and use tax from the buyer is waived if the buyer provides the vendor with a signed resale certificate that contains the information set forth in §B of this regulation, except instead of a Maryland sales and use tax registration number, the certificate states that the buyer is an out-of-State vendor who does not sell or deliver tangible personal property or a taxable service for use in Maryland; does not otherwise engage in the business of an out-of-State vendor as described in Tax-General Article, §11-701(b), Annotated Code of Maryland; or does not meet the thresholds for economic nexus as defined in Regulation .33B(5) of this chapter, and:</text> <paragraph num="(a)"> <text>Contains:</text> <paragraph num="(i)"> <text>The sales and use tax registration number of another state; and</text> </paragraph> <paragraph num="(ii)"> <text>A copy of a sales and use tax registration license issued to the buyer from that state; or</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>If a buyer is from a state without a sales and use tax, instead of a sales and use tax registration license and number, a copy of a trader's license from that state or a comparable type of identification.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Except as set forth in this section, all other requirements of this regulation including those of §C of this regulation, apply to the sale of an antique or used collectible.</text> </paragraph> </paragraph> <paragraph num="E."> <text>A vendor shall obtain a resale certificate before a sale is consummated to support every transaction for which the resale exclusion is claimed. A buyer making repeated purchases from a vendor may provide a blanket resale certificate to the vendor and claim the resale exclusion on subsequent purchases by providing the buyer's Maryland sales and use tax registration number on its purchase orders.</text> </paragraph> <paragraph num="F."> <text>When the Comptroller notifies a vendor of an intent to assess the tax on transactions for which the vendor does not possess proper resale certificates, the vendor shall have 60 days from the mailing of this notice to obtain the certificates. If the vendor fails to obtain proper resale certificates within this 60-day period, the Comptroller's assessment is final.</text> </paragraph> <paragraph num="G."> <text>A vendor may not accept a resale certificate at any time, including the 60-day grace period, if at the time of acceptance the vendor knows or should know that the sale is not for resale.</text> </paragraph> <paragraph num="H."> <text>Maryland sales and use tax registration numbers contain 8 digits, the first of which is always either a zero or a one. Numbers issued by other jurisdictions, federal employer or Social Security numbers, or numbers containing alphabetic characters are not valid on a resale certificate.</text> </paragraph> <paragraph num="I."> <text>In third-party drop shipment transactions, in which a Maryland registered vendor sells to an out-of-State unregistered vendor and the property is delivered to a Maryland location, the Maryland vendor shall either require the out-of-State vendor to register for Maryland sales and use tax purposes and provide a proper resale certificate, or charge the tax based on the selling price to the out-of-State vendor. The obligation of the Maryland-registered vendor to obtain a proper resale certificate bearing a Maryland registration number or charge the tax is not changed because the out-of-State vendor is in fact making a sale for resale or the Maryland customer is entitled to the resale exclusion or any other exemption.</text> </paragraph> <paragraph num="J."> <text>Vendors may accept resale certificates that bear the exemption certificate number issued to a religious organization instead of a sales and use tax registration number. Sales and use tax exemption certificate numbers issued to religious organizations consist of 8 digits, the first two of which are always "29". Other private exempt entities may not use their exemption certificate numbers on resale certificates. These entities shall register as vendors and use their sales and use tax registration numbers on resale certificates.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".15" heading="Containers."> <paragraph num="A."> <text>The resale exclusion includes not only the purchase for resale of the particular products or their components but also the containers, cartons, bottles, pallets, packing, and their components sold with these products.</text> </paragraph> <paragraph num="B."> <text>A vendor may claim the resale exclusion on the purchase of returnable containers, provided that the vendor uses them solely to deliver other property for sale. If the vendor makes any use of the containers for other purposes, the resale exclusion does not apply.</text> </paragraph> <paragraph num="C."> <text>The resale exclusion does not apply to purchases of containers which will not be used to package tangible personal property for sale. For example, the tax applies to the purchase of materials used to package an item transferred in a nontaxable service transaction, such as the sale to a dry cleaner of boxes and plastic bags.</text> </paragraph> <paragraph num="D."> <text>Except for sales to farmers, the claim for the resale exclusion on purchases of containers is made through the issuance of resale certificates. Sales of containers to farmers to transport products the farmer raises are expressly exempt and need not be supported with resale certificates.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".16" heading="Photography."> <paragraph num="A."> <text>The sale of a photograph, photocopy, or blueprint is subject to tax whether delivered to the buyer electronically or in tangible form. When the product is delivered in tangible form, the tax also applies to separately stated charges for portrait photography, motion picture and videotaping production, and the development and printing of a picture.</text> </paragraph> <paragraph num="B."> <text>The tax applies to rental charges for equipment used for the production of audio, video, or film recordings. Charges for services to operate this equipment are not subject to the tax if they are separately stated, identified, and made known to the buyer at the time of sale.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".17" heading="Dry Cleaners and Laundries."> <paragraph num="A."> <text>Persons operating dry cleaning establishments and laundries are required to collect the tax on receipts from their services when these services are performed for a person engaged in business, such as restaurants, hotels, motels, beauty shops, barber shops, and other such establishments, which require the regular cleaning and laundering of their linens and textiles. When the service is performed for a dry shop, the person providing the laundry and dry cleaning service shall obtain a resale certificate from the dry shop operator.</text> </paragraph> <paragraph num="B."> <text>Laundries and dry cleaners who rent textiles shall collect the tax on the rentals and may issue a resale certificate for the purchase of the textiles.</text> </paragraph> <paragraph num="C."> <text>Laundry and dry cleaning services performed for individuals of their personal laundry are exempt from the tax.</text> </paragraph> <paragraph num="D."> <text>This exemption also includes domestic diaper service.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".18" heading="Florists."> <text>The tax shall be collected on orders taken by a Maryland florist or nursery to be sent to a second florist or nursery, whether the delivery is to be made within or without the State. A florist or nursery making deliveries pursuant to orders received from another florist or nursery may not collect the tax regardless of whether the florist or nursery forwarding the order is within or without this State.</text> </regulation> <regulation prefix="Regulation" num=".19" heading="Real Property Construction, Improvement, Alteration, and Repair."> <paragraph num="A."> <text>The sale of tangible personal property to a person who will use or resell it in the form of real property is taxable. Therefore, a person who constructs, improves, alters, or repairs real property shall pay the tax on all materials purchased, which will be incorporated into real property in such a manner that the materials will lose their identity as tangible personal property.</text> </paragraph> <paragraph num="B."> <text>Taxability is not affected by language in a real property construction contract or subcontract such as “tax included” or “tax exempt”, except as provided in §D of this regulation or by any form of payment under the real property construction contract or subcontract, whether lump-sum, cost-plus, time and material, or otherwise.</text> </paragraph> <paragraph num="C."> <text>Determination of Material as Real Property.</text> <paragraph num="(1)"> <text>The determination of whether material installed or annexed to real property will become a part of the real property depends principally upon the intention of the person making the annexation.</text> </paragraph> <paragraph num="(2)"> <text>If the intention of the annexation is to permanently and substantially improve land, a building, or other real property, the material will be considered to have become real property. An installed or annexed item which is an integral, necessary, and expected part of real property constitutes a permanent and substantial improvement to the real property.</text> </paragraph> <paragraph num="(3)"> <text>If the intention of the annexation is for a temporary purpose, that is, for the enjoyment or use of the material as a chattel or personalty, the material will be considered to retain its character as tangible personal property. Machinery used in a production activity retains its character as tangible personal property without regard to the method or permanency of its annexation to real property. Farm equipment, a foundation in support of machinery and equipment used in a production activity and any machinery, device, or equipment which is required for conformance with air or water pollution laws or regulations retain their character as tangible personal property.</text> </paragraph> <paragraph num="(4)"> <text>Factors to be considered in determining the intention of the party making the annexation are the:</text> <paragraph num="(a)"> <text>Nature of the article annexed;</text> </paragraph> <paragraph num="(b)"> <text>Mode of annexation;</text> </paragraph> <paragraph num="(c)"> <text>Purpose for which it was annexed; and</text> </paragraph> <paragraph num="(d)"> <text>Practicality and feasibility of removal of the annexed article.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>As a general rule, counters, countertops, and cabinetry installed in commercial spaces will be treated as tangible personal property. Doors, windows, molding, built-ins, and kitchen cabinetry installed in residential or commercial spaces will be treated as realty.</text> </paragraph> </paragraph> <paragraph num="D."> <text>A person who, because of a contractual obligation, purchases material which will be incorporated into the real property of a private, nonprofit charitable, educational, or religious organization, or volunteer fire, ambulance, or rescue company or squad, located in Maryland, may use the exemption certificate issued to the organization to purchase the material tax-free. In order to purchase the material tax-free, the buyer shall certify to the supplier, in a signed statement, that the material will be incorporated into the real property of the exempt organization. The buyer shall include in the statement the name and exemption certificate number of the organization, and the date and identification of the contract for which the materials are purchased. No specific format for the statement is required, nor are forms supplied by the Comptroller. Buyers and suppliers may use any format which contains the required information. The following is an example of an acceptable format:</text> </paragraph> <paragraph num="E."> <text>The exemption for the purchase of building material described above applies only when the final recipient of the material is a private, nonprofit charitable, educational, or religious organization, or volunteer fire, ambulance, or rescue company or squad, located in Maryland, which has been issued an exemption certificate. Purchases of material which will be incorporated into the real property of any other person or organization, whether or not that person or organization may be exempt from tax for any reason, are subject to tax in accordance with §A, above. Therefore, for example, purchases of material which will be incorporated into the real property of the State of Maryland, including its political subdivisions, the U.S. Government, including its agencies and instrumentalities, diplomatic embassies, or credit unions, are subject to tax.</text> </paragraph> <paragraph num="F."> <text>The retail sale or use of all equipment, tools, expendable supplies, and other items which are used to improve real property and are not incorporated into the realty, is subject to tax in all instances.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".20" heading="Games and Amusements."> <paragraph num="A."> <text>Charges made for the privilege of bowling, golfing, swimming, and for playing billiards, pingpong, tennis, squash, badminton, and similar sports are not sales of tangible personal property and are not subject to the tax.</text> </paragraph> <paragraph num="B."> <text>Persons who offer these privileges to the public are considered the consumers of all materials and supplies which they purchase to operate the establishments and shall pay the tax to their vendors.</text> </paragraph> <paragraph num="C."> <text>Rentals of sporting equipment are subject to the tax.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".21" heading="Time of Collection."> <paragraph num="A."> <text>A sale is a transaction for the present or future transfer of title or possession of tangible personal property, a digital code, or a digital product or for the performance of taxable services, for a consideration, and the tax imposed on a retail sale applies when the transaction is entered into, regardless of when the consideration is to be paid, the tangible personal property, digital code, or digital product is to be delivered, or the services are to be performed. Except as provided by this regulation or for a rental, lease, subscription, or license for use, the vendor shall collect the tax from the buyer when the sale occurs.</text> </paragraph> <paragraph num="B."> <text>Exception for Certain Credit or Installment Sales.</text> <paragraph num="(1)"> <text>If a vendor makes a credit or installment sale of tangible personal property, taxable services, digital codes, or digital products which the vendor must manufacture, design, create, custom-alter, or order from a third party, collection of the tax may be deferred at the option of the vendor until the property, digital code, digital product, or taxable service is delivered. Among other things, this exception does not apply to a sale, such as a lay-away sale, when delivery of existing property in the possession of the vendor is delayed pending full payment.</text> </paragraph> <paragraph num="(2)"> <text>The vendor may not defer collection of the tax beyond the time of full payment for or delivery of the property, taxable service, digital code, or digital product, whichever occurs first. A vendor obligated to make more than one delivery as a result of a single sale of property, services, digital codes, or digital products which the vendor must manufacture, design, create, custom-alter, or order from a third party may defer collection of the tax on the portion of the price attributable to each delivery until payment of that portion of the price or the date of that delivery, whichever occurs first.</text> </paragraph> <paragraph num="(3)"> <text>If a sale as to which a vendor has elected to defer collection of the tax is cancelled and, for any reason, less than the full amount of any payment is returned to the buyer, the vendor shall allocate the amount retained as between taxable price and tax and remit that tax with the next return to the Comptroller.</text> </paragraph> <paragraph num="(4)"> <text>The authority to defer collection of the tax created by this section does not affect the nature or amount of the vendor's or buyer's liability as created at the time of entering into a transaction but only affects the time of collection of the tax.</text> <paragraph num="(a)"> <text>If a change in the tax rate occurs between the time of sale and the time of delivery of tangible personal property, a digital code, a digital product, or a taxable service, the original tax rate shall apply.</text> </paragraph> <paragraph num="(b)"> <text>If the sale of the tangible personal property, digital code, digital product, or service is not taxable at the time the sale occurs, the sale does not become taxable if the tangible personal property, digital code, digital product, or service becomes taxable after the sale but before the items or services are delivered.</text> </paragraph> <paragraph num="(c)"> <text>If the sale of the tangible personal property, digital code, digital product, or service is taxable at the time the sale occurs, the sale is taxable even if the tangible personal property, digital code, digital product, or service would not be taxable at the time the items or services are delivered.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>Examples.</text> <paragraph num="(a)"> <text>Example 1. A contract for the sale of tangible personal property is entered into on June 10. The contract states the property is to be delivered July 10, and requires a single payment due by August 10. Effective July 1 the same year, the rate of sales and use tax on the tangible personal property increases from 5 percent to 6 percent. The vendor is required to collect the tax on the transaction at the 5 percent rate that is in effect on June 10. The tax must be collected no later than the delivery date, July 10.</text> </paragraph> <paragraph num="(b)"> <text>Example 2. A contract for the sale of tangible personal property is entered into on June 10. The contract states the property is to be delivered July 10 and requires a single payment due by August 10. Effective July 1 the same year, the tangible personal property is exempt from the sales and use tax. The vendor is required to collect the tax on the transaction at the rate that was in effect on June 10. The tax must be collected no later than the delivery date, July 10.</text> </paragraph> <paragraph num="(c)"> <text>Example 3a. A contract for the sale of computer systems integration design consulting services is entered into on January 1, 2025. Services are to be delivered over a negotiated period of 5 years, from March 1, 2025, through February 28, 2030. The contract states the total price for the services is $5,000,000 to be paid in installments upon completion of milestones as defined by the contract. At the time of sale, computer systems integration design consulting is a nontaxable service. Computer systems integration design consulting becomes taxable effective July 1, 2025. Although some installment payments are made after the change in the taxability of the service, taxability for this contract is determined as of the date of sale, which is January 1, 2025. Because the service was not taxable at the date of sale, no sales and use tax is due on any of the installment payments.</text> </paragraph> <paragraph num="(d)"> <text>Example 3b. Assume the facts in Example 3a, except the January 1, 2025 contract also includes an option for additional data or information technology services at a set price and an option for an additional period at a set price. Prior to February 28, 2030, the buyer exercises the rights to the additional services and additional years. Because the terms for the optional additional services and additional period were agreed upon and included in the January 1, 2025 contract, the additional services and additional period retain their status as nontaxable as determined as of the date of sale, which is January 1, 2025.</text> </paragraph> <paragraph num="(e)"> <text>Example 3c. The parties from Example 3a effectuate a change order on December 1, 2025, contracting for additional data or information technology services not included in the January 1, 2025 contract. The change order adds $2,500,000 to the contract price and the payment of the $2,500,000 be based on additional milestones not included in the original contract. Although the installment payments made pursuant to the January 1, 2025 contract are not subject to the sales and use tax, the December 1, 2025 change order constitutes a new sale. The new sale is subject to the sales and use tax in effect on the date of sale, which is December 1, 2025. The vendor is required to collect the tax on milestone installment payments made for the services included in the change order.</text> </paragraph> <paragraph num="(f)"> <text>Example 4. A contract for a subscription cloud storage service is initially entered into for a period from June 10, 2025 through July 9, 2025. Effective July 1, 2025, the cloud storage service becomes taxable. The subscription contract requires advance payments, gives the subscriber access to the service for a 1-month period, and is renewable thereafter on a monthly basis. Each subscription payment period is considered a separate lease, and thus a separate sale, for the purpose of determining when the tax is to be collected or paid. Because the cloud storage service is not subject to the sales and use tax as of June 10, 2025, no tax is due on the June 10, 2025 through July 9, 2025 subscription payment. Because the cloud storage service becomes subject to the sales and use tax on July 1, 2025, the tax is due on the July 10, 2025, through August 9, 2025, subscription payment and any subsequent monthly subscription payments for continued access.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".22" heading="Exempt Charitable or Nonprofit Organizations."> <paragraph num="A."> <text>In this regulation, “food” has the meaning as defined in Tax-General Article, §11-206(a)(3)(i) and (ii), Annotated Code of Maryland.</text> </paragraph> <paragraph num="B."> <text>Purchases by an Organization.</text> <paragraph num="(1)"> <text>A purchase by a nonprofit charitable, educational, or religious organization or volunteer fire company or department, or volunteer ambulance company or rescue squad, located in this State, when the purchase is made to carry on the work of the organization, is exempt from the tax.</text> </paragraph> <paragraph num="(2)"> <text>A purchase by a bona fide nationally organized and recognized organization of the veterans of the armed forces of the United States or an auxiliary of the organization or one of its units, is exempt from the tax.</text> </paragraph> <paragraph num="(3)"> <text>A purchase to be used primarily for carrying on an “unrelated trade or business” as that term is defined in §513 of the Internal Revenue Code, or a purchase made by officials, members, or employees of the organization for their personal usage is not a purchase made to carry on the work of the organization within the meaning of this regulation. A purchase by the organization to be used for raising funds in activities which do not constitute an “unrelated trade or business” qualifies for the exemption.</text> </paragraph> <paragraph num="(4)"> <text>A purchase of tangible personal property, a digital code, or a digital product by a nonprofit parent-teacher association located in the State is exempt from the tax if the association contributes the purchase to a public or nonprofit elementary or secondary school. A parent-teacher association may present the exemption number of its school to a vendor to claim the exemption.</text> </paragraph> <paragraph num="(5)"> <text>Purchases of tangible personal property and taxable services are exempt if purchased by:</text> <paragraph num="(a)"> <text>A cemetery company that holds a 501(c)(13) designation from the Internal Revenue Service;</text> </paragraph> <paragraph num="(b)"> <text>A credit union organized under the laws of Maryland or the United States; or</text> </paragraph> <paragraph num="(c)"> <text>A nonprofit organization that holds a 501(c)(4) designation from the Internal Revenue Service and provides a program to contain, clean up, or otherwise mitigate oil spills or other substances occurring in the United States coastal and tidal waters.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Sales by an Organization.</text> <paragraph num="(1)"> <text>Generally, a sale of tangible personal property, a digital code, a digital product, or a taxable service by an exempt organization is subject to tax.</text> </paragraph> <paragraph num="(2)"> <text>The following sales are not subject to the tax:</text> <paragraph num="(a)"> <text>Sales made by a bona fide church or religious organization when made for the general purposes of the organization.</text> </paragraph> <paragraph num="(b)"> <text>Sales made by a gift shop at a mental hospital that the Maryland Department of Health operates.</text> </paragraph> <paragraph num="(c)"> <text>Sales made by an independent hospital thrift shop that is operated by all volunteer staff, sells only donated articles, contributes the profits from sales to the hospital with which the shop is associated, and is not operated in conjunction with a gift shop or other retail establishment.</text> </paragraph> <paragraph num="(d)"> <text>Sales made by a vending facility operated under the Maryland Vending Program for the Blind and located on property held or acquired by or for the use of the United States for any military or naval purpose where a post exchange or other tax exempt concession is operated.</text> </paragraph> <paragraph num="(e)"> <text>Sales of magazine subscriptions by an elementary or secondary school in the State, or a nonprofit parent-teacher organization or other nonprofit organization within the school, when the students act as salespersons or order takers, if the net proceeds from the sales are used solely for the educational benefit of the school or its students. Sales from an agreement or contract with an organization to participate in a fund-raising activity for a percentage of the gross receipts when students sell or take orders for magazines are also exempt.</text> </paragraph> <paragraph num="(f)"> <text>Sales of food, the proceeds of which are used to support a bona fide nationally organized and recognized organization of veterans of the armed forces of the United States or auxiliary of the organization or one of its units, for consumption only on the premises, when served by the organization or auxiliary.</text> </paragraph> <paragraph num="(g)"> <text>Sales of food, the proceeds of which are used to support a volunteer fire company or department or its auxiliary or a volunteer ambulance company or rescue squad or its auxiliary, when the food is served by the company, department, squad, or auxiliary.</text> </paragraph> <paragraph num="(h)"> <text>Auction sales by or on behalf of a bona fide church, religious organization, or other qualified nonprofit organization, if the proceeds of the sale are used to carry on the exempt purposes of the church or organization. Unless the auction is held directly by a bona fide church or other religious organization, the exemption is limited to only that portion of the sale price that exceeds the fair market value of the tangible personal property, digital code, or digital product, and therefore qualifies for a deduction under the federal income tax as a charitable contribution under the regulations and guidelines of the Internal Revenue Service. In auctions held by an auctioneer or any person or organization other than a bona fide church or other religious organization, the exemption is subject to limitation. This exemption requires that the portion of the sale price that qualifies for a deduction under the federal income tax must be separately stated from the fair market value portion of the sales price. If the two components of the sale price are not separately stated, then the sale price is subject to the tax in its entirety.</text> </paragraph> <paragraph num="(i)"> <text>Sales of food, bottled water, soft drinks or carbonated beverages, or candy by a nonprofit food vendor at a youth sporting event or 4-H youth event for individuals under the age of 18 years if there are no facilities for food consumption on the premises, unless the sale is within an enclosure for which a charge is made for admission.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>Exemption Certificates.</text> <paragraph num="(1)"> <text>The Comptroller will issue an exemption certificate upon approval of an application to:</text> <paragraph num="(a)"> <text>A nonprofit charitable, educational, or religious organization that is:</text> <paragraph num="(i)"> <text>Located in the State;</text> </paragraph> <paragraph num="(ii)"> <text>Located in an adjacent jurisdiction and provides its services within the State on a routine and regular basis; or</text> </paragraph> <paragraph num="(iii)"> <text>Located in an adjacent jurisdiction whose law does not impose a sales or use tax on a sale to a nonprofit organization made to carry on its works, or contains a reciprocal exemption from sales and use tax for sales to nonprofit organizations located in adjacent jurisdictions.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>A volunteer fire company or department or a volunteer ambulance company or rescue squad located in the State; and</text> </paragraph> <paragraph num="(c)"> <text>Other organizations entitled to exemptions on their purchases, such as governmental entities, bona fide nationally organized and recognized veterans’ organizations, and credit unions.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>An organization wishing to claim an exemption to which it is entitled shall exhibit its exemption certificate to the vendor at the time of sale. The vendor shall record the valid serial number of the exemption certificate on any record or evidence of each sale. Unless the exemption certificate is exhibited at the time of sale, the applicable tax shall be charged by the vendor.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Form and Expiration of Exemption Certificates.</text> <paragraph num="(1)"> <text>An exemption certificate contains the organization's name, address, eight-digit account number, and, except for governmental entities, specifies an expiration date. Except for governmental entities, certificates will expire on September 30, 2017, and, upon reissuance, at 5-year intervals after that. Upon application, the Comptroller will issue new exemption certificates to replace existing certificates of those organizations which continue to qualify for tax exempt status.</text> </paragraph> <paragraph num="(2)"> <text>Designation of Categories. The first two digits of the eight-digit account number assigned to the organization by the Comptroller designate the category in which the organization is included, as follows:</text> <paragraph num="(a)"> <text>29 — religious institutions;</text> </paragraph> <paragraph num="(b)"> <text>30 — federal, state, and local governmental agencies;</text> </paragraph> <paragraph num="(c)"> <text>31 — educational and charitable organizations, qualified cemeteries, and qualified oil spill mitigation organizations;</text> </paragraph> <paragraph num="(d)"> <text>32 — credit unions;</text> </paragraph> <paragraph num="(e)"> <text>33 — volunteer fire departments, rescue squads, and ambulance companies; and</text> </paragraph> <paragraph num="(f)"> <text>34 — veterans' organizations.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Contractors purchasing materials to be incorporated into the real property of a nonprofit charitable, educational, or religious organization, a volunteer fire company or rescue squad, or a bona fide, nationally organized and recognized veterans' organization may use the exemption certificate issued to that organization to purchase the material tax-free. Purchase of material which will be incorporated into the real property of any other organization, including an otherwise exempt governmental entity, is subject to the tax.</text> </paragraph> <paragraph num="(4)"> <text>A vendor may accept the exemption certificate number issued to a religious institution on a resale certificate instead of a sales and use tax license number. Other private exempt entities may not use their exemption certificate number to issue resale certificates but shall register as vendors and use their sales and use tax license numbers for this purpose.</text> </paragraph> <paragraph num="(5)"> <text>A vendor may not exempt from the tax any sale to any entity on the basis of an exemption certificate which has expired. The tax shall be collected on sales to entities claiming exemption status unless the vendor is presented with an unexpired exemption certificate issued by the Comptroller to that organization.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".23" heading="Room Rentals."> <paragraph num="A."> <text>A charge for a right to occupy a room or lodgings as a transient guest is subject to tax. The tax does not apply to charges to persons who rent living accommodations on a monthly basis or who are permanent residents. However, all rentals in resort areas for terms of 4 months or less are subject to the tax.</text> </paragraph> <paragraph num="B."> <text>Any amount charged or retained by a vendor as a result of the cancellation of a room or lodging is subject to tax. The vendor shall allocate the amount charged or retained between taxable price and tax. This section does not apply to amounts charged or retained by a vendor for the rental of living accommodations to permanent residents or to persons on a monthly basis. This section does apply to amounts charged or retained by a vendor who rents accommodations in resort areas for terms of 4 months or less.</text> </paragraph> <paragraph num="C."> <text>Receipts from the rental of banquet and other public rooms and business quarters are not subject to the tax.</text> </paragraph> <paragraph num="D."> <text>The tax will apply on the rental of any sleeping room when used both for accommodations and for business purposes.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".24" heading="Tangible Personal Property Consumed in a Production Activity."> <paragraph num="A."> <text>This regulation applies to sales on or before June 30, 2000.</text> </paragraph> <paragraph num="A-1."> <text>The retail sale or use of tangible personal property that will be consumed directly and predominantly in a production activity, if consumed within 1 year after the property is first used in a production activity, is not subject to tax.</text> </paragraph> <paragraph num="B."> <text>Consumed Test.</text> <paragraph num="(1)"> <text>Tangible personal property is consumed if it is destroyed, used up, or worn out during production activities to the extent that it cannot be repaired, reconditioned, or rendered fit for further use in production activities.</text> </paragraph> <paragraph num="(2)"> <text>Tangible personal property is not consumed because it becomes obsolete, or because the buyer has no further orders requiring its use, or because it is otherwise not needed or useless. Property is not consumed in production activities because it is changed as a result of preparing it for further use, even though its usefulness may be limited as a result of the changes. The changed property is consumed only if, as a result of its subsequent use in production activities, it satisfies the test described in §B(1) of this regulation.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Directly Test.</text> <paragraph num="(1)"> <text>Tangible personal property is consumed directly in a production activity only if it is used during the production activity, at the location where the production activity occurs, and its use is integral and essential to that activity.</text> </paragraph> <paragraph num="(2)"> <text>Tangible personal property is not consumed directly in a production activity simply because it is used at some point in a production process, as distinguished from the actual production activity, even if such use may be considered essential to a production activity, either by law or practical necessity. For example, tangible personal property that is consumed in producing items that are not sold, but are used in a production activity, is not consumed directly in that production activity, even though the items produced may be essential to production.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Predominantly Test. Tangible personal property is consumed predominantly in a production activity if it is used more than 50 percent of the time directly in a production activity.</text> </paragraph> <paragraph num="E."> <text>The 1-year limitation within which tangible personal property shall be consumed begins to run when that property is first used in a production activity, and is not stayed if the property is temporarily withdrawn from use. Property that is not in fact consumed within 1 year does not satisfy this limitation, even if the buyer intended to consume, or would normally consume, the property within 1 year.</text> </paragraph> <paragraph num="F."> <text>Payment of Tax.</text> <paragraph num="(1)"> <text>The buyer need not pay the tax on the purchase or use of tangible personal property only if the buyer reasonably expects and in good faith intends to consume that property directly and predominantly in a production activity within 1 year from its first use, as those terms and conditions are defined and explained in this regulation. If, however, the property is actually used in such a way that it does not satisfy each of the tests set forth above, including the 1-year limitation, the tax applies to that property. At the time a buyer knows or should know that the tax applies to property on which no tax has been paid, the buyer shall report the price of that property as a taxable purchase or use on the return for that period. A buyer may claim a refund for taxes paid on any property that in fact satisfies all of the tests and limitations set forth above.</text> </paragraph> <paragraph num="(2)"> <text>If a buyer is not required to pay the tax at the time of the purchase or use of property in accordance with §F(1), above, the buyer may claim the exclusion by providing the vendor with a resale certificate, on which a registration number is not required, stating the reason that tax is not payable. A buyer may also issue such a certificate if the buyer cannot determine how much of the property will not be subject to tax pursuant to this regulation, so long as the buyer reasonably expects that more than half the property will not be subject to tax.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".25" heading="Transactions in Interstate Commerce."> <paragraph num="A."> <text>General. The tax does not apply to a transaction which is not within the taxing power of this State under the Constitution of the United States, as interpreted from time to time by applicable court decisions.</text> </paragraph> <paragraph num="B."> <text>Tangible Personal Property Shipped From this State.</text> <paragraph num="(1)"> <text>If tangible personal property is sold within this State, and possession is taken by the buyer within this State, the tax applies even if the tangible personal property is to be transported out of this State immediately upon delivery.</text> </paragraph> <paragraph num="(2)"> <text>If tangible personal property is sold within this State and possession is taken by the buyer outside this State, the tax does not apply, if the property is not to be used in Maryland. Possession is taken by the buyer outside this State only if either of the following tests are met:</text> <paragraph num="(a)"> <text>The seller is obligated to personally deliver the tangible personal property outside this State; or</text> </paragraph> <paragraph num="(b)"> <text>The seller is, by terms of the sales contract, obligated to deliver the tangible personal property to a common carrier or to the mails for transportation outside this State.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>If tangible personal property is sold within this State and possession is taken by the buyer outside this State, the tax applies if the property is to be brought into this State for use in this State. The duty of the vendor to collect the sales and use tax on a sale for use in the State is not affected by delivery of the property to the buyer at a point outside Maryland. If the vendor, exercising reasonable judgment, knows or should know that the buyer intends to bring the property into this State for use here, the vendor is obligated to collect the tax.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Tangible Personal Property Shipped into this State. In those cases in which tangible personal property is shipped into this State pursuant to a contract of sale, the sale will be considered to be made in this State if both of the following tests are met:</text> <paragraph num="(1)"> <text>The contract of sale is entered into either conditionally or unconditionally in this State by or on account of a nonresident seller who has in this State a place of business from which sales are made or a sales office.</text> </paragraph> <paragraph num="(2)"> <text>The delivery of the tangible personal property is made by the seller to the buyer in this State. Delivery of tangible personal property will be considered as made in this State if either:</text> <paragraph num="(a)"> <text>Physical possession of the tangible personal property is transferred by the seller to the buyer in this State; or</text> </paragraph> <paragraph num="(b)"> <text>The tangible personal property is shipped by the seller from a point outside this State to a buyer in this State either by common carrier or mail, whether the shipment is F.O.B. the seller's place of business or otherwise.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>The tax applies to sales for use in this State regardless of whether the sale takes place in this State or outside this State.</text> </paragraph> <paragraph num="E."> <text>Taxable Services.</text> <paragraph num="(1)"> <text>The sale of a digital code, digital product, data or information technology service, a software publishing service, or a taxable service described in Tax-General Article, §11-101(m)(14) and (15), Annotated Code of Maryland is presumed to be made in the state in which the customer tax address is located.</text> </paragraph> <paragraph num="(2)"> <text>If a seller located outside the State delivers a taxable service within the State, the tax applies if the seller is an out-of-state vendor under Regulation .33 of this chapter.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".26" heading="Aircraft, Motor Vehicles, Railroad Rolling Stock, and Vessels Used in Interstate and Foreign Commerce."> <paragraph num="A."> <text>A sale or a sale for use of an aircraft, motor vehicle, railroad rolling stock, or vessel that is used principally in interstate or foreign commerce and a sale or a sale for use of a replacement part, other tangible personal property, or digital product to be used physically in, on, or by it, are exempt from the tax.</text> </paragraph> <paragraph num="B."> <text>An aircraft, motor vehicle, railroad rolling stock, or vessel is used principally in interstate or foreign commerce if during the first year of its use, or if the use does not extend to 1 year, then during the lesser period of use, any one of the following tests is met:</text> <paragraph num="(1)"> <text>More than 50 percent of the total mileage traveled is mileage between a pickup or delivery point in one state and a pickup or delivery point in another state or the District of Columbia (uninterrupted by intervening pickups or deliveries), between a pickup or delivery point within the United States and a pickup or delivery point outside the United States, or between pickup and delivery points wholly outside the United States. The mileage traveled directly between one pickup or delivery point to another pickup or delivery point within the same state or the District of Columbia is not qualifying mileage.</text> </paragraph> <paragraph num="(2)"> <text>More than 50 percent of all trips between a pickup or delivery point and the next pickup or delivery point, are between a pickup or delivery point in one state and a pickup or delivery point in another state or the District of Columbia, between a pickup or delivery point within the United States and a pickup or delivery point outside the United States, or between pickup and delivery points wholly outside the United States. For the purposes of this test, each segment of a fixed or variable route between one pickup or delivery point and the next pickup or delivery point is a distinct trip, and trips wholly within one state or the District of Columbia are not qualifying trips.</text> </paragraph> <paragraph num="(3)"> <text>More than 50 percent of the total days of use are days during which there has occurred or is occurring a trip between a pickup or delivery point in one state and a pickup or delivery point in another state including the District of Columbia, between a pickup or delivery point within the United States and pickup or delivery point outside the United States, or between pickup and delivery points wholly outside the United States. A day in which trips are made or are being made solely between pickup and delivery points within any one state or the District of Columbia is not a qualifying day.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Repealed.</text> </paragraph> <paragraph num="D."> <text>If tax is not paid at the time of purchase or use of tangible personal property or digital product on the basis that one of the tests set forth in §B of this regulation will be met, but in fact none of these tests is met, the exemption does not apply. The tax shall be payable to the Comptroller from the buyer as of the date the buyer has reason to believe that the exemption does not apply.</text> </paragraph> <paragraph num="E."> <text>Lease or Rental — Tax Exemption.</text> <paragraph num="(1)"> <text>In the case of a lease or rental, entitlement to the exemption is determined on the basis of use during each billing period of the lease or rental.</text> </paragraph> <paragraph num="(2)"> <text>If a lease or rental agreement extends over more than one billing period, and if the lessee reasonably believes that the exemption will apply in more than 50 percent of the billing periods covered by the lease or rental agreement, the lessee may:</text> <paragraph num="(a)"> <text>Claim the exemption for all of the billing periods covered by the lease or rental agreement, and pay the tax on any lease or rental payment for any billing period for which the exemption does not apply; or</text> </paragraph> <paragraph num="(b)"> <text>Claim no exemption for any of the billing periods covered by the lease or rental agreement, and file an application for refund of any taxes paid on any lease or rental payment for any billing period for which the exemption applies.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>An exemption may not be claimed if a lessee does not reasonably believe that the exemption will apply in more than 50 percent of the billing periods covered by the lease or rental agreement, but a lessee may file an application for refund of any taxes paid on any lease or rental payment for any billing period for which the exemption applies.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Statement For Tax Exemption.</text> <paragraph num="(1)"> <text>A vendor may overcome the presumption of taxability by requiring of the buyer and retaining with the records of the transaction, a statement signed by the buyer in substantially the following form:</text> </paragraph> <paragraph num="(2)"> <text>A vendor may also accept a signed statement covering a number of specified transactions or all transactions with a particular buyer, subject to notification to the contrary.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".27" heading="Auctioneers, Agents, Brokers and Factors."> <text>Every factor, auctioneer, broker, or agent acting for any principal, or entrusted with possession of any bill of lading, custom house permit, or warehouse receipt for delivery of any tangible personal property or entrusted with possession of any personal property for the purpose of sale shall be responsible for the proper collection and remittance of the tax with respect to these sales, regardless of the fact that the principal or owner of the property being sold would not have been liable for collection of the tax if they had made the sale themselves.</text> </regulation> <regulation prefix="Regulation" num=".28" heading="Lease of Tangible Personal Property, Digital Codes, Digital Products, Data or Information Technology Services, and Software Publishing Services."> <paragraph num="A."> <text>In this regulation, “lease” means:</text> <paragraph num="(1)"> <text>The transfer of possession, absolutely or conditionally by any means, of tangible personal property, digital codes, or digital products for a consideration, by way of lease, rental, royalty agreement, or grant of a license for use; and</text> </paragraph> <paragraph num="(2)"> <text>A license for use of a data or information technology service or a software publishing service as defined in Regulation .48 of this chapter.</text> </paragraph> </paragraph> <paragraph num="B."> <text>“Lease” is included within the statutory definition of the term “sale” and is thus subject to the tax in the absence of a specific exemption or exclusion.</text> </paragraph> <paragraph num="C."> <text>Each lease payment period is considered a separate lease, and thus a separate sale, for the purpose of determining when the tax is to be collected or paid.</text> </paragraph> <paragraph num="D."> <text>The tax applies to the entire lease payment if property acquired by lease is within this State at any time during that lease payment period, regardless of where the lease was transacted or possession of the property taken.</text> </paragraph> <paragraph num="E."> <text>The tax applies to the entire lease payment if the property, digital code, digital product, or taxable service acquired by lease is used within the State at any time during that lease payment period regardless of where the lease was transacted or possession of the property, the digital code, or the digital product was taken, or where the taxable service was delivered.</text> </paragraph> <paragraph num="F."> <text>A transaction involving the utilization of equipment with an operator supplied by the owner is a lease if control over the utilization of the equipment passes to the customer, but is not a lease if the transaction is for the performance of a specific job in a manner to be determined by the owner or his operator. In this transaction, the burden is on the parties to establish that no lease occurred. When the billing for this transaction is on a time basis, it is presumed that control passed for the time indicated and that the transaction is a lease. This presumption may be rebutted only by clear and convincing evidence, such as a written contract, that at the time the transaction was entered into each party contemplated that the agreement was for the completion of a specific job rather than for the provision of a particular piece of equipment with an operator for a particular purpose for as long as necessary. The fact that the owner issued a resale certificate to buy the equipment tax free is evidence that a subsequent transaction involving that equipment is a lease.</text> </paragraph> <paragraph num="G."> <text>Service Charges.</text> <paragraph num="(1)"> <text>In this section, “nontaxable service” means any service other than a taxable service as defined in Tax-General Article, §11-101(m), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>The tax applies to the entire lease payment if a charge for lease or rental of tangible personal property or digital products includes a charge for a nontaxable service, whether the charge for a nontaxable service is separately stated or not, if the dominant purpose of the transaction is to obtain the tangible personal property or digital product and the nontaxable service is a mandatory charge imposed by the vendor as a condition of renting the item or is incidental and is not the dominant purpose of the transaction. For example, a charge for the lease of a portable toilet that includes a mandatory charge for cleaning is subject to the tax whether the cleaning charge is separately stated or not. The dominant purpose of the lease of the toilet is to provide a specific item of tangible personal property and not to provide cleaning or servicing of the toilet. Separately stated charges for the nontaxable services enumerated in §H(2) of this regulation are excluded from taxable price.</text> </paragraph> <paragraph num="(3)"> <text>The tax does not apply to a charge for a nontaxable service that includes a charge for lease or rental of tangible personal property or digital product, whether the charge for the tangible personal property or digital product is separately stated or not, or whether the charge is mandatory or not, if the dominant purpose of the transaction is to obtain a nontaxable service, and the provision of the tangible personal property or digital product is incidental to the nontaxable service. For example, a charge for trash removal service where a trash receptacle is provided in conjunction with the trash removal service is not a taxable lease of tangible personal property. The dominant purpose of the lease is to remove trash from a premise and not to lease a trash receptacle.</text> </paragraph> <paragraph num="(4)"> <text>The tax applies to the entire lease payment if a charge for a lease of a taxable service includes a charge for a nontaxable service if the charge for the nontaxable service is not separately stated, if the dominant purpose of the transaction is to obtain the taxable service, and the nontaxable service is a mandatory charge imposed by the vendor as a condition of, or incidental to, receiving the taxable service and not the dominant purpose of the transaction. For example, a vendor charges a software developer for publishing a non-custom software application, which is a taxable software publishing service, and includes a charge for customer support, which is a nontaxable service. The dominant purpose for the lease of the software publishing service is to provide the software to end users, not to provide customer support. The entire lease payment is subject to the sales and use tax if the charge for customer support is not separately stated.</text> </paragraph> <paragraph num="(5)"> <text>The tax does not apply to a charge for a lease of a nontaxable service that includes a charge for a lease of a taxable service that is not separately stated, if the dominant purpose of the transaction is to obtain the nontaxable service, and the provision of the taxable service is incidental to the nontaxable service.</text> </paragraph> </paragraph> <paragraph num="H."> <text>Computation of Tax.</text> <paragraph num="(1)"> <text>The tax applies to the value in money of the consideration of any kind required to be paid to the lessor under the terms of the lease, except as provided in §G(3) of this regulation. Included in the taxable price are charges for required maintenance or required insurance agreements, reimbursement for registration fees, taxes, and other expenses of the owner, passed on to the lessee, and all charges for an operator of leased equipment including waiting time, overtime, guaranteed time, travel time, and holiday pay.</text> </paragraph> <paragraph num="(2)"> <text>The following charges, if separately stated and identified, are not a part of the taxable price:</text> <paragraph num="(a)"> <text>Installation charges;</text> </paragraph> <paragraph num="(b)"> <text>Charges for professional services, unless the services are taxable services;</text> </paragraph> <paragraph num="(c)"> <text>Late payment charges, but not any charges included in a timely payment even though computed in a manner similar to the computation of interest or finance charges;</text> </paragraph> <paragraph num="(d)"> <text>Delivery charges, including charges for an operator to get the item to the lessee at the beginning of the lease and to return the item to the owner at the expiration of the lease;</text> </paragraph> <paragraph num="(e)"> <text>Charges for an amount directly attributable to any personal property tax on the leased property if the lease is noncancellable except for cause and is for a period exceeding 1 year.</text> </paragraph> </paragraph> </paragraph> <paragraph num="I."> <text>Except as provided in Regulation .49 of this chapter, a person who buys tangible personal property, a digital code, a digital product, or a taxable service for the dual purpose of leasing it to others and also for personal use, or who buys tangible personal property, a digital code, a digital product, or a taxable service with the sole intention of leasing it but in fact also employs the property or digital product for personal purposes, shall pay the tax on the purchase price and shall also collect the tax on all leases. The fact that the buyer may simultaneously or subsequently offer this property or digital product for outright sale does not create an exemption for the original purchase.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".29" heading="Ice."> <text>In general, ice, including ice for household consumption, is not food for sales and use tax purposes. If, however, ice is sold as a component of food, such as in a beverage other than an alcoholic beverage, the provisions of the law concerning the sale of food shall apply. In all other instances, the sale of ice, including the sale of ice sculptures, is subject to taxation to the same extent as other tangible personal property. For example, if ice is used for packing a commodity during shipment, and title to the ice will pass to the buyer along with the commodity, the packer may issue a resale certificate for the ice. If, however, only the commodity and not the ice will be transferred, the purchase of the ice is taxable.</text> </regulation> <regulation prefix="Regulation" num=".30" heading="Fabrication or Production."> <paragraph num="A."> <text>The tax shall be charged on the full selling price for the production or fabrication of tangible personal property or a digital product on a special order for a consideration. This is true even though charges for labor are segregated from the cost of the materials.</text> </paragraph> <paragraph num="B."> <text>Production of a New Item.</text> <paragraph num="(1)"> <text>Whenever any new item is being produced the tax shall be collected on the full selling price as, for example, a manufacturer orders a repair part for machinery from a machine-shop—the tax shall be collected on the full selling price of the part including labor.</text> </paragraph> <paragraph num="(2)"> <text>This regulation applies with equal force to those situations where the materials are furnished by the customer and the fabrication consists wholly of labor as for example, a steel fabricator or machine shop rolling, bending, cutting, boring or punching holes, painting, or performing other services on materials furnished by the customer, if this labor is used in producing a new item. Some other examples are a tailor making a suit from materials furnished by his customers and the making of drapes or slipcovers from materials furnished by the customer.</text> </paragraph> </paragraph> <paragraph num="C."> <text>New Item.</text> <paragraph num="(1)"> <text>“New Item” means new insofar as the ultimate purchaser is concerned. The fact that work is performed by several different persons before the item is ready for use by the ultimate purchaser does not mean that the item is not a new item. Thus, all charges for bringing the item to its finished state are subject to the tax. Likewise, the cost of repairing, remodeling, or reconditioning an item is subject to the tax if a new or different item from the original is produced by these services.</text> </paragraph> <paragraph num="(2)"> <text>The creation of a new item includes the assembly of a piece of property for the first time, on the job site or elsewhere, but not the re- assembly of a piece of property which has been fully assembled previously, disassembled for shipping convenience, and then reassembled.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Installation.</text> <paragraph num="(1)"> <text>The installation of units for tangible personal property, each of which constitutes a complete, separable, and functioning unit at the job site, will not be considered fabrication. Any process which involves the assembly of raw materials, components, subassemblies or parts into a functioning industrial unit or the creation or assembling of workable support systems such as piping systems, electrical systems, material moving systems, etc. will be considered fabrication and subject to the tax.</text> </paragraph> <paragraph num="(2)"> <text>The test to be applied is the following:</text> <paragraph num="(a)"> <text>If the labor is expended in producing a new or different item, it is subject to the tax;</text> </paragraph> <paragraph num="(b)"> <text>If the labor is expended in repairing or altering existing property belonging to another to restore the item to its original condition or usefulness, the tax does not apply to the labor pursuant to Regulation .03 of this chapter.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".31" heading="Direct Payment Permits."> <paragraph num="A."> <text>General Provisions.</text> <paragraph num="(1)"> <text>Authority to Issue a Direct Payment Permit.</text> <paragraph num="(a)"> <text>Except as provided in §A(1)(c) of this regulation, the Comptroller may not grant the authority to make direct payment, to the Comptroller, of sales and use tax due on purchases by a vendor or issue permits evidencing this authority.</text> </paragraph> <paragraph num="(b)"> <text>Notwithstanding the provisions of §A(1)(a) of this regulation, the Comptroller may continue to administer direct payment permits issued to vendors before July 1, 1993.</text> </paragraph> <paragraph num="(c)"> <text>On or after July 1, 2002, the Comptroller may issue a direct payment permit to a licensed vendor with which the Comptroller has entered into an effective rate agreement.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>A person to whom a Direct Payment Permit has been issued by the Comptroller may not be required to pay vendors the sales and use tax, as long as the permit remains valid, but instead shall make direct payments to the Comptroller of any sales and use tax due. Holders of Direct Payment Permits shall be required to file tax reports and make payments of all taxes due on or before the twentieth day of the month succeeding that month in which the obligation for the tax was incurred. Sales and use tax shall become due when the property or service bought is actually placed in service, or when the utilization becomes known, whichever occurs first. If determination of taxability is not made within 1 year from the receipt of goods or services by the permit holder, then those goods and services shall be deemed taxable. The permit holder shall be required to make proper determination of the tax due and keep appropriate records of that determination.</text> </paragraph> <paragraph num="(3)"> <text>Holders of Direct Payment Permits shall notify their vendors that they hold this permit and may furnish to each vendor a photocopy or electronic copy of that permit. In making purchases the permit holder shall furnish to vendors a certificate of exemption bearing the holder's Direct Payment Permit number.</text> </paragraph> <paragraph num="(4)"> <text>Vendors who make sales to holders of Direct Payment Permits shall maintain records of the amount and description of each sale and the identity of the permit holder. A vendor, upon notice of revocation or discontinuance of the holder's Direct Payment Permit, shall collect sales and use tax on all purchases from the date of notice.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Repealed.</text> </paragraph> <paragraph num="C."> <text>Revocations of Direct Payment Permit.</text> <paragraph num="(1)"> <text>The Comptroller may revoke a Direct Payment Permit at any time for failure of the holder to comply with the conditions under which the permit was granted, or for any other reasons constituting misuse of the permit, or for any other good cause.</text> </paragraph> <paragraph num="(2)"> <text>A direct payment permit issued in conjunction with an effective rate agreement shall be revoked when an effective rate agreement is no longer in effect.</text> </paragraph> <paragraph num="(3)"> <text>Within 30 days after receipt by the permit holder of notice of revocation by the Comptroller or at least 30 days before unilateral discontinuance of direct payment authority, the holder shall give notice to each supplier of the termination of the Direct Payment authority and return the Direct Payment Permit Certificate to the Comptroller.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Exemption Certificate for Use in Connection with Direct Payment Permits. The certificate of exemption to be furnished by the holder to vendors in making purchases shall bear the Direct Payment Permit number.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".32" heading="Repealed." /> <regulation prefix="Regulation" num=".32-1" heading="Repealed." /> <regulation prefix="Regulation" num=".32-2" heading="Tangible Personal Property Used in a Production Activity."> <paragraph num="A."> <text>This regulation applies to sales and purchases on or after July 1, 2000.</text> </paragraph> <paragraph num="B."> <text>In this regulation, the following terms have the meanings indicated:</text> <paragraph num="(1)"> <text>Production Activity.</text> <paragraph num="(a)"> <text>“Production activity” means:</text> <paragraph num="(i)"> <text>Assembling, manufacturing, processing, or refining tangible personal property for sale or resale, except for processing food or beverages by a food vendor;</text> </paragraph> <paragraph num="(ii)"> <text>Generating electricity for sale or for use in another production activity;</text> </paragraph> <paragraph num="(iii)"> <text>Laundering, maintaining, or preparing textile products for rental;</text> </paragraph> <paragraph num="(iv)"> <text>Producing or repairing production machinery or equipment;</text> </paragraph> <paragraph num="(v)"> <text>Establishing or maintaining clean rooms or clean zones as required by applicable provisions of the federal Food, Drug and Cosmetic Act, the Public Health Service Act, and the Virus-Serum-Toxin Act, and the regulations adopted thereunder, pertaining to the manufacture of drugs, medical devices, or biologics;</text> </paragraph> <paragraph num="(vi)"> <text>Providing for the safety of employees; or</text> </paragraph> <paragraph num="(vii)"> <text>Providing for quality control.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>“Production activity” does not include:</text> <paragraph num="(i)"> <text>Servicing or repairing tangible personal property, except servicing or repairing production machinery or equipment;</text> </paragraph> <paragraph num="(ii)"> <text>Maintaining tangible personal property, except textile products for rental and production machinery and equipment;</text> </paragraph> <paragraph num="(iii)"> <text>Providing for the comfort or health of employees; and</text> </paragraph> <paragraph num="(iv)"> <text>Storing the finished product.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(2)"> <text>“Used directly and predominantly in a production activity” means the:</text> <paragraph num="(a)"> <text>Use of the property is integral and essential to the production activity, occurs where the production activity is carried on, and occurs during the production activity; and</text> </paragraph> <paragraph num="(b)"> <text>Property used both in production activities and administrative, managerial, sales, or any other operational or nonoperational activities is used more than 50 percent of the time directly in production activities.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Applicability of the Sales and Use Tax. The sales and use tax does not apply to a sale or lease of:</text> <paragraph num="(1)"> <text>Tangible personal property, a digital code, or a digital product used directly and predominantly in a production activity at any stage of operation on the production activity site, from the handling of raw material or components to the movement of finished product, if the tangible personal property, digital code, or digital product is not installed so that it becomes real property;</text> </paragraph> <paragraph num="(2)"> <text>A melting, smelting, heating, or annealing coke oven, aluminum furnace, anode bake oven, electrolytic pot, cathode, refractory, or other material used in relining and rebuilding a furnace or oven;</text> </paragraph> <paragraph num="(3)"> <text>A foundation to support production machinery or equipment or an item required to conform to air or water pollution laws and normally considered part of real property;</text> </paragraph> <paragraph num="(4)"> <text>Machinery and equipment used to produce bituminous concrete or electricity, fuel, and other utilities used to operate that machinery and equipment; or</text> </paragraph> <paragraph num="(5)"> <text>Equipment used by a retail food vendor to manufacture or process bread or bakery goods for resale if the:</text> <paragraph num="(a)"> <text>Taxable price of each piece of equipment is at least $2,000; and</text> </paragraph> <paragraph num="(b)"> <text>Retail food vendor operates a substantial grocery or market business, as defined in Tax-General Article, §11-206(a), Annotated Code of Maryland, at the same location where the food is sold.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>Examples of Exempt Personal Property.</text> <paragraph num="(1)"> <text>Exempt tangible personal property used in providing for the safety of employees includes only tangible personal property worn on or carried by the person engaged in the production activity, such as:</text> <paragraph num="(a)"> <text>Safety glasses;</text> </paragraph> <paragraph num="(b)"> <text>Hard hats;</text> </paragraph> <paragraph num="(c)"> <text>Safety gloves;</text> </paragraph> <paragraph num="(d)"> <text>Breathing apparatus;</text> </paragraph> <paragraph num="(e)"> <text>Lab coats; or</text> </paragraph> <paragraph num="(f)"> <text>Safety shoes.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Exempt tangible personal property used in providing for quality control includes items used for raw material testing and end product testing, such as:</text> <paragraph num="(a)"> <text>Gauges;</text> </paragraph> <paragraph num="(b)"> <text>Scales;</text> </paragraph> <paragraph num="(c)"> <text>Petri dishes;</text> </paragraph> <paragraph num="(d)"> <text>Test tubes;</text> </paragraph> <paragraph num="(e)"> <text>Spectrometers; and</text> </paragraph> <paragraph num="(f)"> <text>Certain computers and software.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Exempt tangible personal property used to move finished goods on a production activity site includes equipment used to move goods into and out of storage, including:</text> <paragraph num="(a)"> <text>Forklifts;</text> </paragraph> <paragraph num="(b)"> <text>Cranes;</text> </paragraph> <paragraph num="(c)"> <text>End product conveyor belts; and</text> </paragraph> <paragraph num="(d)"> <text>Inventory control systems and related software.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Exempt tangible personal property used to maintain production machinery and equipment includes:</text> <paragraph num="(a)"> <text>Autoclaves and sterilizers;</text> </paragraph> <paragraph num="(b)"> <text>Pressure washers;</text> </paragraph> <paragraph num="(c)"> <text>Cleaning fluids; and</text> </paragraph> <paragraph num="(d)"> <text>Vacuum systems.</text> </paragraph> </paragraph> </paragraph> <paragraph num="E."> <text>Storage equipment, including shelving and storage racks, is subject to tax.</text> </paragraph> <paragraph num="F."> <text>Tangible personal property used to provide for the health and comfort of employees, such as antibacterial detergents and soaps, and ventilation and cooling equipment, is not exempt from sales tax.</text> </paragraph> <paragraph num="G."> <text>Payment of Tax.</text> <paragraph num="(1)"> <text>All sales are presumed subject to the tax. The burden of proving that the exemption applies is on the vendor and buyer. A vendor may overcome the presumption by requiring the buyer to produce a signed statement in substantially the following form and retaining that form with the record of sale:</text> </paragraph> <paragraph num="(2)"> <text>The buyer need not pay the tax on the purchase or use of tangible personal property only if the buyer reasonably expects and in good faith intends to use that property directly and predominantly in a production activity. If, however, the property is used in a way that does not meet the directly and predominantly test, the tax applies to that property. At the time the buyer knows or should know that the tax applies to property on which no tax has been paid, the buyer shall report the price of the property as a taxable purchase for use on the return for that period. The buyer may claim a refund for taxes paid on property that in fact satisfies all the tests and limitations of this regulation.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".33" heading="Out-of-State Vendor."> <paragraph num="A."> <text>A person who engages in the business of an out-of-State vendor shall collect and remit sales and use tax on all taxable sales for use in the State.</text> </paragraph> <paragraph num="B."> <text>A person engages in the business of an out-of-State vendor if the person:</text> <paragraph num="(1)"> <text>Permanently or temporarily maintains, occupies, or uses any office, sales or sample room, or distribution, storage, warehouse, or other place for the sale of tangible personal property, a digital code, a digital product, or a taxable service directly or indirectly through an agent or subsidiary;</text> </paragraph> <paragraph num="(2)"> <text>Has an agent, canvasser, representative, salesman, or solicitor operating in the State for the purpose of delivering, selling, or taking orders for tangible personal property, a digital code, a digital product, or a taxable service;</text> </paragraph> <paragraph num="(3)"> <text>Enters the State on a regular basis to provide service or repair for tangible personal property, digital code, or digital product either directly or indirectly through an agent, independent contractor, or subsidiary;</text> </paragraph> <paragraph num="(4)"> <text>Regularly uses the person’s vehicles to sell or deliver tangible personal property, digital codes, digital products or a taxable service for use in the State; or</text> </paragraph> <paragraph num="(5)"> <text>Sells tangible personal property, digital codes, digital products, or taxable services for delivery in the State, if, during the previous calendar year or the current calendar year, the person satisfies either of the following criteria:</text> <paragraph num="(a)"> <text>The person’s gross revenue from the sale of tangible personal property, digital codes, digital products, or taxable services delivered in the State exceeds $100,000; or</text> </paragraph> <paragraph num="(b)"> <text>The person sold tangible personal property, digital codes, digital products, or taxable services for delivery into the State in 200 or more separate transactions.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>The requirements of §B(5) of this regulation shall be effective beginning October 1, 2018.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".34" heading="Special Use Tax on Certain Electricity."> <paragraph num="A."> <text>Definitions.</text> <paragraph num="(1)"> <text>In this regulation, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="(2)"> <text>Terms Defined.</text> <paragraph num="(a)"> <text>“On site generated electricity” has the meaning stated in Tax-General Article, §11-1A-01(b)(1), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(b)"> <text>“Owner” has the meaning stated in Tax-General Article, §11-1A-01(c), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(c)"> <text>“Public service company” has the meaning stated in Tax-General Article, §8-401(f), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(d)"> <text>“Substantially the same ownership” means that identical persons or governmental entities are the owners of a facility that generates electricity and a building or machinery and equipment that consumes the electricity and their ownership interest in each varies by 10 percent or less.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>The special use tax on electricity applies to the use in this State of electricity not delivered by a public service company and which is generated by a facility:</text> <paragraph num="(1)"> <text>The owner of which, together with any tenants of the owner, does not consume at least 80 percent of the electricity generated by the facility each year;</text> </paragraph> <paragraph num="(2)"> <text>That is not operated by the owner or a designee of the owner; or</text> </paragraph> <paragraph num="(3)"> <text>Owned by more than one person or governmental entity where the ownership of the facility and the ownership of the building or machinery and equipment that consumes the electricity are not substantially the same ownership.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The special use tax on electricity does not apply to:</text> <paragraph num="(1)"> <text>Electricity used for residential purposes;</text> </paragraph> <paragraph num="(2)"> <text>Electricity used exclusively for emergency back-up generation; and</text> </paragraph> <paragraph num="(3)"> <text>On-site generated electricity.</text> </paragraph> </paragraph> <paragraph num="D."> <text>The provisions of Tax-General Article, Title 11, Subtitles 3, 4, 5, 6, and 7, Annotated Code of Maryland, regarding tax computation and statement, tax collection, returns and records, tax payment, and licensing apply to the special use tax on electricity.</text> </paragraph> <paragraph num="E."> <text>In addition to the information required under Tax-General Article, Title 11, Subtitle 5, the returns of a vendor or buyer of electricity that is subject to the special use tax on electricity shall state for the period that the return covers the:</text> <paragraph num="(1)"> <text>Kilowatt hours of electricity that are subject to the special use tax on electricity; and</text> </paragraph> <paragraph num="(2)"> <text>Special use tax on electricity that is due.</text> </paragraph> </paragraph> <paragraph num="F."> <text>The rate of the special use tax on electricity is 0.062 cents for each kilowatt hour of electricity that is subject to the tax.</text> </paragraph> <paragraph num="G."> <text>The special use tax is in addition to any other sales and use tax due on the sale of the electricity.</text> </paragraph> <paragraph num="H."> <text>The provisions of the Tax-General Article, Title 13, Annotated Code of Maryland, which apply to sales and use taxes, apply to the special use tax on electricity.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".35" heading="Property and Services Used in a Film Production Activity."> <paragraph num="A."> <text>Definitions. In this regulation, the following terms have the meanings indicated:</text> <paragraph num="(1)"> <text>“Certified film producer or film production company” means a film producer or film production company that has received a Certificate of Eligibility for Film Production Sales and Use Tax Exemption from the Maryland Film Office of the Maryland Department of Commerce.</text> </paragraph> <paragraph num="(2)"> <text>Film Production Activity.</text> <paragraph num="(a)"> <text>“Film production activity” means the production or post-production of film or video projects including feature films, television projects, commercials, corporate films, infomercials, music videos, or other projects for which the producer or production company will be compensated, and which are intended for nationwide commercial distribution.</text> </paragraph> <paragraph num="(b)"> <text>“Film production activity” includes the production or postproduction of digital, animation, and multimedia projects.</text> </paragraph> <paragraph num="(c)"> <text>“Film production activity” does not include:</text> <paragraph num="(i)"> <text>Production or postproduction of student films or noncommercial personal videos;</text> </paragraph> <paragraph num="(ii)"> <text>Any activity not necessary to, and not undertaken directly and exclusively for, the making of a master film, tape, or image; or</text> </paragraph> <paragraph num="(iii)"> <text>Production or postproduction of projects the sale, display, exhibition, distribution, advertising, receipt, or possession of which, in the State, would violate the provisions of any State or federal law, including but not limited to Criminal Law Article, Title 11, Subtitles 1 and 2, Annotated Code of Maryland.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(3)"> <text>Nationwide Commercial Distribution.</text> <paragraph num="(a)"> <text>“Nationwide commercial distribution” means intended for commercial distribution extending primarily beyond Maryland's local or regional (Maryland, Virginia, and the District of Columbia) market.</text> </paragraph> <paragraph num="(b)"> <text>“Nationwide commercial distribution” does not include:</text> <paragraph num="(i)"> <text>Distribution primarily via Internet transmission; or</text> </paragraph> <paragraph num="(ii)"> <text>Live coverage of an event, including but not limited to news, sporting events, and concerts.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(4)"> <text>“Short term vehicle rentals” means a rental of a motor vehicle, as defined in Transportation Article, §11-135, Annotated Code of Maryland, for a period not to exceed 180 days.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The following tangible personal property or digital products, or a digital code to purchase the following, when sold to a certified film producer or film production company and used directly in connection with a film production activity, are exempt from sales and use tax:</text> <paragraph num="(1)"> <text>Camera equipment, supplies, and accessories;</text> </paragraph> <paragraph num="(2)"> <text>Motion picture film and tape stock;</text> </paragraph> <paragraph num="(3)"> <text>Digital discs and masters;</text> </paragraph> <paragraph num="(4)"> <text>Production facilities, including sound stage;</text> </paragraph> <paragraph num="(5)"> <text>Lighting equipment and supplies, including bulbs and lamps;</text> </paragraph> <paragraph num="(6)"> <text>Stage equipment and supplies;</text> </paragraph> <paragraph num="(7)"> <text>Cranes, booms, dollies, and jibs;</text> </paragraph> <paragraph num="(8)"> <text>Electric stands, cables, and wires;</text> </paragraph> <paragraph num="(9)"> <text>Generators used to operate tax exempt lighting and stage equipment;</text> </paragraph> <paragraph num="(10)"> <text>Time code equipment;</text> </paragraph> <paragraph num="(11)"> <text>VTR and digital editing equipment;</text> </paragraph> <paragraph num="(12)"> <text>Switchers;</text> </paragraph> <paragraph num="(13)"> <text>Character generators;</text> </paragraph> <paragraph num="(14)"> <text>Sound equipment and supplies;</text> </paragraph> <paragraph num="(15)"> <text>Costumes, wardrobes, and materials to construct them, including shoes and hairpieces;</text> </paragraph> <paragraph num="(16)"> <text>Make-up;</text> </paragraph> <paragraph num="(17)"> <text>Props, including materials and equipment to construct them;</text> </paragraph> <paragraph num="(18)"> <text>Scenery, including materials and equipment to construct it;</text> </paragraph> <paragraph num="(19)"> <text>Design supplies and equipment;</text> </paragraph> <paragraph num="(20)"> <text>Heating and air conditioning equipment not part of the realty and used on the set;</text> </paragraph> <paragraph num="(21)"> <text>Drafting and art supplies and equipment;</text> </paragraph> <paragraph num="(22)"> <text>Special effects supplies and equipment;</text> </paragraph> <paragraph num="(23)"> <text>Photographic film;</text> </paragraph> <paragraph num="(24)"> <text>Animation supplies and equipment;</text> </paragraph> <paragraph num="(25)"> <text>Computer graphics and images;</text> </paragraph> <paragraph num="(26)"> <text>Video and sound recording equipment;</text> </paragraph> <paragraph num="(27)"> <text>Equipment and supplies for dubbing, mixing, editing, and cutting;</text> </paragraph> <paragraph num="(28)"> <text>Short-term vehicle rentals; and</text> </paragraph> <paragraph num="(29)"> <text>Separately stated charges for parts used to repair tax-exempt machinery and equipment.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The following are examples of tangible personal property not eligible for the film production exemption set forth in Tax-General Article, §11-227(b), Annotated Code of Maryland:</text> <paragraph num="(1)"> <text>Office supplies and furniture;</text> </paragraph> <paragraph num="(2)"> <text>Bottled water;</text> </paragraph> <paragraph num="(3)"> <text>Catering of food and beverages;</text> </paragraph> <paragraph num="(4)"> <text>Crew uniforms;</text> </paragraph> <paragraph num="(5)"> <text>Flowers and plants used off-set;</text> </paragraph> <paragraph num="(6)"> <text>Personal gifts;</text> </paragraph> <paragraph num="(7)"> <text>Utilities;</text> </paragraph> <paragraph num="(8)"> <text>Cell phones, pagers, and battery chargers;</text> </paragraph> <paragraph num="(9)"> <text>Hotel rooms and lodging; and</text> </paragraph> <paragraph num="(10)"> <text>Shipping cases and packaging materials.</text> </paragraph> </paragraph> <paragraph num="D."> <text>The following services, when sold to a certified film producer or film production company and used directly in connection with a film production activity, are exempt from sales tax:</text> <paragraph num="(1)"> <text>Editing (film, digital or tape);</text> </paragraph> <paragraph num="(2)"> <text>Film processing;</text> </paragraph> <paragraph num="(3)"> <text>Transfers of film to tape or digital format;</text> </paragraph> <paragraph num="(4)"> <text>Foley services;</text> </paragraph> <paragraph num="(5)"> <text>Multi-image services;</text> </paragraph> <paragraph num="(6)"> <text>Sound mixing;</text> </paragraph> <paragraph num="(7)"> <text>Voice-overs;</text> </paragraph> <paragraph num="(8)"> <text>ADR/looping and sound sweetening;</text> </paragraph> <paragraph num="(9)"> <text>Animation and special effects services;</text> </paragraph> <paragraph num="(10)"> <text>Computer graphics services;</text> </paragraph> <paragraph num="(11)"> <text>Photography on set; and</text> </paragraph> <paragraph num="(12)"> <text>Fabrication, printing, or production of scripts, storyboards, costumes, wardrobes, props, scenery, or special effects.</text> </paragraph> </paragraph> <paragraph num="E."> <text>The following are examples of services not eligible for the film production exemption set forth in Tax-General Article, §11-226(b), Annotated Code of Maryland:</text> <paragraph num="(1)"> <text>Catering services;</text> </paragraph> <paragraph num="(2)"> <text>Bodyguard or security services;</text> </paragraph> <paragraph num="(3)"> <text>Cleaning services;</text> </paragraph> <paragraph num="(4)"> <text>Telephone answering services; and</text> </paragraph> <paragraph num="(5)"> <text>Mobile telecommunications services.</text> </paragraph> </paragraph> <paragraph num="F."> <text>The duty of a vendor to collect the sales and use tax from a buyer is waived if the buyer provides the vendor with a properly executed Buyer Certification—Film Production Sales and Use Tax Exemption, Form No. COT/ST 131, which includes the Department of Commerce Certificate Number and Certificate expiration date.</text> </paragraph> <paragraph num="G."> <text>For each film project, before a sale is consummated, the vendor shall have on file at least one completed Buyer Certification—Film Production Sales and Use Tax Exemption, Form No. COT/ST 131, to support the transactions for which the film production exemption is sought.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".36" heading="Signs."> <paragraph num="A."> <text>Definitions.</text> <paragraph num="(1)"> <text>In this regulation, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="(2)"> <text>Terms Defined.</text> <paragraph num="(a)"> <text>“Banners” means signs made of cloth.</text> </paragraph> <paragraph num="(b)"> <text>“Billboard signs” means freestanding advertising signs alongside a road installed by direct burial or anchor bolted to a concrete base.</text> </paragraph> <paragraph num="(c)"> <text>“Freestanding signs” means advertising, identifying, or directional signs made of pylons or other material installed by direct burial or anchor bolted to a concrete base.</text> </paragraph> <paragraph num="(d)"> <text>“Hanging signs” means signs hanging from the interior or exterior of a building.</text> </paragraph> <paragraph num="(e)"> <text>“Portable signs” means signs which can be moved from place to place, including signs equipped with stands or legs.</text> </paragraph> <paragraph num="(f)"> <text>“Posters” means signs made of paper or cardboard.</text> </paragraph> <paragraph num="(g)"> <text>“Signs affixed to a building” means advertising, identifying, or directional signs affixed to exterior or interior walls of a building by means of nails, screws, brackets, glue, or two-sided tape, including neon channel letter signs, box-type electric signs, and pin-mounted dimensional letter signs.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Except as provided in §E of this regulation, the sale of a sign is considered to be the sale of tangible personal property subject to sales and use tax. The following are examples of signs which, when installed, are considered to be sales of tangible personal property:</text> <paragraph num="(1)"> <text>Billboard signs;</text> </paragraph> <paragraph num="(2)"> <text>Freestanding signs;</text> </paragraph> <paragraph num="(3)"> <text>Signs affixed to a building;</text> </paragraph> <paragraph num="(4)"> <text>Hanging signs;</text> </paragraph> <paragraph num="(5)"> <text>Portable signs;</text> </paragraph> <paragraph num="(6)"> <text>Posters; and</text> </paragraph> <paragraph num="(7)"> <text>Banners.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The vendor of a sign considered to be tangible personal property shall collect sales and use tax on the price charged for the sign, including any charges for fabrication labor to make the sign. Separately stated installation charges are not subject to the sales and use tax. Charges for installation of signs at the job site are not considered charges for fabrication and are not subject to the tax. See Regulation .30 of this chapter regarding fabrication and installation.</text> </paragraph> <paragraph num="D."> <text>A sign vendor may purchase materials that become incorporated into the sign without paying sales and use tax by issuing the supplier a valid Maryland sales and use tax resale certificate.</text> </paragraph> <paragraph num="E."> <text>Signs or plaques embedded into a wall or floor of a building with the intent to be permanent and which cannot be removed are considered improvements to real property. Street or traffic signs installed for governmental entities are considered to be permanently installed and improvements to real property. Sales and use tax may not be collected on the sale of these installed signs. The installer of the sign shall pay the sales and use tax on the purchases of materials used to make the signs.</text> </paragraph> <paragraph num="F."> <text>The application of vinyl letters, decals, or paint to a door, building, or vehicle to produce a sign is a non-taxable service. However, all materials and tools used to provide these services are taxable to the provider of the service upon purchase.</text> </paragraph> <paragraph num="G."> <text>Lump sum charges for the maintenance and repair of signs are not subject to sales and use tax. If charges for the maintenance and repair are lump sum billed, the repairer shall pay the sales and use tax on all materials used to repair the sign. If charges for labor and materials are separately stated for repair of signs that are considered tangible personal property, the repairer shall collect the sales and use tax on all charges for materials and does not pay the tax on materials used to repair the sign. The repairer is responsible for paying the tax on all materials that are used to repair signs that are considered to be real property.</text> </paragraph> <paragraph num="H."> <text>A sign that is shipped or installed, or both, outside the State is not subject to Maryland sales and use tax if it is considered a sale of tangible personal property. Sign materials or fabrication labor, or both, purchased in Maryland for signs installed as real property outside the State are subject to Maryland sales and use tax unless the purchase of the sign materials and fabrication labor would be exempt in the jurisdiction in which the sign is installed.</text> </paragraph> <paragraph num="I."> <text>The sale of poles upon which signs are attached and foundations for the poles are considered sales of tangible personal property and are subject to the sales and use tax when the sign itself is considered tangible personal property.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".37" heading="Tax Free Week for Qualifying Clothing and Footwear Items."> <paragraph num="A."> <text>Definitions.</text> <paragraph num="(1)"> <text>In this regulation, the following terms have the meaning indicated.</text> </paragraph> <paragraph num="(2)"> <text>Terms Defined.</text> <paragraph num="(a)"> <text>“Accessory items” includes jewelry, watches, watchbands, handbags, handkerchiefs, umbrellas, scarves, ties, headbands, and belt buckles.</text> </paragraph> <paragraph num="(b)"> <text>“Clothing or footwear” means an article of wearing apparel designed to be worn on or about the human body.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Exempt Sales.</text> <paragraph num="(1)"> <text>The sales and use tax is not due on the sale of an article of clothing or footwear, excluding accessory items, if:</text> <paragraph num="(a)"> <text>The taxable price of the article is $100 or less; and</text> </paragraph> <paragraph num="(b)"> <text>The sale takes place during the 7-day period beginning at 12:01 a.m. on the second Sunday in August and continuing through 12 midnight the following Saturday.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The exemption applies to the taxable price of each article of clothing or footwear selling for $100 or less, regardless of how many items are sold on the same invoice to a customer. For example, if a customer purchases two shirts for $80 each, both items qualify for the exemption, even though the customer's total purchase price ($160) exceeds $100.</text> </paragraph> <paragraph num="(3)"> <text>The exemption does not apply to the first $100 of an article of clothing or footwear selling for more than $100. For example, if a customer purchases a pair of pants costing $110, sales tax is due on the entire $110.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Taxable Sales. The exemption set forth in this regulation does not apply to:</text> <paragraph num="(1)"> <text>Any special clothing or footwear that is primarily designed for protective use and that is not normally worn except when used for the protective use for which it is designed (For example, football pads are primarily designed for protective use and are not normally worn except when used for those purposes and do not qualify for the exemption.);</text> </paragraph> <paragraph num="(2)"> <text>Accessory items;</text> </paragraph> <paragraph num="(3)"> <text>Taxable services performed on the clothing or footwear, such as alterations (For example, sales tax is due on alteration to clothing, even though the alterations may be sold, invoiced, and paid for at the same time as the clothing being altered. If a customer purchases a pair of pants for $90 and pays $15 to have the pants cuffed, the $90 charge for the pants is exempt, but tax is due on the $15 alterations charge.); and</text> </paragraph> <paragraph num="(4)"> <text>Purchases of items used to make or repair clothing or footwear, including fabric, thread, yarn, buttons, snaps, hooks, and zippers.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Articles Normally Sold as a Unit. Articles that are normally sold as a unit must continue to be sold in that manner. They cannot be priced separately and sold as individual items in order to qualify for the exemption. For example, if a pair of shoes sells for $150, the pair cannot be split in order to sell each shoe for $75 to qualify for the exemption. If a suit is normally priced at $225 on a single price tag, the suit cannot be split into separate articles so that any of the components may be sold for $100 or less in order to qualify for the exemption. However, components that are normally priced as separate articles may continue to be sold as separate articles and qualify for the exemption if the price of any article is $100 or less.</text> </paragraph> <paragraph num="E."> <text>Sales of Sets Containing Both Exempt and Taxable Items.</text> <paragraph num="(1)"> <text>When exempt clothing or footwear is sold together with taxable merchandise as a set or single unit, the full price is subject to sales tax unless the price of the exempt clothing or footwear is separately stated. For example, if a boxed gift consisting of a shirt and tie is sold for a single price of $80, the full price of the boxed gift set is taxable because the tie is taxable and the sale price of the shirt is not separately stated.</text> </paragraph> <paragraph num="(2)"> <text>When exempt clothing is sold in a set that also contains taxable merchandise as a free gift, and no additional charge is made for the gift, the exempt clothing may qualify for this exemption. For example, a boxed set may contain a shirt and a free handkerchief. If the price of the set is the same as the price of the shirt sold separately, the item being sold is the shirt, which is exempt from tax if sold for $100 or less during the exemption period.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Discounts and Coupons.</text> <paragraph num="(1)"> <text>A retailer may offer discounts to reduce the sales price of an item. If the discount reduces the sales price of an item to $100 or less, the item may qualify for the exemption. For example, a customer buys a $150 dress and a $110 blouse from a retailer offering a 10 percent discount. After applying the 10 percent discount, the final sales price of the dress is $135, and the blouse is $99. The dress is taxable because the price is more than $100, and the blouse is exempt because the price is less than $100.</text> </paragraph> <paragraph num="(2)"> <text>When coupons are accepted by retailers as a part of the selling price of a taxable item, the value of the coupon is excludable from the tax as a cash discount, unless the retailer is reimbursed by a third party for the amount represented by the coupon. For example, if a customer purchases a pair of shoes priced at $110 with a retailer's coupon worth $10 off, the final sales price of the shoes is $100, and the shoes qualify for the exemption. If a customer purchases a pair of shoes priced at $110 with a manufacturer's coupon worth $10 off, the consideration paid for the pair of shoes totals $110 and the shoes do not qualify for the exemption.</text> </paragraph> </paragraph> <paragraph num="G."> <text>Buy One, Get One Free or for a Reduced Price.</text> <paragraph num="(1)"> <text>The total price of items advertised as “buy one, get one free” or “buy one, get one for a reduced price” cannot be averaged in order for both items to qualify for the exemption. The application of the exemption depends on the actual price paid for the item. The examples in §G (2) and (3) of this regulation illustrate how these sales shall be handled.</text> </paragraph> <paragraph num="(2)"> <text>A retailer advertises pants as “buy one, get one free.” The first pair of pants is priced at $120 and the second pair is free. The tax is due on the $120. Having advertised that the second pair is free, the store cannot ring up each pair of pants for $60 in order for the items to qualify for the exemption. However, if the retailer advertises and sells the pants for 50 percent off, selling each pair of $120 pants for $60, each pair of pants qualifies for the exemption.</text> </paragraph> <paragraph num="(3)"> <text>A retailer advertises shoes as “buy one at the regular price, get a second pair for half price.” The first pair of shoes is sold for $110 and the second pair is sold for $55. Tax is due on the pair of shoes, but not on the $55 pair. Having advertised that the second pair is half price, the store cannot ring up each pair of shoes for $75 in order for the items to qualify for the exemption. However, if the retailer advertises the shoes for 25 percent off, thereby selling each pair of $110 shoes for $82.50, each pair of shoes qualifies for the exemption.</text> </paragraph> </paragraph> <paragraph num="H."> <text>Rebates. Rebates occur after the sale and do not affect the sales price of an item purchased for purposes of the application of the exemption. For example, a customer purchases a sweater for $110 and receives a $12 rebate from the manufacturer. The retailer shall collect tax on the $110 sale price of the sweater.</text> </paragraph> <paragraph num="I."> <text>Layaway Sales. A layaway sale is a transaction in which merchandise is set aside for future delivery to a customer who makes a deposit, agrees to pay the balance of the purchase price over a period of time, and, at the end of the payment period, receives the merchandise. Under Maryland law, the sale is made when the layaway agreement is entered into. Therefore, if the sale is entered into during the exemption period, the sale of eligible clothing may qualify for the exemption.</text> </paragraph> <paragraph num="J."> <text>Rain Checks. Eligible items purchased during the exemption period using a rain check qualify for the exemption regardless of when the rain check was issued. However, issuance of a rain check during the exemption period does not qualify an eligible item for the exemption if the item is actually purchased after the exemption period.</text> </paragraph> <paragraph num="K."> <text>Exchanges.</text> <paragraph num="(1)"> <text>If a customer purchases an item of eligible clothing or footwear during the exemption period and later exchanges the item for the same item (different size, different color, etc.), additional tax is not due even if the exchange is made after the exemption period.</text> </paragraph> <paragraph num="(2)"> <text>If a customer purchases an item of eligible clothing or footwear during the exemption period and, after the exemption period has ended, returns the item and receives credit on the purchase of a different item, the appropriate sales tax applies to the sale of the newly purchased item.</text> </paragraph> <paragraph num="(3)"> <text>If a customer purchases an item of eligible clothing or footwear before the exemption period and, during the exemption period, returns the item and receives credit on the purchase of a different item of eligible clothing or footwear, sales tax is not due on the sale of the new item if it is purchased during the exemption period.</text> </paragraph> <paragraph num="(4)"> <text>Examples.</text> <paragraph num="(a)"> <text>A customer purchases a $35 shirt during the exemption period. After the exemption period, the customer exchanges the shirt for the same shirt in a different size. Tax is not due on the $35 price of the shirt purchased after the exemption period.</text> </paragraph> <paragraph num="(b)"> <text>A customer purchases a $35 shirt during the exemption period. After the exemption period, the customer exchanges the shirt for a $35 jacket. Because the jacket was not purchased during the exemption period, tax is due on the $35 price of the jacket.</text> </paragraph> <paragraph num="(c)"> <text>During the exemption period, a customer purchases a $90 dress that qualifies for the exemption. Later, during the exemption period, the customer exchanges the $90 dress for a $150 dress. Tax is due on the $150 dress. The $90 credit from the returned item cannot be used to reduce the sales price of the $150 item to $60 for exemption purposes.</text> </paragraph> <paragraph num="(d)"> <text>During the exemption period, a customer purchases a $60 dress that qualifies for the exemption. Later, during the exemption period, the customer exchanges the $60 dress for a $95 dress. Tax is not due on the $95 dress because it was also purchased during the exemption period and otherwise meets the qualifications for the exemption.</text> </paragraph> </paragraph> </paragraph> <paragraph num="L."> <text>Returned Merchandise. For a 30-day period after the temporary exemption period, when a customer returns an item that would qualify for the exemption, a credit for, or refund of, sales tax may not be given unless the customer provides a receipt or invoice showing tax was paid, or the retailer has sufficient documentation to show that tax was paid on the specific item. This 30-day period is set solely for the purpose of designating a time period during which the customer shall provide documentation showing that sales tax was paid on returned merchandise. The 30-day period is not intended to change a retailer's policy concerning the time period during which the retailer will accept returns.</text> </paragraph> <paragraph num="M."> <text>Mail, Telephone, E-mail, and Internet Orders and Custom Orders.</text> <paragraph num="(1)"> <text>A sale of tangible personal property occurs when title or possession of the property is transferred in exchange for consideration. Therefore, an item of eligible clothing or footwear may qualify for this exemption if:</text> <paragraph num="(a)"> <text>The item is both delivered to and paid for by the customer during the exemption period; or</text> </paragraph> <paragraph num="(b)"> <text>The item is ordered and paid for by the customer and the order is accepted by the retailer during the exemption period for immediate shipment, even if delivery is made after the exemption period.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>An order is for immediate shipment when delayed shipment is not requested by the customer and notwithstanding that the shipment may be delayed because of a backlog of orders, or because stock is currently unavailable or on back-order by the company.</text> </paragraph> </paragraph> <paragraph num="N."> <text>Shipping and Handling Charges.</text> <paragraph num="(1)"> <text>A separately stated shipping or delivery charge is not included in the sales price of the clothing or footwear to determine if the price of the item is $100 or less.</text> </paragraph> <paragraph num="(2)"> <text>A combined shipping and handling charge, however, is included as part of the sales price of the clothing or footwear, even if the combined charge is separately stated from the price of the item, and shall be added to the price of the clothing or footwear to determine if the price of the item is $100 or less. If multiple items are shipped on a single invoice, the shipping and handling charge shall be proportionately allocated to each item ordered, and separately identified on the invoice, to determine if any items qualify for the exemption.</text> </paragraph> <paragraph num="(3)"> <text>Examples.</text> <paragraph num="(a)"> <text>A customer orders a jacket for $95 during the exemption period. An additional charge of $10 is separately stated on the bill for shipping. The shipping charge is not included in the price subject to the tax and the price of the jacket is, therefore, $95 and qualifies for the exemption.</text> </paragraph> <paragraph num="(b)"> <text>A customer orders a jacket for $95 during the exemption period. A shipping and handling charge of $10 is added to the bill. The sales price of the jacket is $105 and tax is due on the full sales price.</text> </paragraph> <paragraph num="(c)"> <text>A customer orders a suit for $285 and a shirt for $95. The charge to deliver the items is $15. The $15 shipping and handling charge must be proportionately and separately allocated between the items: $285/$380 = 75 percent; therefore, 75 percent of the $15 shipping and handling charge, or $11.25, must be allocated to the suit, and separately identified on the invoice. The remaining 25 percent of the $15 shipping and handling charge, or $3.75, must be allocated to the shirt, and separately identified on the invoice. The sales price of the shirt is $95 plus $3.75, totaling $98.75; therefore, the shirt qualifies for the exemption.</text> </paragraph> </paragraph> </paragraph> <paragraph num="O."> <text>Documenting Exempt Sales. The retailer is not required to obtain an exemption certificate on sales of eligible items during the exemption period. However, the retailer's records shall clearly identify the type of item sold, the date the item was sold, and the sales price of the item.</text> </paragraph> <paragraph num="P."> <text>Reporting Exempt Sales. Special reporting procedures are not necessary to report exempt sales made during the exemption period. Sales shall be reported as currently required by law.</text> </paragraph> <paragraph num="Q."> <text>Absorption of the Sales Tax.</text> <paragraph num="(1)"> <text>A vendor may assume and absorb all or any part of the sales and use tax on a retail sale and pay that tax on behalf of the buyer.</text> </paragraph> <paragraph num="(2)"> <text>The vendor shall separately state the tax from the sales price at the time of sale to purchaser.</text> </paragraph> <paragraph num="(3)"> <text>The vendor shall pay the tax with the return that covers the period in which the vendor makes the sale.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".38" heading="Advertising Agencies."> <paragraph num="A."> <text>In General.</text> <paragraph num="(1)"> <text>An advertising agency is providing nontaxable advertising services when the transaction with the client is for:</text> <paragraph num="(a)"> <text>The preparation and placement of advertising in print, broadcast, or digital media;</text> </paragraph> <paragraph num="(b)"> <text>Public relations;</text> </paragraph> <paragraph num="(c)"> <text>Setting up press conferences;</text> </paragraph> <paragraph num="(d)"> <text>Conducting market research; or</text> </paragraph> <paragraph num="(e)"> <text>Creative concept development.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>An advertising agency is selling tangible personal property or a digital product when the transaction with the client is for the production and transfer of specific property, including property that the client uses:</text> <paragraph num="(a)"> <text>In its business, such as signage, letterhead stationery, business cards, annual reports, or audio or video tapes; or</text> </paragraph> <paragraph num="(b)"> <text>To convey its commercial message, such as brochures, flyers, posters, displays, or finished artwork.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Advertising Agency Purchases.</text> <paragraph num="(1)"> <text>Office Supplies. Advertising agencies shall pay sales and use tax on purchases of office supplies, equipment, and other materials used in their business.</text> </paragraph> <paragraph num="(2)"> <text>Purchases Used or Consumed in Providing Advertising Services. When the transaction with its client is for advertising services, the advertising agency shall pay sales and use tax on its taxable purchases and taxable services that it uses or consumes in providing those services, such as:</text> <paragraph num="(a)"> <text>Artwork or photography for preliminary layouts;</text> </paragraph> <paragraph num="(b)"> <text>Finished art that is reproduced in print media;</text> </paragraph> <paragraph num="(c)"> <text>Recorded music;</text> </paragraph> <paragraph num="(d)"> <text>Rentals of recording studio equipment and facilities; and</text> </paragraph> <paragraph num="(e)"> <text>Audio and video cassettes and film.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Purchases Used in Producing Tangible Personal Property or Digital Product for Sale. When the transaction with its client is for the sale of tangible personal property or a digital product, the advertising agency shall pay sales and use tax on its taxable purchases and taxable services that it uses in producing the property or digital product, unless the material purchased is to be incorporated as a component or part of other property or digital products produced for sale as set forth in §B(4)(b) of this regulation.</text> </paragraph> <paragraph num="(4)"> <text>Purchases for Resale. When the transaction with its client is for the sale of tangible personal property or a digital product, an advertising agency may claim the resale exclusion for:</text> <paragraph num="(a)"> <text>Tangible personal property, digital products, and taxable services purchased solely for resale to a client in the same form in which it receives the property, digital product, or services, such as:</text> <paragraph num="(i)"> <text>Finished brochures;</text> </paragraph> <paragraph num="(ii)"> <text>Catalogs;</text> </paragraph> <paragraph num="(iii)"> <text>Stationery,</text> </paragraph> <paragraph num="(iv)"> <text>Specialty advertising items;</text> </paragraph> <paragraph num="(v)"> <text>Signs; and</text> </paragraph> <paragraph num="(vi)"> <text>Digital images; and</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Tangible personal property, digital products, or taxable services that are incorporated as a part or component of property produced for sale, such as poster board and lettering for signs or displays.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Tangible Personal Property Purchased by an Advertising Agency Acting as an Agent of a Specific Client.</text> <paragraph num="(1)"> <text>An advertising agency may be considered to be the agent of its client with respect to a particular purchase only if:</text> <paragraph num="(a)"> <text>The advertising agency clearly discloses to the supplier the name of the client and that it is acting as that client's agent;</text> </paragraph> <paragraph num="(b)"> <text>The price billed to the client, except for a separately stated standard agency fee, is the same as the amount paid to the supplier; and</text> </paragraph> <paragraph num="(c)"> <text>The advertising agency makes no use of the property in preparing, assembling, fabricating, or producing property for sale or in providing advertising services, and does not charge the property to the account of more than one client.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Notwithstanding the presence of the three minimum requirements set forth in §C(1) of this regulation, an agency relationship will not be presumed. The person claiming agency bears the burden of establishing the agency relationship. The party claiming agency shall demonstrate, by clear and convincing evidence, such as a written contract, that, at the time the transaction was entered into, the parties intended to create an agency relationship with respect to purchases.</text> </paragraph> <paragraph num="(3)"> <text>An advertising agency making a purchase of property as the agent of a specific client shall pay the sales and use tax that the client would be required to pay if it was making the purchase directly from the supplier. The client, as buyer, is ultimately responsible for payment of the sales and use tax and for maintaining records showing that the sales and use tax has been paid.</text> </paragraph> <paragraph num="(4)"> <text>Any claim that a transaction is tax exempt by reason of an advertising agency's acting as an agent of a tax-exempt client shall be supported, at the time of the transaction, by certification to the supplier of the client's tax exempt status, including the 8-digit serial number and the expiration date of the client's exemption certificate.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Advertising Agency Sales.</text> <paragraph num="(1)"> <text>Advertising agencies shall charge and collect sales and use tax on all sales of tangible personal property unless a statutory exemption applies. Charges for creative, consultation, or design services rendered or performed in connection with the production of tangible personal property for sale are subject to sales tax, even if separately stated. Similarly, charges for preliminary property, such as artwork, layouts, mock-ups, or models, produced for the agency's use or for the client's approval in connection with the production of the property for sale, are subject to sales tax, even if separately stated.</text> </paragraph> <paragraph num="(2)"> <text>The tax does not apply to charges for initial consultations or preliminary artwork if:</text> <paragraph num="(a)"> <text>The consultations are provided and artwork is prepared to discuss and demonstrate an idea or message before the client enters into a contract or understanding with the agency for the production of tangible personal property for sale;</text> </paragraph> <paragraph num="(b)"> <text>Title to the preliminary artwork does not pass to the client;</text> </paragraph> <paragraph num="(c)"> <text>The preliminary artwork is not physically incorporated into the property produced for sale; and</text> </paragraph> <paragraph num="(d)"> <text>There is a separately stated charge clearly identifying the billing for the consultation or preliminary artwork.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>If there is a written or unwritten contract or understanding that the agency will produce a product for sale, all charges, including those for additional services or artwork, are subject to sales tax.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".39" heading="Detective, Guard, Armored Car Services, and Security Systems."> <paragraph num="A."> <text>In this regulation, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Armored car service” does not include coin rolling or change room services, as long as these charges are separately stated.</text> </paragraph> <paragraph num="(2)"> <text>“Detective” means a person who is authorized to provide private detective services under Business Occupations and Professions Article, Title 13, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(3)"> <text>Detective Service.</text> <paragraph num="(a)"> <text>“Detective service” means to conduct an investigation concerning:</text> <paragraph num="(i)"> <text>A crime or wrong committed, assumed to have been committed, or threatened to be committed;</text> </paragraph> <paragraph num="(ii)"> <text>The identity, habits, conduct, movement, location, affiliations, associations, transactions, reputation, or character of any person;</text> </paragraph> <paragraph num="(iii)"> <text>The credibility of a witness or of any other individual;</text> </paragraph> <paragraph num="(iv)"> <text>The location of a missing individual;</text> </paragraph> <paragraph num="(v)"> <text>The location or recovery of lost or stolen property;</text> </paragraph> <paragraph num="(vi)"> <text>The origin, cause of, or responsibility for a fire, accident, damage to or loss of property, or injury to an individual, regardless of who conducts the investigation;</text> </paragraph> <paragraph num="(vii)"> <text>The affiliation, connection, or relation of any person with an organization or other person;</text> </paragraph> <paragraph num="(viii)"> <text>The activities, conduct, efficiency, loyalty, or honesty of any employee, agent, contractor, or subcontractor; or</text> </paragraph> <paragraph num="(ix)"> <text>The financial standing, creditworthiness, or financial responsibility of any person.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>“Detective service” includes:</text> <paragraph num="(i)"> <text>Securing evidence for use before any investigating committee, board of award, or board of arbitration, or for use in the trial of any civil or criminal cause;</text> </paragraph> <paragraph num="(ii)"> <text>Providing uniformed or nonuniformed personal protection;</text> </paragraph> <paragraph num="(iii)"> <text>Conducting polygraph testing;</text> </paragraph> <paragraph num="(iv)"> <text>Conducting background checks on prospective employees or tenants; or</text> </paragraph> <paragraph num="(v)"> <text>Conducting background checks on individuals by or at the request of an insurance company for worker's compensation purposes.</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>“Detective service” does not include private process service unless the service goes beyond service of process to a missing person investigation.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>“Security guard service” includes any activity that is performed for compensation as a security guard to protect any individual or property.</text> </paragraph> <paragraph num="(5)"> <text>Security Systems Service.</text> <paragraph num="(a)"> <text>“Security systems service” means providing on the premises of a person's residential or commercial property the service of:</text> <paragraph num="(i)"> <text>Monitoring an electronically controlled burglar or fire alarm system for any residential or commercial property located in the State; or</text> </paragraph> <paragraph num="(ii)"> <text>Responding to a distress call or an alarm sounding from a security system.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>“Security systems service” does not include:</text> <paragraph num="(i)"> <text>Installing a burglar or fire alarm system in commercial or residential property;</text> </paragraph> <paragraph num="(ii)"> <text>Maintaining or repairing a security system for a customer;</text> </paragraph> <paragraph num="(iii)"> <text>Monitoring property located entirely outside of the State, even if the equipment used to perform the monitoring service is located in the State; or</text> </paragraph> <paragraph num="(iv)"> <text>Providing a medical response system used by individuals to summon medical aid.</text> </paragraph> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Taxability.</text> <paragraph num="(1)"> <text>The sales and use tax applies to the sale of a security service, which includes:</text> <paragraph num="(a)"> <text>A detective service;</text> </paragraph> <paragraph num="(b)"> <text>A security guard service;</text> </paragraph> <paragraph num="(c)"> <text>An armored car service; and</text> </paragraph> <paragraph num="(d)"> <text>A security systems service.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The application of the Maryland sales and use tax to charges for security services is controlled by the delivery point of the services. For example, an investigation that encompasses a number of states but results in a report of the investigation being delivered to a client in Maryland is subject to the Maryland sales and use tax. However, an investigation conducted entirely in Maryland which results in a report delivered to an out-of-State client is not subject to the Maryland sales and use tax.</text> </paragraph> <paragraph num="(3)"> <text>Armored car services delivered in Maryland are subject to the sales and use tax, although the vendor may reasonably apportion any charges for any out-of-State delivery component. Acceptable apportionment methods include distance, time, or number of stops within and outside of the State.</text> </paragraph> <paragraph num="(4)"> <text>Security Monitoring Systems.</text> <paragraph num="(a)"> <text>Except as set forth in §C(4)(b) of this regulation, the installer of security systems in commercial or residential property shall pay the sales and use tax on the cost of all materials that are installed in such a manner as to become real property.</text> </paragraph> <paragraph num="(b)"> <text>Equipment that is used to operate or monitor a security system or functions independently as a standalone electronic device whether wired to the system or wireless and is property normally treated as tangible personal property, does not become part of the realty even though it may be used as part of the security system to monitor, secure, and control access to realty. Examples of such equipment include, but are not limited to, computers, laptops, VCRs, DVDs, cameras, monitors, and televisions.</text> </paragraph> <paragraph num="(c)"> <text>Installers or sellers of tangible personal property included in or as part of a commercial or residential security system shall separately state the charge for tangible personal property on any invoice, contract of sale, or lease, and shall charge the sales and use tax to the purchaser. Installers or sellers of items that do not become part of the realty may issue their supplier a resale certificate to purchase the tangible personal property tax-free.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".40" heading="Sourcing Cellular Telephone and Other Mobile Telecommunications Services Charges."> <paragraph num="A."> <text>Definitions.</text> <paragraph num="(1)"> <text>In this regulation, the following terms have the meaning indicated.</text> </paragraph> <paragraph num="(2)"> <text>Terms Defined.</text> <paragraph num="(a)"> <text>“Act” means the Mobile Telecommunications Sourcing Act, 4 U.S.C. §116, et seq.</text> </paragraph> <paragraph num="(b)"> <text>“Customer” means:</text> <paragraph num="(i)"> <text>The person that contracts with the home service provider for mobile telecommunications services; or</text> </paragraph> <paragraph num="(ii)"> <text>For the purpose of determining the place of primary use, if the end user of mobile telecommunications services is not the contracting party, the end user of the mobile telecommunications service.</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>“Home service provider” means the facilities-based carrier or reseller with which the customer contracts for mobile telecommunications services.</text> </paragraph> <paragraph num="(d)"> <text>“Licensed service area” means the geographic area in which the home service provider may by law or contract provide commercial mobile radio service to the customer.</text> </paragraph> <paragraph num="(e)"> <text>“Place of primary use” means the street address representative of where the customer's use of the mobile telecommunications service primarily occurs, which shall be:</text> <paragraph num="(i)"> <text>The residential street address or the primary business street address of the customer; and</text> </paragraph> <paragraph num="(ii)"> <text>Within the licensed service area of the home service provider.</text> </paragraph> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Tax on Cellular Telephone and Other Mobile Telecommunications Services. Charges for cellular telephone and other mobile telecommunications services are subject to sales and use tax in the State as provided in Tax-General Article, Title 11, Annotated Code of Maryland, this regulation, and to the extent consistent with this regulation, the Act.</text> </paragraph> <paragraph num="C."> <text>Sourcing of Cellular Telephone and Other Mobile Telecommunications Services.</text> <paragraph num="(1)"> <text>Tax shall be charged based on a determination that the State is the customer's place of primary use, regardless of where the mobile telecommunication services originate, terminate, or pass through.</text> </paragraph> <paragraph num="(2)"> <text>A home service provider shall employ an enhanced zip code to identify each street address in the State which is its customer's primary place of use.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Determining Tax on Cellular Telephone or Other Mobile Telecommunications Services.</text> <paragraph num="(1)"> <text>If a home service provider can reasonably identify nontaxable charges based on records regularly kept in the course of business, tax under this regulation may not be charged on the nontaxable charges, even if the nontaxable charges are not separately stated from the taxable charges.</text> </paragraph> <paragraph num="(2)"> <text>Prepaid telephone calling arrangements are not covered by this regulation and are subject to tax if purchased in a retail sale in the State.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".41" heading="Sales of Appliances Meeting Certain Efficiency Requirements and Multifuel Pellet Stoves."> <paragraph num="A."> <text>Repealed.</text> </paragraph> <paragraph num="B."> <text>Repealed.</text> </paragraph> <paragraph num="C."> <text>The sales and use tax does not apply to a sale of a multifuel pellet stove designed to burn agricultural field corn. The fact that agricultural field corn can be burned in a stove not specifically designed for the burning of agricultural field corn does not exempt the sale of that stove from the tax. Vendors and purchasers of multifuel pellet stoves shall keep records or documentation identifying the items as meeting the requirements for the exemption under this regulation.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".42" heading="Effective Rate Agreements."> <paragraph num="A."> <text>Definitions.</text> <paragraph num="(1)"> <text>In this regulation, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="(2)"> <text>Terms Defined.</text> <paragraph num="(a)"> <text>“Effective rate” means a calculated percentage derived from analysis of selected accounts for a selected sample period.</text> </paragraph> <paragraph num="(b)"> <text>“Effective rate agreement” means an agreement between the Comptroller and a vendor that allows a vendor to compute its sales and use tax liability for purchases made by the vendor for a specific period using a predetermined agreed upon effective rate.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>On or after July 1, 2002, the Comptroller may enter into an effective rate agreement to allow a vendor to compute its sales and use tax liability reportable on purchases.</text> </paragraph> <paragraph num="C."> <text>Requirements.</text> <paragraph num="(1)"> <text>An effective rate agreement shall:</text> <paragraph num="(a)"> <text>Specify the types of records to be maintained by the vendor;</text> </paragraph> <paragraph num="(b)"> <text>Have a predetermined expiration date; and</text> </paragraph> <paragraph num="(c)"> <text>Contain provisions for modification of the effective rate due to law changes and court decisions that have an affect on the sales and use tax due.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>An effective rate agreement may exclude specific types of purchases of specific dollar amounts.</text> </paragraph> <paragraph num="(3)"> <text>To be eligible for an effective rate agreement, a vendor:</text> <paragraph num="(a)"> <text>Shall maintain an acceptable system of internal controls and business records;</text> </paragraph> <paragraph num="(b)"> <text>Shall make a large volume of taxable purchases in the effective rate period applied for;</text> </paragraph> <paragraph num="(c)"> <text>May not have a history of poor or improper reporting of taxes collected;</text> </paragraph> <paragraph num="(d)"> <text>May not have filed for bankruptcy within the last 10 years or be controlled by a related taxpayer that has filed for bankruptcy within the last 10 years; and</text> </paragraph> <paragraph num="(e)"> <text>May not have been or currently be a subject of a criminal or fraud investigation.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Applications to enter into an effective rate agreement with the Comptroller shall be in writing and contain the following vendor information:</text> <paragraph num="(a)"> <text>Name;</text> </paragraph> <paragraph num="(b)"> <text>Address;</text> </paragraph> <paragraph num="(c)"> <text>Central registration number;</text> </paragraph> <paragraph num="(d)"> <text>Type of business;</text> </paragraph> <paragraph num="(e)"> <text>Gross annual sales and purchases;</text> </paragraph> <paragraph num="(f)"> <text>Reason for the request to enter into an effective rate agreement;</text> </paragraph> <paragraph num="(g)"> <text>A statement attesting that the vendor meets the minimum criteria stated in §C(3) of this regulation; and</text> </paragraph> <paragraph num="(h)"> <text>Signature of an officer responsible for the payment of taxes.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>Revocation of an Effective Rate Agreement.</text> <paragraph num="(1)"> <text>Either the Comptroller or the vendor may void an effective rate agreement without cause after 30 days written notice.</text> </paragraph> <paragraph num="(2)"> <text>The Comptroller may void an effective rate agreement:</text> <paragraph num="(a)"> <text>If the vendor's operation significantly changed during the term of the agreement;</text> </paragraph> <paragraph num="(b)"> <text>Immediately upon revocation of the direct pay permit; or</text> </paragraph> <paragraph num="(c)"> <text>For cause.</text> </paragraph> </paragraph> </paragraph> <paragraph num="E."> <text>An effective rate agreement may not be implemented until the vendor has applied for and is issued a direct payment permit by the Comptroller.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".43" heading="Geothermal and Residential Wind Energy and Solar Equipment."> <paragraph num="A."> <text>Definitions.</text> <paragraph num="(1)"> <text>In this regulation, the following terms have the meaning indicated:</text> </paragraph> <paragraph num="(2)"> <text>Defined Terms.</text> <paragraph num="(a)"> <text>“Equipment” means an implement, such as a tool, apparatus, appliance, utensil, or instrument, used to perform a mechanical or manual operation.</text> </paragraph> <paragraph num="(b)"> <text>“Geothermal equipment” means equipment that uses ground loop technology to heat and cool a structure.</text> </paragraph> <paragraph num="(c)"> <text>“Residential wind energy equipment” means equipment installed on residential property that uses wind energy to generate electricity to be used in a residential structure on the property.</text> </paragraph> <paragraph num="(d)"> <text>Solar Energy Equipment.</text> <paragraph num="(i)"> <text>“Solar energy equipment” means equipment that uses solar energy to heat or cool a structure, generate electricity to be used in a structure or supplied to the electric grid, or provide hot water for use in a structure.</text> </paragraph> <paragraph num="(ii)"> <text>“Solar energy equipment” does not include equipment that is part of a nonsolar energy system, such as a window, floor or other passive solar material that does not involve the use of a mechanical or electronic device but is designed to enhance or improve the functionality of a traditional heating or cooling system, or that uses any type of recreational facility or equipment as a storage medium, such as a pool or hot tub.</text> </paragraph> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Exempt Sales.</text> <paragraph num="(1)"> <text>The sales and use tax does not apply to a sale of geothermal equipment, residential wind energy equipment, or solar energy equipment.</text> </paragraph> <paragraph num="(2)"> <text>The exemption includes the sale of equipment and other material that is attached, applied, fabricated, or assembled in such a manner that it comprises a complete geothermal, residential wind energy, or solar energy system.</text> </paragraph> <paragraph num="(3)"> <text>Material such as sand, gravel, or grout, although necessary for the system to be built or to function properly, is not equipment or a component of equipment and, therefore, is not exempt from the tax.</text> </paragraph> <paragraph num="(4)"> <text>Vendors, in lieu of collecting the tax, may accept a signed statement from the buyer certifying that the tangible personal property purchased is qualifying geothermal, residential wind energy, or solar energy equipment. The vendor shall retain the statement with the record of sale.</text> </paragraph> <paragraph num="(5)"> <text>If sales and use tax is paid on the sale of an item that qualifies for an exemption the person paying the tax may apply to the Comptroller for a refund pursuant to COMAR 03.03.03.05.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".44" heading="Tax-Free Weekend for Certain Energy Efficient Equipment."> <paragraph num="A."> <text>Definitions.</text> <paragraph num="(1)"> <text>In this regulation, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="(2)"> <text>Terms Defined.</text> <paragraph num="(a)"> <text>“Compact fluorescent light bulb” means a fluorescent light bulb that has been compressed into the size of a standard-issue screw-in incandescent light bulb.</text> </paragraph> <paragraph num="(b)"> <text>“Energy Star product” means an air conditioner, clothes washer, clothes dryer, furnace, heat pump, standard size refrigerator, compact fluorescent light bulb, dehumidifier, boiler, or programmable thermostat that has been designated as meeting or exceeding the applicable Energy Star efficiency requirements developed by the U.S. Environmental Protection Agency and the United States Department of Energy and is authorized to carry the Energy Star label. For the period July 1, 2014 through June 30, 2017, “Energy Star product” also means a light-emitting diode (LED) light bulb that meets or exceeds the same Energy Star efficiency criteria.</text> </paragraph> <paragraph num="(c)"> <text>“Solar water heater” means a system composed of equipment designed to heat water by the use of solar energy.</text> </paragraph> <paragraph num="(d)"> <text>“Standard size refrigerator” means a refrigerator with a factory-built, self-contained cabinet that is marketed for use in a private residence or household, whether or not used in a private residence.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Exempt Sales.</text> <paragraph num="(1)"> <text>The sales and use tax does not apply to the sale of a qualified Energy Star product or a solar water heater that is sold between 12:01 a.m. on the Saturday immediately preceding the third Monday in February and 11:59 p.m. on the third Monday of February, beginning in February 2011 and on such dates each February thereafter.</text> </paragraph> <paragraph num="(2)"> <text>Requirements for Exemption.</text> <paragraph num="(a)"> <text>The sale is considered made during the tax-free period if the contract of sale and payment for the product takes place during the specified period, even if delivery of the product is delayed until after the period.</text> </paragraph> <paragraph num="(b)"> <text>For lay-away sales, the sale will be considered to be made during the tax-free period if the contract of sale is entered into and the initial payment is made during the specified period and the product is removed from normal inventory and set aside for the purchaser at that time.</text> </paragraph> <paragraph num="(c)"> <text>A product purchased pursuant to a rain check is not eligible for exemption unless the contract of sale and payment for the product takes place during the specified period.</text> </paragraph> <paragraph num="(d)"> <text>The initial lease payment for a qualifying product will be exempt from sales and use tax if the lease agreement is entered into and the first payment is made during the specified period.</text> </paragraph> <paragraph num="(e)"> <text>For catalogue or internet sales, the sale will be considered to be made during the tax-free period if the transaction is completed, payment is made, and the vendor has taken action to immediately fulfill the order during the specified period.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>If sales and use tax is paid on the sale of an item that qualifies for exemption, the person paying the tax may apply to the Comptroller for a refund pursuant to COMAR 03.06.03.05.</text> </paragraph> <paragraph num="(4)"> <text>In addition to record-keeping requirements under Tax-General Article, §11-504, Annotated Code of Maryland, vendors and purchasers of Energy Star products and solar water heaters shall keep records or documentation identifying the items as meeting the requirements for the exemption under this regulation for a period of 4 years from the date of the sale.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".45" heading="Sales and Use Tax on Sales of Dyed Diesel Fuel by Marinas."> <paragraph num="A."> <text>Definitions.</text> <paragraph num="(1)"> <text>In this regulation, the following terms have the meanings indicated.</text> <paragraph num="(a)"> <text>“Dyed diesel fuel” means diesel fuel that is dyed under U.S. Environmental Protection Agency rules for high sulfur diesel fuel or is dyed under Internal Revenue Service rules for nontaxable use.</text> </paragraph> <paragraph num="(b)"> <text>“Marina” means an entity that maintains a place of business where motor fuel is sold primarily to vessels.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Tax Computation.</text> <paragraph num="(1)"> <text>A marina that sells dyed diesel fuel on or after July 1, 2012:</text> <paragraph num="(a)"> <text>Shall pay the sales and use tax on that sale directly to the Comptroller; and</text> </paragraph> <paragraph num="(b)"> <text>May not collect the tax from the buyer as a separately stated item.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>To compute the sales and use tax, the marina shall apply the 6 percent tax rate to 94.5 percent of the taxable gross receipts from the sale of dyed diesel fuel.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Records. A marina shall issue a receipt or other record of sale to the buyer that clearly indicates that the sales and use tax is included in the price charged.</text> </paragraph> <paragraph num="D."> <text>Exempt Sales.</text> <paragraph num="(1)"> <text>If a sale of dyed diesel fuel by a marina qualifies for exemption from sales and use tax, the vendor shall reduce the tax-included price of the dyed diesel fuel by the proportionate amount of tax included in the price.</text> </paragraph> <paragraph num="(2)"> <text>The receipt or other record of sale shall clearly indicate that the price charged has been reduced by the tax amount.</text> </paragraph> <paragraph num="(3)"> <text>A sale of dyed diesel fuel or repair part to be used in a commercial fishing vessel or a vessel otherwise used for commercial purposes is exempt from the tax. A marina may require that the customer certify in a signed written statement that the dyed diesel fuel or repair part is to be used in a commercial fishing vessel or for an otherwise commercial purpose if the record of sale does not otherwise clearly indicate entitlement to exemption.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".46" heading="Parent-Teacher Organization Fundraisers."> <paragraph num="A."> <text>Definitions.</text> <paragraph num="(1)"> <text>In this regulation, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="(2)"> <text>Terms Defined.</text> <paragraph num="(a)"> <text>“Organization within an elementary or secondary school” means a formal group of students, teachers, administrators, and/or parents of students that is recognized by an elementary or secondary school and that promotes, leads, or supports participation in an educational or extra-curricular activity at or on behalf of that school and whose activities include fund raising on behalf of the organization.</text> </paragraph> <paragraph num="(b)"> <text>“Organization within a school system” means a formal group of students, teachers, administrators, and/or parents of students that is recognized by a Maryland school system, not including the school itself, and that promotes, leads, or supports participation in an educational or extra-curricular activity at or on behalf of that school system or one or more schools within that school system and whose activities include fund raising on behalf of the organization.</text> </paragraph> <paragraph num="(c)"> <text>“Parent-teacher organization” means a formal organization of parents, teachers and school staff of an elementary or secondary school that facilitates parental participation in a school and whose activities include fund raising on behalf of the organization.</text> </paragraph> <paragraph num="(d)"> <text>“School system in the State” means one of the twenty-three county school systems in Maryland or the Baltimore City school system.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Except as provided in COMAR 03.06.01.22C(2)(e), a sale by a parent-teacher organization or other organization within an elementary or secondary school in the State or within a school system in the State does not include a sale where the parent-teacher organization or other organization accepts payment on behalf of a third-party vendor, even if said organization receives some portion of the proceeds of the sale.</text> </paragraph> <paragraph num="C."> <text>A sale of tangible personal property, digital codes, or digital products by any of the following organizations is exempt from the tax:</text> <paragraph num="(1)"> <text>A parent-teacher organization within an elementary or secondary school in the State;</text> </paragraph> <paragraph num="(2)"> <text>A parent-teacher organization within a school system in the State;</text> </paragraph> <paragraph num="(3)"> <text>An organization within an elementary or secondary school in the State;</text> </paragraph> <paragraph num="(4)"> <text>An organization within a school system in the State.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".47" heading="Cannabis."> <paragraph num="A."> <text>Scope. This regulation applies to all businesses required to be licensed or registered by the Maryland Cannabis Administration, including growers, micro growers, processors, microprocessors, incubator space operators, dispensaries, micro dispensaries, on-site consumption establishments, nurseries, and delivery services.</text> </paragraph> <paragraph num="B."> <text>Definitions.</text> <paragraph num="(1)"> <text>In this regulation, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="(2)"> <text>Terms Defined.</text> <paragraph num="(a)"> <text>“Cannabis” has the meaning stated in Alcoholic Beverages and Cannabis Article, §1-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(b)"> <text>“Cannabinoid beverage” has the meaning stated in Alcoholic Beverages and Cannabis Article, § 36–101, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(c)"> <text>“Cannabis business” means a cannabis business that is licensed under Alcoholic Beverages and Cannabis Article, Title 36, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(d)"> <text>“Cannabis nursery” means a cannabis nursery that is registered under Alcoholic Beverages and Cannabis Article, Title 36, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(e)"> <text>“Delivery service” has the meaning stated in Alcoholic Beverages and Cannabis Article, §36-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(f)"> <text>“Medical cannabis” means cannabis that is:</text> <paragraph num="(i)"> <text>Purchased by or administered to an individual who is registered as a qualifying patient, as defined in Alcoholic Beverages and Cannabis Article, §36-101, Annotated Code of Maryland; or</text> </paragraph> <paragraph num="(ii)"> <text>Purchased by a caregiver, as defined in Alcoholic Beverages and Cannabis Article, §36-101, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="(g)"> <text>“Vaping liquid” has the meaning indicated in Business Regulation Article, §16.7-101, Annotated Code of Maryland.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Returns and Record Keeping.</text> <paragraph num="(1)"> <text>A cannabis business shall:</text> <paragraph num="(a)"> <text>Maintain records as required by law; and</text> </paragraph> <paragraph num="(b)"> <text>Comply with all statutory and regulatory reporting requirements, and any other requirements published by the Comptroller.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>For each separate return required to be filed under COMAR 03.06.03.03, a cannabis business may claim the credit allowed under Tax-General Article, §11-105, Annotated Code of Maryland, for timely filing a sales and use tax return.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Exemptions.</text> <paragraph num="(1)"> <text>Sales Between Cannabis Businesses.</text> <paragraph num="(a)"> <text>Subject to §D(1)(b) and (c) of this regulation, the sales and use tax does not apply to the retail sale of cannabis between cannabis businesses or between cannabis businesses and cannabis nurseries.</text> </paragraph> <paragraph num="(b)"> <text>A licensed buyer shall present a resale certificate to the licensed seller as evidence of eligibility for the exemption under §D(1)(a) of this regulation.</text> </paragraph> <paragraph num="(c)"> <text>A seller shall retain a record of the sale in compliance with COMAR 03.06.03.02.</text> </paragraph> <paragraph num="(d)"> <text>Except as provided in §D(1)(e) of this regulation, the resale certificate shall include the information required in Regulation .14 of this chapter.</text> </paragraph> <paragraph num="(e)"> <text>If the buyer is not required to obtain a sales and use tax license, the buyer shall include its cannabis business license number instead of a sales and use tax registration number on its resale certificate.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Sales of Medical Cannabis.</text> <paragraph num="(a)"> <text>The sales and use tax does not apply to the sale of medical cannabis under Alcoholic Beverages and Cannabis Article, Title 36, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(b)"> <text>For every sale of medical cannabis, the seller shall record the qualifying patient or caregiver’s registration number and retain a record of the sale in compliance with COMAR 03.06.03.02.</text> </paragraph> </paragraph> </paragraph> <paragraph num="E."> <text>Clarifications.</text> <paragraph num="(1)"> <text>Notwithstanding Tax-General Article, §11-104(j), Annotated Code of Maryland, regarding the sales and use tax rate for certain vaping liquid containers, the sales and use tax rate for vaping liquid containing cannabis shall be the rate applicable to cannabis under Tax-General Article, §11-104(k), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>Notwithstanding the exemption from sales and use tax for certain food, the sale of food or edible products containing cannabis or cannabinoid beverages shall be subject to the sales and use tax rate applicable to cannabis under Tax-General Article, §11-104(k), Annotated Code of Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".48" heading="Data or Information Technology Services and Software Publishing Services."> <paragraph num="A."> <text>Definitions.</text> <paragraph num="(1)"> <text>In this regulation, the following terms have the meaning indicated.</text> </paragraph> <paragraph num="(2)"> <text>Terms Defined.</text> <paragraph num="(a)"> <text>“Buyer” has the meaning stated in Tax-General Article, §11-101(b), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(b)"> <text>“Cloud computing” means a service that enables on-demand, self-service network access to a shared pool of configurable computer resources, including data storage, analytics, commerce, streaming, e-mail, document sharing, and document editing.</text> </paragraph> <paragraph num="(c)"> <text>“Customer tax address” has the meaning stated in Tax-General Article §11-101(c-1), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(d)"> <text>“Data or information technology service” means services described under NAICS sectors 518, 519, and subsector 5415.</text> </paragraph> <paragraph num="(e)"> <text>“Emerging technology development area” means the University of Maryland’s Discovery District located in Prince George’s County.</text> </paragraph> <paragraph num="(f)"> <text>“NAICS” means the North American Industrial Classification System, United States Manual, 2022 Edition, published by the United States Office of Management and Budget.</text> </paragraph> <paragraph num="(g)"> <text>“Services described under NAICS subsector 5132” means:</text> <paragraph num="(i)"> <text>Applications development and publishing (except on a custom basis);</text> </paragraph> <paragraph num="(ii)"> <text>Computer software publishing and reproduction;</text> </paragraph> <paragraph num="(iii)"> <text>Gaming site publishing;</text> </paragraph> <paragraph num="(iv)"> <text>Mobile applications development and publishing (except on a custom basis);</text> </paragraph> <paragraph num="(v)"> <text>Packaged computer applications software;</text> </paragraph> <paragraph num="(vi)"> <text>Packaged computer operating systems software;</text> </paragraph> <paragraph num="(vii)"> <text>Packaged computer software publishing;</text> </paragraph> <paragraph num="(viii)"> <text>Packaged computer utility software;</text> </paragraph> <paragraph num="(ix)"> <text>Packaged programming language and compiler software publishing;</text> </paragraph> <paragraph num="(x)"> <text>Packaged software publishing;</text> </paragraph> <paragraph num="(xi)"> <text>Publishing computer software for games; and</text> </paragraph> <paragraph num="(xii)"> <text>Software publishing.</text> </paragraph> </paragraph> <paragraph num="(h)"> <text>“Services described under NAICS sector 518” means:</text> <paragraph num="(i)"> <text>Application hosting (excluding software publishing);</text> </paragraph> <paragraph num="(ii)"> <text>Automated data processing;</text> </paragraph> <paragraph num="(iii)"> <text>Cloud computing (except software publishing and computer systems design);</text> </paragraph> <paragraph num="(iv)"> <text>Cloud storage;</text> </paragraph> <paragraph num="(v)"> <text>Co-location in data centers (i.e., rental of server and networking space in data centers);</text> </paragraph> <paragraph num="(vi)"> <text>Computer data storage;</text> </paragraph> <paragraph num="(vii)"> <text>Computer input preparation;</text> </paragraph> <paragraph num="(viii)"> <text>Computer time leasing;</text> </paragraph> <paragraph num="(ix)"> <text>Computer time rental;</text> </paragraph> <paragraph num="(x)"> <text>Computer time sharing;</text> </paragraph> <paragraph num="(xi)"> <text>Computing infrastructure provision;</text> </paragraph> <paragraph num="(xii)"> <text>Computing platform infrastructure provision;</text> </paragraph> <paragraph num="(xiii)"> <text>Data capture imaging;</text> </paragraph> <paragraph num="(xiv)"> <text>Data entry;</text> </paragraph> <paragraph num="(xv)"> <text>Data processing computer services;</text> </paragraph> <paragraph num="(xvi)"> <text>Data processing (except payroll services, financial transaction processing services);</text> </paragraph> <paragraph num="(xvii)"> <text>Disk and diskette conversion;</text> </paragraph> <paragraph num="(xviii)"> <text>Disk and diskette recertification;</text> </paragraph> <paragraph num="(xix)"> <text>Electronic data processing;</text> </paragraph> <paragraph num="(xx)"> <text>Game server hosting;</text> </paragraph> <paragraph num="(xxi)"> <text>Infrastructure as a service (IaaS);</text> </paragraph> <paragraph num="(xxii)"> <text>Media streaming data storage;</text> </paragraph> <paragraph num="(xxiii)"> <text>Media streaming technical support;</text> </paragraph> <paragraph num="(xxiv)"> <text>Microfiche recording and imaging;</text> </paragraph> <paragraph num="(xxv)"> <text>Microfilm recording and imaging;</text> </paragraph> <paragraph num="(xxvi)"> <text>Optical scanning;</text> </paragraph> <paragraph num="(xxvii)"> <text>Platform as a service (PaaS);</text> </paragraph> <paragraph num="(xxviii)"> <text>Video and audio technical streaming support;</text> </paragraph> <paragraph num="(xxix)"> <text>Video tape and film stock technical streaming support;</text> </paragraph> <paragraph num="(xxx)"> <text>Virtual currency (cryptocurrency) mining; and</text> </paragraph> <paragraph num="(xxxi)"> <text>Web hosting (excluding software publishing).</text> </paragraph> </paragraph> <paragraph num="(i)"> <text>“Services described under NAICS sector 519” means:</text> <paragraph num="(i)"> <text>Archives;</text> </paragraph> <paragraph num="(ii)"> <text>Bookmobiles;</text> </paragraph> <paragraph num="(iii)"> <text>Centers for documentation (i.e., archives);</text> </paragraph> <paragraph num="(iv)"> <text>Circulating libraries;</text> </paragraph> <paragraph num="(v)"> <text>Film archives;</text> </paragraph> <paragraph num="(vi)"> <text>Internet search portals;</text> </paragraph> <paragraph num="(vii)"> <text>Internet search websites;</text> </paragraph> <paragraph num="(viii)"> <text>Lending libraries;</text> </paragraph> <paragraph num="(ix)"> <text>Libraries (except motion picture stock footage, motion picture commercial distribution);</text> </paragraph> <paragraph num="(x)"> <text>Motion picture film libraries;</text> </paragraph> <paragraph num="(xi)"> <text>Music archives;</text> </paragraph> <paragraph num="(xii)"> <text>News clipping services;</text> </paragraph> <paragraph num="(xiii)"> <text>Press clipping services;</text> </paragraph> <paragraph num="(xiv)"> <text>Provision of stock photos;</text> </paragraph> <paragraph num="(xv)"> <text>Reference libraries;</text> </paragraph> <paragraph num="(xvi)"> <text>Telephone-based recorded information services;</text> </paragraph> <paragraph num="(xvii)"> <text>Title search services (except real estate); and</text> </paragraph> <paragraph num="(xviii)"> <text>Web search portals.</text> </paragraph> </paragraph> <paragraph num="(j)"> <text>“Services described under NAICS subsector 5415” means:</text> <paragraph num="(i)"> <text>Audio visual and IT (information technology) systems integration design;</text> </paragraph> <paragraph num="(ii)"> <text>CAD (computer-aided design) systems integration design;</text> </paragraph> <paragraph num="(iii)"> <text>CAE (computer-aided engineering) systems integration design;</text> </paragraph> <paragraph num="(iv)"> <text>CAM (computer-aided manufacturing) systems integration design;</text> </paragraph> <paragraph num="(v)"> <text>Computer disaster recovery;</text> </paragraph> <paragraph num="(vi)"> <text>Computer hardware consulting;</text> </paragraph> <paragraph num="(vii)"> <text>Computer network systems integration design;</text> </paragraph> <paragraph num="(viii)"> <text>Computer software consulting;</text> </paragraph> <paragraph num="(ix)"> <text>Computer systems integration analysis and design;</text> </paragraph> <paragraph num="(x)"> <text>Computer systems integration design consulting;</text> </paragraph> <paragraph num="(xi)"> <text>Computer systems integrator;</text> </paragraph> <paragraph num="(xii)"> <text>Computer software installation;</text> </paragraph> <paragraph num="(xiii)"> <text>Computer systems facilities (i.e., client’s facilities) management and operation;</text> </paragraph> <paragraph num="(xiv)"> <text>Custom computer application software programming;</text> </paragraph> <paragraph num="(xv)"> <text>Custom computer program or software development;</text> </paragraph> <paragraph num="(xvi)"> <text>Custom computer programming services;</text> </paragraph> <paragraph num="(xvii)"> <text>Custom computer software analysis and design;</text> </paragraph> <paragraph num="(xviii)"> <text>Custom computer software support;</text> </paragraph> <paragraph num="(xix)"> <text>Custom search engine optimization (SEO) (except hosting and infrastructure support services);</text> </paragraph> <paragraph num="(xx)"> <text>Custom software programming;</text> </paragraph> <paragraph num="(xxi)"> <text>Custom webpage design services;</text> </paragraph> <paragraph num="(xxii)"> <text>Data processing facilities (i.e., client’s facilities) management and operation;</text> </paragraph> <paragraph num="(xxiii)"> <text>Industrial robot automation applications/software design and development;</text> </paragraph> <paragraph num="(xxiv)"> <text>Industrial robot programming;</text> </paragraph> <paragraph num="(xxv)"> <text>Information management computer systems integration design;</text> </paragraph> <paragraph num="(xxvi)"> <text>Local area network (LAN) computer system integration design;</text> </paragraph> <paragraph num="(xxvii)"> <text>Machine vision software design and development;</text> </paragraph> <paragraph num="(xxviii)"> <text>Material handling robot applications/software design and development;</text> </paragraph> <paragraph num="(xxix)"> <text>Office automation computer systems integration design;</text> </paragraph> <paragraph num="(xxx)"> <text>Robotics applications/software design and development;</text> </paragraph> <paragraph num="(xxxi)"> <text>Robotics process automation software design and development; and</text> </paragraph> <paragraph num="(xxxii)"> <text>Welding robot applications/software design and development.</text> </paragraph> </paragraph> <paragraph num="(k)"> <text>“Qualified Company” means a company that contracts with the University of Maryland’s Applied Research Laboratory for Intelligence and Security to develop systems and technologies to advance the use of quantum computing.</text> </paragraph> <paragraph num="(l)"> <text>“Qualified Cybersecurity Business” means an entity organized for profit that is engaged primarily in the development of innovative proprietary cybersecurity technology or the provision of cybersecurity services.</text> </paragraph> <paragraph num="(m)"> <text>“Retail sale” has the meaning stated in Tax-General Article, §11-101(h), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(n)"> <text>“Software publishing service” means a system software or application software publishing service described under NAICS subsector 5132.</text> </paragraph> <paragraph num="(o)"> <text>“Taxable price” has the meaning stated in Regulation .08 of this chapter.</text> </paragraph> <paragraph num="(p)"> <text>“Vendor” has the meaning stated in Tax-General Article, §11-101(o), Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Every classification detail under a NAICS sector's or subsector's industry groups, NAICS industries, and national industries includes all listed services, which can be performed together, separately, or in any combination.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The sale of data or information technology services or software publishing services in the State are subject to sales and use tax in the State as provided in Tax-General Article, Title 11, Annotated Code of Maryland.</text> </paragraph> <paragraph num="C."> <text>Except as provided in Regulation .49 of this chapter, a retail sale of a data or information technology service or software publishing service is presumed to be made in the state in which the customer tax address is located.</text> </paragraph> <paragraph num="D."> <text>Application of NAICS sector codes.</text> <paragraph num="(1)"> <text>Each service the vendor provides must be evaluated individually to determine whether it is a data or information technology service or software publishing service.</text> </paragraph> <paragraph num="(2)"> <text>A vendor may not rely on the principal business activity code reported on the vendor’s annual income tax return to determine whether the services the vendor provides are subject to sales and use tax.</text> </paragraph> </paragraph> <paragraph num="E."> <text>A buyer who is registered to remit sales and use tax may present to a vendor a certificate indicating multiple points of use of a data or information technology service or software publishing service as provided in Regulation .49 of this chapter.</text> </paragraph> <paragraph num="F."> <text>Exempt Sales.</text> <paragraph num="(1)"> <text>The sales and use tax does not apply to:</text> <paragraph num="(a)"> <text>A sale of cloud computing to a qualified cybersecurity business;</text> </paragraph> <paragraph num="(b)"> <text>A sale of a data or information technology service or software publishing service to a qualified company located in an emerging technology development area made in connection with the work of the company; or</text> </paragraph> <paragraph num="(c)"> <text>A sale of a data or information technology service or software publishing service by a qualified company in an emerging technology development area.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The exemption in §F(1) of this regulation does not apply to any tangible personal property, digital product, digital code, or taxable service sold with the exempt service.</text> </paragraph> <paragraph num="(3)"> <text>A vendor may accept a signed statement from a buyer certifying the exemption under §F(1)(a) or (b) of this regulation applies unless if, at the time of acceptance, the vendor knows or should have known that the exemption does not apply. The vendor shall retain the statement with the record of sale.</text> </paragraph> <paragraph num="(4)"> <text>If sales and use tax is paid on the sale of a service that qualifies for an exemption, the person paying the tax may apply to the Comptroller for a refund pursuant to COMAR 03.06.03.05.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".49" heading="Multiple Points of Use Certificates."> <paragraph num="A."> <text>Definitions.</text> <paragraph num="(1)"> <text>In this regulation, the following terms have the meaning indicated.</text> </paragraph> <paragraph num="(2)"> <text>Terms Defined.</text> <paragraph num="(a)"> <text>“Affiliated Group” has the meaning stated in Internal Revenue Code §1504.</text> </paragraph> <paragraph num="(b)"> <text>“Affiliated Group” includes related parties described under Internal Revenue Code §267(b)(10)—(12).</text> </paragraph> <paragraph num="(c)"> <text>“Authorized buyer” means a buyer authorized by the Comptroller to issue a multiple points of use certificate in accordance with this regulation.</text> </paragraph> <paragraph num="(d)"> <text>“Buyer” has the meaning stated in Tax-General Article, §11-101(b), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(e)"> <text>“Data or information technology service” has the meaning stated in Regulation .48 of this chapter.</text> </paragraph> <paragraph num="(f)"> <text>“Multiple points of use certificate” means a certificate presented by an authorized buyer to a vendor that indicates, in accordance with Tax-General Article, §11-403(e), Annotated Code of Maryland, that a digital code, digital product, taxable data or information technology service or software publishing service will be concurrently available for use by the buyer or a related entity both in the State and outside of the State.</text> </paragraph> <paragraph num="(g)"> <text>“Related entity” means a member of an affiliated group or a related pass-through entity of which the buyer is also a member.</text> </paragraph> <paragraph num="(h)"> <text>“Related Pass-Through Entities” means one or more pass-through entities connected through ownership with a common parent pass-through entity but only if the common parent:</text> <paragraph num="(i)"> <text>Possesses at least 80 percent of the total voting power of the total value of the pass-through entity; and</text> </paragraph> <paragraph num="(ii)"> <text>Has a value equal to at least 80 percent of the total value of the pass-through entity.</text> </paragraph> </paragraph> <paragraph num="(i)"> <text>“Software publishing service” has the meaning stated in Regulation .48 of this chapter.</text> </paragraph> <paragraph num="(j)"> <text>“Vendor” has the meaning stated in Tax-General Article, §11-101(o), Annotated Code of Maryland.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Multiple Points of Use Certificate Requirements.</text> <paragraph num="(1)"> <text>To issue a multiple points of use certificate, a buyer must:</text> <paragraph num="(a)"> <text>Be registered with the Comptroller for a sales and use tax account before requesting authorization to issue a multiple points of use certificate;</text> </paragraph> <paragraph num="(b)"> <text>Submit to the Comptroller a separate request for authorization to issue a multiple points of use certificate for each transaction in which the buyer intends to use a multiple points of use certificate.</text> </paragraph> <paragraph num="(c)"> <text>Be authorized by the Comptroller to issue a multiple points of use certificate; and</text> </paragraph> <paragraph num="(d)"> <text>Deliver a multiple points of use certificate, in the form and manner required by the Comptroller, to the vendor at or before the time of purchase.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The Comptroller may deny a buyer’s request for authorization to issue a multiple points of use certificate for reasonable cause, including but not limited to the buyer’s fraud, gross negligence, misuse of a multiple points of use certificate, or delinquency in the payment of undisputed sales and use tax.</text> </paragraph> </paragraph> <paragraph num="C."> <text>A buyer who is authorized by the Comptroller may issue a multiple points of use certificate for the purchase of a digital code, digital product, data or information technology service, or software publishing service if, at the time of the purchase, the buyer knows the digital code, digital product, data or information technology service, or software publishing service will be:</text> <paragraph num="(1)"> <text>Concurrently available for use by the buyer both in the State and outside of the State; or</text> </paragraph> <paragraph num="(2)"> <text>Resold in its original form to at least one related entity for use both inside and outside of the State.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Buyer’s Obligation to Pay or Remit Sales and Use Tax.</text> <paragraph num="(1)"> <text>Except as provided in §D(2) of this regulation, a buyer who issues a multiple points of use certificate is required to pay or remit the applicable tax to the Comptroller.</text> </paragraph> <paragraph num="(2)"> <text>A buyer who issues a multiple points of use certificate with an apportionment determined based on a subsequent resale to a related entity shall:</text> <paragraph num="(a)"> <text>Assume or absorb the tax due from the related entity; or</text> </paragraph> <paragraph num="(b)"> <text>Remit the tax due from the related entity if the tax is not paid by the related entity.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>A buyer who does not issue a multiple points of use certificate at or before the time of sale, or whose request for authorization to issue a multiple points of use certificate is denied by the Comptroller under §B(2) of this regulation may request a refund for sales and use tax paid on the portion of the digital product, digital code, data or information technology service, or software publishing service used outside of Maryland.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Vendor’s Obligation to Collect, Pay, or Remit Sales and Use Tax.</text> <paragraph num="(1)"> <text>Except as provided in §E(3) of this regulation, a vendor is relieved of the duty to collect, pay, or remit the sales and use tax on the sale of a digital code, digital product, data or information technology service, or software publishing service if the buyer provides the vendor with a completed, authorized multiple points of use certificate.</text> </paragraph> <paragraph num="(2)"> <text>A vendor shall obtain a multiple points of use certificate from the buyer before or at the time the sale is consummated to support each transaction for which a multiple points of use certificate applies.</text> </paragraph> <paragraph num="(3)"> <text>A vendor may not accept a multiple points of use certificate at any time, including within the period described in §F, or rely on its acceptance of a multiple points of use certificate to relieve the vendor of the obligation to collect and the sales and remit the sales use tax if the vendor:</text> <paragraph num="(a)"> <text>Failed to verify at or before the time of the sale, using the methods provided by the Comptroller, that the buyer was authorized by the Comptroller to issue the certificate;</text> </paragraph> <paragraph num="(b)"> <text>Knows or should have known that the sale is not for a digital code, digital product, data or information technology service, or software publishing service; or</text> </paragraph> <paragraph num="(c)"> <text>Knows or should have known that the sale is not a sale for use in both the State and outside the State.</text> </paragraph> </paragraph> </paragraph> <paragraph num="F."> <text>When the Comptroller notifies a vendor of an intent to assess the tax on a transaction for which the vendor does not possess a multiple points of use certificate, the vendor shall have 60 days from the mailing of the notice to obtain the certificate. If the vendor fails to obtain a proper multiple points of use certificate within the 60-day period, the Comptroller's assessment is final.</text> </paragraph> <paragraph num="G."> <text>Apportionment.</text> <paragraph num="(1)"> <text>The apportionment must accurately reflect the primary use location in the State.</text> </paragraph> <paragraph num="(2)"> <text>A buyer may use any reasonable method of apportionment that is supported by the buyer’s records as they exist at the time of the sale.</text> </paragraph> <paragraph num="(3)"> <text>A buyer’s method of apportionment must be:</text> <paragraph num="(a)"> <text>Consistent; and</text> </paragraph> <paragraph num="(b)"> <text>Uniform.</text> </paragraph> </paragraph> </paragraph> <paragraph num="H."> <text>The multiple points of use certificate must state:</text> <paragraph num="(1)"> <text>The name of the buyer;</text> </paragraph> <paragraph num="(2)"> <text>The tax address of the buyer;</text> </paragraph> <paragraph num="(3)"> <text>The Maryland combined registration number of the buyer;</text> </paragraph> <paragraph num="(4)"> <text>The name of the vendor;</text> </paragraph> <paragraph num="(5)"> <text>The address of the vendor;</text> </paragraph> <paragraph num="(6)"> <text>The estimated date of the sale or, for a subscription, the renewal term;</text> </paragraph> <paragraph num="(7)"> <text>A general description of the purchase including, for each item in the sale:</text> <paragraph num="(a)"> <text>Information sufficient to identify the item as a digital product, digital code, data or information technology service, or software publishing service;</text> </paragraph> <paragraph num="(b)"> <text>The estimated taxable price; and</text> </paragraph> <paragraph num="(c)"> <text>The percentage of the use allocated to Maryland.</text> </paragraph> </paragraph> <paragraph num="(8)"> <text>If the digital code, digital product, data or information technology service, or software publishing service is to be resold in its original form to one or more related entities within the State who are expected to remit the use tax to the Comptroller, the certificate must also state for each entity:</text> <paragraph num="(a)"> <text>The name of the related entity;</text> </paragraph> <paragraph num="(b)"> <text>The tax address of the related entity;</text> </paragraph> <paragraph num="(c)"> <text>The Maryland combined registration number of the related entity; and</text> </paragraph> <paragraph num="(d)"> <text>The estimated taxable price of the digital code, digital product, data or information technology service, or software publishing service resold in its original form to the related entity.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".50" heading="Applicable Rate for Data or Information Technology Services and Software Publishing Services."> <paragraph num="A."> <text>Definitions.</text> <paragraph num="(1)"> <text>In this regulation, the following terms have the meaning indicated.</text> </paragraph> <paragraph num="(2)"> <text>Terms Defined.</text> <paragraph num="(a)"> <text>“Data or information technology service” has the meaning stated in Regulation .48 of this chapter.</text> </paragraph> <paragraph num="(b)"> <text>“Software publishing service” has the meaning stated in Regulation .48 of this chapter.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Notwithstanding Tax-General Article, §11-104(l)(1), Annotated Code of Maryland regarding the sales and use tax rate for data or information technology services or software publishing services, if a different rate could be applied to a sale or use of tangible personal property, a digital code, a digital product, or a taxable service, the higher rate shall apply to the sale.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Tax-General Article, §§2-102, 2-103, 11-102, 11-104, 11-105, 11-206, 11-245, 11-502, and 11-504, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date:</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 effective June 2, 1961</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 repealed effective January 1, 1990 (16:25 Md. R. 2709)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02 effective August 1, 1947; repealed and new Regulation .02 adopted effective February 15, 1982 (9:3 Md. R. 220)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02A and C amended effective January 1, 1989 (15:26 Md. R. 2979)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03 effective February 28, 1959; amended effective August 17, 1977 (4:17 Md. R. 1292); January 1, 1989 (15:26 Md. R. 2979)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04 effective July 27, 1965; repealed effective June 2, 1986 (13:11 Md. R. 1272)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04 adopted effective June 2, 1986 (13:11 Md. R. 1272)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04A—C, F amended effective January 1, 1989 (15:26 Md. R. 2979)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05 effective April 23, 1965; amended effective January 12, 1979 (6:1 Md. R. 16)</annotation> <annotation type="History" subtype="Administrative History">Regulations .06, .07 effective August 1, 1947; repealed effective February 15, 1982 (9:3 Md. R. 220)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08 repealed effective July 21, 1976 (3:15 Md. R. 785)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09 effective June 17, 1963; amended effective August 25, 1978 (5:17 Md. R. 1325); January 1, 1989 (15:26 Md. R. 2979)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09A and B amended effective August 22, 1980 (7:17 Md. R. 1668); August 30, 1982 (9:17 Md. R. 1704)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09C amended effective January 1, 1990 (16:25 Md. R. 2708)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09F adopted effective August 22, 1980 (7:17 Md. R. 1668)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10 effective June 1, 1961</annotation> <annotation type="History" subtype="Administrative History">Regulation .10 amended effective January 1, 1989 (15:26 Md. R. 2979)</annotation> <annotation type="History" subtype="Administrative History">Regulation .11 effective February 28, 1959; amended effective August 17, 1977 (4:17 Md. R. 1292); January 1, 1989 (15:26 Md. R. 2979)</annotation> <annotation type="History" subtype="Administrative History">Regulation .12 effective December 14, 1959; amended effective August 17, 1977 (4:17 Md. R. 1292); August 24, 1979 (6:17 Md. R. 1391)</annotation> <annotation type="History" subtype="Administrative History">Regulation .12 repealed effective January 1, 1990 (16:25 Md. R. 2709)</annotation> <annotation type="History" subtype="Administrative History">Regulation .13 effective August 19, 1965</annotation> <annotation type="History" subtype="Administrative History">Regulation .13 repealed effective January 1, 1990 (16:25 Md. R. 2709)</annotation> <annotation type="History" subtype="Administrative History">Regulation .14 effective April 14, 1971; repealed effective April 4, 1980 (7:7 Md. R. 706)</annotation> <annotation type="History" subtype="Administrative History">Regulation .14 adopted effective April 4, 1980 (7:7 Md. R. 706)</annotation> <annotation type="History" subtype="Administrative History">Regulation .14 amended effective January 1, 1989 (15:26 Md. R. 2979)</annotation> <annotation type="History" subtype="Administrative History">Regulation .14B amended effective August 22, 1980 (7:17 Md. R. 1668)</annotation> <annotation type="History" subtype="Administrative History">Regulation .14C amended effective August 22, 1980 (7:17 Md. R. 1668); January 1, 1990 (16:25 Md. R. 2708)</annotation> <annotation type="History" subtype="Administrative History">Regulations .15—.16 effective August 1, 1947; repealed effective April 4, 1980 (7:7 Md. R. 706)</annotation> <annotation type="History" subtype="Administrative History">Regulation .15 adopted effective July 13, 1986 (13:14 Md. R. 1631)</annotation> <annotation type="History" subtype="Administrative History">Regulation .15 amended effective January 1, 1989 (15:26 Md. R. 2979)</annotation> <annotation type="History" subtype="Administrative History">Regulation .15 repealed effective January 1, 1990 (16:25 Md. R. 2709)</annotation> <annotation type="History" subtype="Administrative History">Regulation .17 effective August 1, 1947; repealed effective February 15, 1982 (9:3 Md. R. 220)</annotation> <annotation type="History" subtype="Administrative History">Regulation .18 repealed effective July 21, 1976 (3:15 Md. R. 785)</annotation> <annotation type="History" subtype="Administrative History">Regulation .19 effective August 28, 1973; amended effective July 28, 1978 (5:15 Md. R. 1185); August 10, 1979 (6:16 Md. R. 1329); January 1, 1989 (15:26 Md. R. 2979)</annotation> <annotation type="History" subtype="Administrative History">Regulation .20 effective August 28, 1973; repealed effective July 28, 1978 (5:15 Md. R. 1185)</annotation> <annotation type="History" subtype="Administrative History">Regulation .21 effective December 22, 1971; repealed effective April 4, 1980 (7:7 Md. R. 706)</annotation> <annotation type="History" subtype="Administrative History">Regulation .22 repealed effective July 21, 1976 (3:15 Md. R. 785)</annotation> <annotation type="History" subtype="Administrative History">Regulation .23 effective November 12, 1975 (2:26 Md. R. 1559)</annotation> <annotation type="History" subtype="Administrative History">Regulation .24 effective November 10, 1976 (3:23 Md. R. 1301); amended effective August 25, 1978 (5:17 Md. R. 1325); August 10, 1979 (6:16 Md. R. 1329); January 1, 1989 (15:26 Md. R. 2979)</annotation> <annotation type="History" subtype="Administrative History">Regulation .24A, B amended effective September 28, 1981 (8:19 Md. R. 1563)</annotation> <annotation type="History" subtype="Administrative History">Regulation .24E amended effective August 22, 1980 (7:17 Md. R. 1668)</annotation> <annotation type="History" subtype="Administrative History">Regulation .24F adopted effective August 22, 1980 (7:17 Md. R. 1668)</annotation> <annotation type="History" subtype="Administrative History">Regulation .25 repealed effective July 21, 1976 (3:15 Md. R. 785)</annotation> <annotation type="History" subtype="Administrative History">Regulation .26 effective August 1, 1947; repealed effective July 6, 1977 (4:14 Md. R. 1081)</annotation> <annotation type="History" subtype="Administrative History">Regulation .27 effective August 1, 1947; repealed effective July 14, 1978 (5:14 Md. R. 1135)</annotation> <annotation type="History" subtype="Administrative History">Regulation .28 effective August 1, 1947</annotation> <annotation type="History" subtype="Administrative History">Regulation .29 effective May 14, 1973; repealed effective July 28, 1978 (5:15 Md. R. 1185)</annotation> <annotation type="History" subtype="Administrative History">Regulation .30 effective August 28, 1973; amended effective July 28, 1978 (5:15 Md. R. 1185); January 1, 1989 (15:26 Md. R. 2979)</annotation> <annotation type="History" subtype="Administrative History">Regulations .31—.34 effective August 1, 1947; repealed effective July 28, 1978 (5:15 Md. R. 1185)</annotation> <annotation type="History" subtype="Administrative History">Regulation .35 effective August 1, 1947</annotation> <annotation type="History" subtype="Administrative History">Regulation .35 repealed effective January 1, 1989 (15:26 Md. R. 2980)</annotation> <annotation type="History" subtype="Administrative History">Regulation .36 effective August 1, 1947; repealed effective July 28, 1978 (5:15 Md. R. 1185)</annotation> <annotation type="History" subtype="Administrative History">Regulation .37 effective December 24, 1954; repealed February 15, 1982 (9:3 Md. R. 220)</annotation> <annotation type="History" subtype="Administrative History">Regulation .38 effective August 1, 1947; repealed February 15, 1982 (9:3 Md. R. 220)</annotation> <annotation type="History" subtype="Administrative History">Regulation .39 effective July 6, 1970</annotation> <annotation type="History" subtype="Administrative History">Regulation .39 amended effective January 1, 1989 (15:26 Md. R. 2979)</annotation> <annotation type="History" subtype="Administrative History">Regulation .39-1 effective September 29, 1976 (3:20 Md. R. 1143); amended effective August 17, 1977 (4:17 Md. R. 1292); October 5, 1987 (14:20 Md. R. 2140)</annotation> <annotation type="History" subtype="Administrative History">Regulation .40 effective June 17, 1963</annotation> <annotation type="History" subtype="Administrative History">Regulation .41 effective August 1, 1947</annotation> <annotation type="History" subtype="Administrative History">Regulation .41 repealed effective January 1, 1989 (15:26 Md. R. 2979)</annotation> <annotation type="History" subtype="Administrative History">Regulation .42 effective June 17, 1963</annotation> <annotation type="History" subtype="Administrative History">Regulation .43 effective August 1, 1947</annotation> <annotation type="History" subtype="Administrative History">Regulation .44 effective June 11, 1969</annotation> <annotation type="History" subtype="Administrative History">Regulations .45, .46 effective June 2, 1961; amended as an emergency provision effective June 1, 1977 (4:11 Md. R. 864); adopted permanently effective August 31, 1977 (4:18 Md. R. 1392)</annotation> <annotation type="History" subtype="Administrative History">Regulation .45 repealed effective February 15, 1982 (9:3 Md. R. 220)</annotation> <annotation type="History" subtype="Administrative History">Regulation .46 repealed effective August 22, 1980 (7:17 Md. R. 1668)</annotation> <annotation type="History" subtype="Administrative History">Regulation .47 effective August 1, 1947; repealed effective July 6, 1977 (4:14 Md. R. 1081)</annotation> <annotation type="History" subtype="Administrative History">Regulation .48 effective August 28, 1973; amended effective August 24, 1979 (6:17 Md. R. 1391); repealed effective February 15, 1982 (9:3 Md. R. 220)</annotation> <annotation type="History" subtype="Administrative History">Regulation .49 effective May 12, 1955</annotation> <annotation type="History" subtype="Administrative History">Regulation .49 amended effective January 1, 1989 (15:26 Md. R. 2979)</annotation> <annotation type="History" subtype="Administrative History">Regulations .50—.52 effective August 1, 1947; repealed effective February 15, 1982 (9:3 Md. R. 220)</annotation> <annotation type="History" subtype="Administrative History">Regulation .53 effective July 29, 1968; amended effective May 25, 1977 (4:11 Md. R. 866); January 1, 1989 (15:26 Md. R. 2979)</annotation> <annotation type="History" subtype="Administrative History">Regulation .53C amended effective April 4, 1980 (7:7 Md. R. 706)</annotation> <annotation type="History" subtype="Administrative History">Regulation .53D, E amended effective September 28, 1981 (8:19 Md. R. 1563)</annotation> <annotation type="History" subtype="Administrative History">Regulation .53-1 adopted as an emergency provision effective June 7, 1977 (4:13 Md. R. 1023); adopted permanently effective August 31, 1977 (4:18 Md. R. 1392)</annotation> <annotation type="History" subtype="Administrative History">Regulation .53-1 repealed effective October 5, 1987 (14:20 Md. R. 2140)</annotation> <annotation type="History" subtype="Administrative History">Regulation .54 effective June 5, 1958; repealed effective July 14, 1978 (5:14 Md. R. 1135)</annotation> <annotation type="History" subtype="Administrative History">Regulation .55 effective August 1, 1947; repealed effective February 15, 1982 (9:3 Md. R. 220)</annotation> <annotation type="History" subtype="Administrative History">Regulation .56 effective May 27, 1955</annotation> <annotation type="History" subtype="Administrative History">Regulation .56 amended effective January 1, 1989 (15:26 Md. R. 2979)</annotation> <annotation type="History" subtype="Administrative History">Regulation .57 effective December 4, 1973; amended effective June 27, 1980 (7:13 Md. R. 1267); January 1, 1989 (15:26 Md. R. 2979)</annotation> <annotation type="History" subtype="Administrative History">Regulations .58—.58-2 effective May 5, 1955</annotation> <annotation type="History" subtype="Administrative History">Regulation .59 effective June 17, 1963; amended effective November 17, 1978 (5:23 Md. R. 1739); September 28, 1981 (8:19 Md. R. 1563); August 24, 1987 (14:17 Md. R. 1870); January 1, 1989 (15:26 Md. R. 2979)</annotation> <annotation type="History" subtype="Administrative History">Regulation .59A amended effective January 1, 1990 (16:25 Md. R. 2708)</annotation> <annotation type="History" subtype="Administrative History">Regulation .59-1 effective June 17, 1963; repealed effective September 28, 1981 (8:19 Md. R. 1563)</annotation> <annotation type="History" subtype="Administrative History">Regulations .60, .61 effective August 1, 1947</annotation> <annotation type="History" subtype="Administrative History">Regulation .61 amended effective January 1, 1989 (15:26 Md. R. 2979)</annotation> <annotation type="History" subtype="Administrative History">Regulation .62 effective November 12, 1975 (2:26 Md. R. 1559)</annotation> <annotation type="History" subtype="Administrative History">Regulation .63 effective October 3, 1968; amended effective August 24, 1979 (6:17 Md. R. 1391)</annotation> <annotation type="History" subtype="Administrative History">Regulation .64 effective December 22, 1947; amended as an emergency provision effective July 1, 1977 (4:13 Md. R. 1023); adopted permanently effective August 31, 1977 (4:18 Md. R. 1392)</annotation> <annotation type="History" subtype="Administrative History">Regulation .64B amended effective August 22, 1980 (7:17 Md. R. 1668)</annotation> <annotation type="History" subtype="Administrative History">Regulation .64-1 effective December 14, 1959; amended as an emergency provision effective July 1, 1977 (4:13 Md. R. 1023); emergency status extended at 4:23 Md. R. 1727; adopted permanently effective December 30, 1977 (4:27 Md. R. 2102)</annotation> <annotation type="History" subtype="Administrative History">Regulation .65 effective July 6, 1970; repealed effective April 4, 1980 (7:7 Md. R. 706)</annotation> <annotation type="History" subtype="Administrative History">Regulation .66 effective June 11, 1969</annotation> <annotation type="History" subtype="Administrative History">Regulations .67—.69 effective August 1, 1947</annotation> <annotation type="History" subtype="Administrative History">Regulation .67 repealed effective January 1, 1989 (15:26 Md. R. 2979)</annotation> <annotation type="History" subtype="Administrative History">Regulation .68 repealed effective February 15, 1982 (9:3 Md. R. 220)</annotation> <annotation type="History" subtype="Administrative History">Regulation .69 repealed effective January 1, 1989 (15:26 Md. R. 2979)</annotation> <annotation type="History" subtype="Administrative History">Regulations .70, .70-1 effective July 29, 1968; repealed effective May 25, 1977 (4:11 Md. R. 866)</annotation> <annotation type="History" subtype="Administrative History">Regulation .70-2 effective June 19, 1969; repealed effective May 25, 1977 (4:11 Md. R. 866)</annotation> <annotation type="History" subtype="Administrative History">Regulation .71 effective August 1, 1947</annotation> <annotation type="History" subtype="Administrative History">Regulation .71 repealed effective January 1, 1989 (15:26 Md. R. 2979)</annotation> <annotation type="History" subtype="Administrative History">Regulation .72 effective February 21, 1956</annotation> <annotation type="History" subtype="Administrative History">Regulation .73 effective June 11, 1969; amended effective August 10, 1979 (6:16 Md. R. 1329); January 1, 1989 (15:26 Md. R. 2979)</annotation> <annotation type="History" subtype="Administrative History">Regulation .74 effective June 11, 1969; amended effective August 17, 1977 (4:17 Md. R. 1292); January 1, 1989 (15:26 Md. R. 2979)</annotation> <annotation type="History" subtype="Administrative History">Regulation .75 effective December 22, 1947; repealed effective July 6, 1977 (4:11 Md. R. 1081)</annotation> <annotation type="History" subtype="Administrative History">Regulation .76 effective September 20, 1958</annotation> <annotation type="History" subtype="Administrative History">Regulation .76 repealed effective January 1, 1989 (15:26 Md. R. 2979)</annotation> <annotation type="History" subtype="Administrative History">Regulations .77, .78 effective May 7, 1948; repealed effective April 4, 1980 (7:7 Md. R. 706)</annotation> <annotation type="History" subtype="Administrative History">Regulation .79 effective July 22, 1953</annotation> <annotation type="History" subtype="Administrative History">Regulation .80 effective September 5, 1972; amended effective December 15, 1978 (5:25 Md. R. 1852)</annotation> <annotation type="History" subtype="Administrative History">Regulation .80F adopted effective December 26, 1980 (7:26 Md. R. 2415)</annotation> <annotation type="History" subtype="Administrative History">Regulation .80 repealed effective January 1, 1990 (16:25 Md. R. 2709)</annotation> <annotation type="History" subtype="Administrative History">Regulation .81 effective August 28, 1973</annotation> <annotation type="History" subtype="Administrative History">Regulation .82 effective February 6, 1970</annotation> <annotation type="History" subtype="Administrative History">Regulation .82 amended effective January 1, 1989 (15:26 Md. R. 2979)</annotation> <annotation type="History" subtype="Administrative History">Regulation .83 effective August 28, 1973; amended effective July 20, 1977 (4:15 Md. R. 1145); August 10, 1979 (6:16 Md. R. 1329); August 30, 1982 (9:17 Md. R. 1704)</annotation> <annotation type="History" subtype="Administrative History">Regulation .84 effective August 28, 1973</annotation> <annotation type="History" subtype="Administrative History">Regulation .85 effective August 28, 1973; repealed effective July 28, 1978 (5:15 Md. R. 1185)</annotation> <annotation type="History" subtype="Administrative History">Regulations .86 and .87 effective November 17, 1978 (5:23 Md. R. 1739)</annotation> <annotation type="History" subtype="Administrative History">Regulations .86 and .87 repealed effective January 1, 1990 (16:25 Md. R. 2709)</annotation> <annotation type="History" subtype="Administrative History">Annotations:</annotation> <annotation type="History" subtype="Administrative History">COMAR 03.06.01.02 and 03.06.01.19A(1) cited in Attorney General Opinion No. 83-026 (June 22, 1983), dealing with the applicability of sales tax to certain veterinary products.</annotation> <annotation type="History" subtype="Administrative History">COMAR 03.06.01.19A(2) applied in Retail Sales Tax Division Declaratory Ruling No. 3 (March 31, 1980)</annotation> <annotation type="History" subtype="Administrative History">COMAR 03.06.01.53 applied in Retail Sales Tax Division Declaratory Ruling No. 2 (November 9, 1979)</annotation> <annotation type="History" subtype="Administrative History">COMAR 03.06.01.53D, E applied in Retail Sales Tax Division Declaratory Ruling No. 5 (March 15, 1982)</annotation> <annotation type="History" subtype="Administrative History">COMAR 03.06.01.67 applied in Retail Sales Tax Division Declaratory Ruling No. 1 (August 27, 1979)</annotation> <annotation type="History" subtype="Administrative History">COMAR 03.06.01.80 cited in Comptroller of the Treasury v. Brand Iron, Inc., 65 Md. App. 207 (1985)</annotation> <annotation type="History" subtype="Administrative History">COMAR 03.06.01.81 cited in Attorney General Opinion No. 86-049 (September 16, 1986)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective August 20, 1990 (17:16 Md. R. 1989)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 amended effective January 14, 1999 (26:1 Md. R. 22); July 11, 2022 (49:14 Md. R. 704)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01B, C amended effective March 2, 2026 (53:4 Md. R. 183)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03 amended effective July 11, 2022 (49:14 Md. R. 704); March 2, 2026 (53:4 Md. R. 183)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03C amended effective January 14, 1999 (26:1 Md. R. 22)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04 amended effective December 19, 1994 (21:25 Md. R. 2104); January 14, 1999 (26:1 Md. R. 22); July 11, 2022 (49:14 Md. R. 704)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05 amended effective December 9, 1991 (18:24 Md. R. 2641); December 19, 1994 (21:25 Md. R. 2104); January 14, 1999 (26:1 Md. R. 22); December 25, 2000 (27:25 Md. R. 2279)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05A, B amended effective March 2, 2026 (53:4 Md. R. 183)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07 amended effective July 11, 2022 (49:14 Md. R. 704); March 2, 2026 (53:4 Md. R. 183)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08 amended effective December 19, 1994 (21:25 Md. R. 2104); March 2, 2026 (53:4 Md. R. 183)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08A amended effective January 15, 2007 (34:1 Md. R. 31)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08B, D amended effective August 19, 2013 (40:16 Md. R. 1340)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08D amended effective May 1, 2000 (27:8 Md. R. 796)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09 amended effective January 14, 1999 (26:1 Md. R. 22); April 2, 2001 (28:6 Md. R. 620)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09B amended effective August 19, 2013 (40:16 Md. R. 1340); July 11, 2022 (49:14 Md. R. 704)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10 amended effective October 2, 2000 (27:19 Md. R. 1725); March 31, 2003 (30:6 Md. R. 418)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10A, D amended effective December 19, 1994 (21:25 Md. R. 2104)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10D amended effective August 19, 2013 (40:16 Md. R. 1340)</annotation> <annotation type="History" subtype="Administrative History">Regulation .11 amended effective July 11, 2022 (49:14 Md. R. 704)</annotation> <annotation type="History" subtype="Administrative History">Regulation .11B amended effective January 15, 2007 (34:1 Md. R. 31)</annotation> <annotation type="History" subtype="Administrative History">Regulation .11C amended effective March 2, 2026 (53:4 Md. R. 183)</annotation> <annotation type="History" subtype="Administrative History">Regulation .12 amended effective July 11, 2022 (49:14 Md. R. 704)</annotation> <annotation type="History" subtype="Administrative History">Regulation .13B, C amended effective January 14, 1999 (26:1 Md. R. 22); July 11, 2022 (49:14 Md. R. 704)</annotation> <annotation type="History" subtype="Administrative History">Regulation .14 amended effective March 31, 2003 (30:6 Md. R. 418); July 11, 2022 (49:14 Md. R. 704)</annotation> <annotation type="History" subtype="Administrative History">Regulation .14A amended and A-1 adopted effective December 19, 1994 (21:25 Md. R. 2104)</annotation> <annotation type="History" subtype="Administrative History">Regulation .14E amended effective May 28, 2001 (28:10 Md. R. 946)</annotation> <annotation type="History" subtype="Administrative History">Regulation .15C amended effective December 19, 1994 (21:25 Md. R. 2104)</annotation> <annotation type="History" subtype="Administrative History">Regulation .16A amended effective July 11, 2022 (49:14 Md. R. 704)</annotation> <annotation type="History" subtype="Administrative History">Regulation .16B amended effective January 15, 2007 (34:1 Md. R. 31)</annotation> <annotation type="History" subtype="Administrative History">Regulation .18 amended effective July 11, 2022 (49:14 Md. R. 704)</annotation> <annotation type="History" subtype="Administrative History">Regulation .19C amended effective January 14, 1999 (26:1 Md. R. 22)</annotation> <annotation type="History" subtype="Administrative History">Regulation .21 amended effective July 11, 2022 (49:14 Md. R. 704); March 2, 2026 (53:4 Md. R. 183)</annotation> <annotation type="History" subtype="Administrative History">Regulation .22 amended effective August 19, 2013 (40:16 Md. R. 1340)</annotation> <annotation type="History" subtype="Administrative History">Regulation .22B, C amended effective July 11, 2022 (49:14 Md. R. 704)</annotation> <annotation type="History" subtype="Administrative History">Regulation .22C amended effective August 11, 1997 (24:16 Md. R. 1159)</annotation> <annotation type="History" subtype="Administrative History">Regulation .23 amended effective March 5, 2001 (28:4 Md. R. 417)</annotation> <annotation type="History" subtype="Administrative History">Regulation .24 amended effective October 5, 1998 (25:20 Md. R. 1527)</annotation> <annotation type="History" subtype="Administrative History">Regulation .25B amended effective October 11, 1993 (20:20 Md. R. 1567)</annotation> <annotation type="History" subtype="Administrative History">Regulation .25E adopted effective March 2, 2026 (53:4 Md. R. 183)</annotation> <annotation type="History" subtype="Administrative History">Regulation .26A, D amended effective July 11, 2022 (49:14 Md. R. 704)</annotation> <annotation type="History" subtype="Administrative History">Regulation .26C repealed effective December 19, 1994 (21:25 Md. R. 2104)</annotation> <annotation type="History" subtype="Administrative History">Regulation .28 amended effective August 19, 2013 (40:16 Md. R. 1340); March 2, 2026 (53:4 Md. R. 183)</annotation> <annotation type="History" subtype="Administrative History">Regulation .28A amended effective July 11, 2022 (49:14 Md. R. 704)</annotation> <annotation type="History" subtype="Administrative History">Regulation .28D amended effective January 14, 1999 (26:1 Md. R. 22)</annotation> <annotation type="History" subtype="Administrative History">Regulation .28E, G amended effective July 11, 2022 (49:14 Md. R. 704)</annotation> <annotation type="History" subtype="Administrative History">Regulation .29 amended effective January 15, 2007 (34:1 Md. R. 31)</annotation> <annotation type="History" subtype="Administrative History">Regulation .30A amended effective July 11, 2022 (49:14 Md. R. 704)</annotation> <annotation type="History" subtype="Administrative History">Regulation .31A amended effective May 22, 2006 (33:10 Md. R. 881); July 11, 2022 (49:14 Md. R. 704)</annotation> <annotation type="History" subtype="Administrative History">Regulation .31A amended and B repealed effective December 19, 1994 (21:25 Md. R. 2104)</annotation> <annotation type="History" subtype="Administrative History">Regulation .31A, C amended effective June 26, 2003 (30:12 Md. R. 787)</annotation> <annotation type="History" subtype="Administrative History">Regulation .32 amended effective October 5, 1998 (25:20 Md. R. 1527)</annotation> <annotation type="History" subtype="Administrative History">Regulation .32A amended effective December 19, 1994 (21:25 Md. R. 2104; August 11, 1997 (24:16 Md. R. 1559)</annotation> <annotation type="History" subtype="Administrative History">Regulation .32B amended effective December 19, 1994 (21:25 Md. R. 2104); August 11, 1997 (24:16 Md. R. 1159)</annotation> <annotation type="History" subtype="Administrative History">Regulation .32C amended effective August 11, 1997 (24:16 Md. R. 1159); May 1, 2000 (27:8 Md. R. 796)</annotation> <annotation type="History" subtype="Administrative History">Regulation .32 repealed effective January 15, 2007 (34:1 Md. R. 31)</annotation> <annotation type="History" subtype="Administrative History">Regulation .32-1 adopted effective October 5, 1998 (25:20 Md. R. 1527)</annotation> <annotation type="History" subtype="Administrative History">Regulation .32-1 repealed effective January 15, 2007 (34:1 Md. R. 31)</annotation> <annotation type="History" subtype="Administrative History">Regulation .32-2 adopted effective October 1, 2001 (28:19 Md. R. 1683)</annotation> <annotation type="History" subtype="Administrative History">Regulation .32-2C amended effective July 11, 2022 (49:14 Md. R. 704)</annotation> <annotation type="History" subtype="Administrative History">Regulation .33 adopted effective August 25, 1997 (24:17 Md. R. 1214)</annotation> <annotation type="History" subtype="Administrative History">Regulation .33B amended as an emergency provision effective October 1, 2018 (45:20 Md. R. 916); amended permanently effective February 11, 2019 (46:3 Md. R. 106)</annotation> <annotation type="History" subtype="Administrative History">Regulation .33B amended effective July 11, 2022 (49:14 Md. R. 704)</annotation> <annotation type="History" subtype="Administrative History">Regulation .33C adopted as an emergency provision effective October 1, 2018 (45:20 Md. R. 916); adopted permanently effective February 11, 2019 (46:3 Md. R. 106)</annotation> <annotation type="History" subtype="Administrative History">Regulation .34 adopted effective May 1, 2000 (27:8 Md. R. 796)</annotation> <annotation type="History" subtype="Administrative History">Regulation .34A amended effective July 11, 2022 (49:14 Md. R. 704)</annotation> <annotation type="History" subtype="Administrative History">Regulation .35 adopted effective October 30, 2000 (27:21 Md. R. 1974)</annotation> <annotation type="History" subtype="Administrative History">Regulation .35B, C amended effective July 11, 2022 (49:14 Md. R. 704)</annotation> <annotation type="History" subtype="Administrative History">Regulation .36 adopted effective March 5, 2001 (28:4 Md. R. 417)</annotation> <annotation type="History" subtype="Administrative History">Regulation .37 adopted effective May 28, 2001 (28:10 Md. R. 946)</annotation> <annotation type="History" subtype="Administrative History">Regulation .37 amended as an emergency provision effective May 15, 2006 (33:15 Md. R. 1271); emergency status expired September 30, 2006</annotation> <annotation type="History" subtype="Administrative History">Regulation .37 amended as an emergency provision effective July 30, 2010 (37:18 Md. R. 1211); amended permanently effective September 6, 2010 (37:18 Md. R. 1213)</annotation> <annotation type="History" subtype="Administrative History">Regulation .38 adopted effective September 3, 2001 (28:17 Md. R. 1554)</annotation> <annotation type="History" subtype="Administrative History">Regulation .38A, B amended effective July 11, 2022 (49:14 Md. R. 704)</annotation> <annotation type="History" subtype="Administrative History">Regulation .39 adopted effective June 24, 2002 (29:12 Md. R. 926)</annotation> <annotation type="History" subtype="Administrative History">Regulation .39 amended effective June 15, 2009 (36:12 Md. R. 836)</annotation> <annotation type="History" subtype="Administrative History">Regulation .39B amended effective July 11, 2022 (49:14 Md. R. 704)</annotation> <annotation type="History" subtype="Administrative History">Regulation .40 adopted effective November 11, 2002 (29:22 Md. R. 1720)</annotation> <annotation type="History" subtype="Administrative History">Regulation .41 adopted effective March 31, 2003 (30:6 Md. R. 418)</annotation> <annotation type="History" subtype="Administrative History">Regulation .41 amended effective July 11, 2022 (49:14 Md. R. 704)</annotation> <annotation type="History" subtype="Administrative History">Regulation .41D, E repealed effective July 11, 2022 (49:14 Md. R. 704)</annotation> <annotation type="History" subtype="Administrative History">Regulation .42 adopted effective June 26, 2003 (30:12 Md. R. 787)</annotation> <annotation type="History" subtype="Administrative History">Regulation .43 adopted effective August 19, 2013 (40:16 Md. R. 1341)</annotation> <annotation type="History" subtype="Administrative History">Regulation .44 adopted as an emergency provision effective January 20, 2011 (38:4 Md. R. 261); emergency status extended to December 6, 2011 (38:14 Md. R. 787); emergency status expired December 6, 2011</annotation> <annotation type="History" subtype="Administrative History">Regulation .44 adopted effective February 16, 2015 (42:3 Md. R. 314)</annotation> <annotation type="History" subtype="Administrative History">Regulation .45 adopted effective August 19, 2013 (40:16 Md. R. 1341)</annotation> <annotation type="History" subtype="Administrative History">Regulation .46 adopted effective August 18, 2014 (41:16 Md. R. 944)</annotation> <annotation type="History" subtype="Administrative History">Regulation .46C amended effective July 11, 2022 (49:14 Md. R. 704)</annotation> <annotation type="History" subtype="Administrative History">Regulation .47 adopted effective August 21, 2023 (50:16 Md. R. 725)</annotation> <annotation type="History" subtype="Administrative History">Regulation .47 amended effective March 2, 2026 (53:4 Md. R. 183)</annotation> <annotation type="History" subtype="Administrative History">Regulation .48 adopted effective March 2, 2026 (53:4 Md. R. 183)</annotation> <annotation type="History" subtype="Administrative History">Regulation .49 adopted effective March 2, 2026 (53:4 Md. R. 183)</annotation> <annotation type="History" subtype="Administrative History">Regulation .50 adopted effective March 2, 2026 (53:4 Md. R. 183)</annotation> </annotations> </chapter> <chapter num="02" heading="General Regulations—Admissions and Amusement Tax"> <regulation prefix="Regulation" num=".01" heading="Club Membership."> <paragraph num="A."> <text>The gross receipts derived from an amount paid to become regularly entitled to the privileges of a club or other organization, as a member or otherwise, do not constitute an admissions and amusement charge subject to the tax, even though one of the privileges is the admission to a clubhouse, club grounds, hall, restaurant, hotel, or other similar place.</text> </paragraph> <paragraph num="B."> <text>If the sole privilege of a charge described as “dues” is a right of admission to certain performances or to a particular place on a definite number of occasions, the gross receipts derived from the charges for these privileges are admissions and amusement charges subject to the tax.</text> </paragraph> <paragraph num="C."> <text>The gross receipts derived from fees charged club members or nonmembers for the use of a golf course, tennis court, swimming pool, or something similar are subject to the tax if the charges are directly related to the usage of the facility or equipment.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Rental Facilities."> <paragraph num="A."> <text>Except as provided in §B, below, the receipts derived from the sales of the sole right to use any place or the right to dispose of all the admissions to any place, are not subject to the tax. The person acquiring the right to use the facility is responsible for the payment of the tax on the gross receipts derived from the sale of any taxable admissions.</text> </paragraph> <paragraph num="B."> <text>The receipts derived from the use or rental of sporting or recreational facilities, such as a boat or tennis barn, in their entirety are subject to the tax unless the person leasing the facilities will also derive receipts by charging for the use of the same facilities. The lessor of the facilities is not liable for the tax on the lessor's receipts if the lessor can document that the lessee will charge for the use of the facilities and the lessor has notified the Comptroller of the proposed use in the form specified in COMAR 03.06.03.01.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Employees."> <paragraph num="A."> <text>A person deriving gross receipts from admissions and amusement charges for admission is not liable for the tax on admissions for bona fide employees of the person if the employees receive free admission. If, however, a bona fide employee is admitted at a reduced rate, the person is responsible for the tax imposed on the gross receipts derived from the admission and the additional tax imposed on reduced charge admissions.</text> </paragraph> <paragraph num="B."> <text>A “bona fide employee” is a person whose admission to the place is required for the performance of some duty to, or work for, the person deriving the gross receipts.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="State Authorized Exemptions."> <paragraph num="A."> <text>Charitable, Educational, or Religious Exemptions.</text> <paragraph num="(1)"> <text>The tax may not be imposed on gross receipts derived from any charge for admission or for merchandise, refreshments, or a service, if the gross receipts are used exclusively for a:</text> <paragraph num="(a)"> <text>Charitable, educational, or religious purpose;</text> </paragraph> <paragraph num="(b)"> <text>Volunteer fire company or nonprofit rescue squad; or</text> </paragraph> <paragraph num="(c)"> <text>Fraternal, service, or veterans organization chartered by a grant of Congress.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>In each instance, in determining whether the “exclusively” requirement is met, ordinary and reasonable expenses of operation, including the costs of merchandise or refreshments provided or sold, may be disregarded. The “exclusively” requirement is not met if any:</text> <paragraph num="(a)"> <text>Promoter, concessionaire operator, professional exhibitor, or entertainer is entitled to share in the gross receipts on any form of a percentage basis, including a minimum fee plus a percentage, whether the additional percentage fee is earned.</text> </paragraph> <paragraph num="(b)"> <text>Promoter, concessionaire operator, professional exhibitor, or entertainer is to be compensated on any other basis resulting in that individual's receiving substantially all of the gross receipts in excess of bona fide expenses paid to unrelated third parties. If a promoter, concessionaire operator, professional exhibitor, or entertainer is compensated from the gross receipts of an affair, the fact that the amount of money devoted to charitable, educational, or religious purposes is less than the applicable tax shall create a presumption that the “exclusively” requirement has not been met.</text> </paragraph> <paragraph num="(c)"> <text>Business promoter receives a substantial business benefit from an affair in the form of advertising, good will, or public acceptance.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>If not disqualified under §A(2)(a)—(c), above, and in the absence of other evidence to the contrary, the Comptroller shall presume that the gross receipts of any organization possessing an effective determination letter from the Internal Revenue Service as to qualification under the Internal Revenue Code, §§501(c)(3), (8), (10), or (19), qualify for exemption.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The tax may not be imposed:</text> <paragraph num="(1)"> <text>On gross receipts derived from any charge for admission or for merchandise, refreshments, or a service, if the gross receipts are used exclusively for the improvement, maintenance, or operation of an agricultural fair, if the net earnings do not inure to the benefit of any stockholder or member of the association conducting the fair.</text> </paragraph> <paragraph num="(2)"> <text>On gross receipts derived from any charge for admission to a concert or theatrical event presented or offered by a not-for-profit group that is organized and operated:</text> <paragraph num="(a)"> <text>To present and offer an annual series of scheduled music concerts; or</text> </paragraph> <paragraph num="(b)"> <text>For a cultural purpose and receives a grant directly or indirectly from the Maryland State Arts Council.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>On gross receipts derived from the use of bowling alleys or lanes. The tax, however, may apply to the gross receipts of other activities at bowling alleys, including the gross receipts derived from rental of sports equipment, such as bowling shoes, and from coin-operated amusement devices.</text> </paragraph> <paragraph num="(4)"> <text>On gross receipts derived from amounts charged for admission to live boxing or wrestling matches. Closed circuit telecasts of live matches taking place within or outside this State are live matches for the purposes of this exemption.</text> </paragraph> <paragraph num="(5)"> <text>On gross receipts derived from amounts charged for admissions to, or use of, a charter fishing boat. In order for this exemption to apply, the fishing vessel shall have been hired by and for one specific person or group of people. The charges for admission to or for the use of a vessel which is not the subject of a charter, such as a head boat, do not qualify for the exemption.</text> </paragraph> <paragraph num="(6)"> <text>On gross receipts derived from any charge for admission to or use of a facility or equipment in connection with a bingo game that is operated in accordance with Criminal Law Article, §13-507, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(7)"> <text>By Baltimore County on gross receipts of a not-for-profit community association that is organized and operated to promote the general welfare of the community that the association serves and the net earnings of which do not inure to the benefit of any stockholder or member of the association.</text> </paragraph> <paragraph num="(8)"> <text>By Calvert County, including Chesapeake Beach and North Beach, on gross receipts that are subject to the sales and use tax.</text> </paragraph> <paragraph num="(9)"> <text>By Washington County on gross receipts from an amusement device that is subject to the license and permit requirements of Article 24, §11-202, Annotated Code of Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Locally Authorized Exemptions."> <paragraph num="A."> <text>A county or incorporated city or town which has authorized the imposition of the tax may enact exemptions from the tax. Legislation specifically authorizing political subdivisions to enact particular exemptions does not limit the authority of political subdivisions to enact exemptions under such terms and conditions as they may see fit.</text> </paragraph> <paragraph num="B."> <text>Particular Exemptions Enacted by a County or Incorporated City or Town.</text> <paragraph num="(1)"> <text>The tax does not apply to the gross receipts:</text> <paragraph num="(a)"> <text>Of nonprofit community associations in Aberdeen, Anne Arundel County, Annapolis, Baltimore City, Calvert County, Howard County, Montgomery County (outside any municipality imposing the tax), Takoma Park, and Talbot County (outside any municipality imposing the tax);</text> </paragraph> <paragraph num="(b)"> <text>Derived by nonprofit associations organized to present any of the performing arts from admissions to concerts and theatrical events in Aberdeen, Anne Arundel County, Annapolis, Baltimore City, Gaithersburg, Greenbelt, Montgomery County (outside any municipality imposing the tax), Prince George's County (outside any municipality imposing the tax), and Takoma Park;</text> </paragraph> <paragraph num="(c)"> <text>Derived by nonprofit athletic organizations from admissions to athletic events in Anne Arundel County (outside the City of Annapolis);</text> </paragraph> <paragraph num="(d)"> <text>On admission charges if the additional tax of 5, 10, or 15 cents on free admission or reduced charge tickets is paid in Cecil County (outside any municipality, except North East, imposing the tax);</text> </paragraph> <paragraph num="(e)"> <text>Of a restaurant in Baltimore City and Hagerstown which provides for its patrons entertainment in the form of an individual roving performer who does not employ or is not dependent on amplified sound; and</text> </paragraph> <paragraph num="(f)"> <text>Of a nonprofit community swimming pool in Rockville;</text> </paragraph> <paragraph num="(g)"> <text>Derived from any activities in Caroline County (outside any municipality imposing the tax);</text> </paragraph> <paragraph num="(h)"> <text>Of the Town of Hampstead swimming pool;</text> </paragraph> <paragraph num="(i)"> <text>Derived by farmers from school tours of their facilities in Cecil County;</text> </paragraph> <paragraph num="(j)"> <text>Derived from Charles County owned and operated facilities;</text> </paragraph> <paragraph num="(k)"> <text>Derived from any sporting or athletic event held, sponsored, and operated by the Harford County Public School System or the Aberdeen Board of Parks and Recreation;</text> </paragraph> <paragraph num="(l)"> <text>Derived from any City of Gaithersburg municipal government operated or controlled functions, events, or activities, or upon the gross receipts derived from the operations or use of any municipal government facility;</text> </paragraph> <paragraph num="(m)"> <text>Derived from amounts charged for admission to a regional, amateur athletic tournament event in Prince George's County (outside any municipality imposing the tax) conducted under the auspices of a recognized amateur or intercollegiate association, excluding events which are part of a regular season schedule;</text> </paragraph> <paragraph num="(n)"> <text>Derived from the amounts charged for admission to an event in Prince George's County (outside any municipality imposing the tax) sanctioned by the United States Olympic Committee to select participants in the International Olympics or as part of the United States Olympic Festival;</text> </paragraph> <paragraph num="(o)"> <text>Derived from the amounts charged for farm recreational activities in Prince George's County (outside any municipality imposing the tax) which take place on the premises of working farms; and</text> </paragraph> <paragraph num="(p)"> <text>Derived from any activity in the Town of Hampstead subject to the sales and use tax.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The additional tax of 5, 10 or 15 cents on free admissions or reduced charge tickets does not apply in Calvert County (outside any municipality imposing the tax), Hampstead, Perryville, Brunswick, Garrett County (outside any municipality, except Grantsville, imposing the tax), Aberdeen, Howard County, Chestertown, Rock Hall, Montgomery County (outside any municipality, except Chevy Chase (Section No. 4) and Gaithersburg, imposing the tax), Cheverly, Edmonston, Laurel, St. Mary's County (outside Leonardtown), Washington County (outside any municipality, except Boonsboro and Smithsburg, imposing the tax), Wicomico County (outside any municipality, except Fruitland, imposing the tax), and Snow Hill.</text> </paragraph> </paragraph> </regulation> <annotations> <annotation type="Authority">Tax-General Article, §2-103, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: January 1, 1990 (16:25 Md. R. 2708)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05B amended effective January 14, 1999 (26:1 Md. R. 22)</annotation> </annotations> </chapter> <chapter num="03" heading="Administrative and Procedural Regulations — Sales and Use, and Admissions and Amusement Taxes"> <regulation prefix="Regulation" num=".01" heading="Owners, Lessors, and Operators of Places Where Amusements Are Conducted."> <text>A lessor shall give prompt notice to the Comptroller containing the information in §§A—E, below, when a place from which gross receipts subject to the admissions and amusement tax are derived, is rented, hired, or leased by any person:</text> <paragraph num="A."> <text>The name and address of the lessee;</text> </paragraph> <paragraph num="B."> <text>The character of amusement or entertainment;</text> </paragraph> <paragraph num="C."> <text>The theater, park, hall, or similar place giving the name if one is used and known to the public;</text> </paragraph> <paragraph num="D."> <text>The date or dates upon which or during which the place of amusement or entertainment is leased; and</text> </paragraph> <paragraph num="E."> <text>The name and address of the lessor.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Records."> <paragraph num="A."> <text>Each taxpayer is required to keep, for a period of 4 years, unless permission is obtained from the Comptroller to destroy the records after a shorter period of time, all records in connection with:</text> <paragraph num="(1)"> <text>Sales and purchases; and</text> </paragraph> <paragraph num="(2)"> <text>Gross receipts subject to the admissions and amusement tax.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The records shall be adequate to distinguish taxable sales, purchases, or gross receipts from nontaxable sales, purchases, or gross receipts. This requires keeping all invoices, bills of lading, purchase orders, sale slips, cash register tapes, meter readings, invoices, contracts, tickets, billing slips, journals, ledgers, inventory records, bank records, and advertising and promotional literature.</text> </paragraph> <paragraph num="C."> <text>In the event a vendor elects to assume or absorb all or part of the sales and use tax on any retail sale, the records shall also distinguish sales in which the vendor assumed or absorbed the tax from sales in which the vendor did not assume or absorb the tax.</text> </paragraph> <paragraph num="D."> <text>Exempt Sales.</text> <paragraph num="(1)"> <text>If sales for resale are made, resale certificates obtained from the purchaser shall be retained. For sales and use tax purposes, if a sale to an exempt purchaser is made, an exemption number issued to the purchaser shall be a part of the sales record.</text> </paragraph> <paragraph num="(2)"> <text>For every sale of medical cannabis, as defined in COMAR 03.06.01.47, the qualifying patient or caregiver’s registration number shall be a part of the sales record.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Sales to contractors of material to be incorporated into exempt jobs shall be supported by written statements from the contractors, identifying the jobs and certifying that the materials are for incorporation into the jobs.</text> </paragraph> <paragraph num="F."> <text>If a sale is subject to a multiple points of use certificate, the certificate and all applicable records obtained from the purchaser shall be retained by the vendor.</text> </paragraph> <paragraph num="G."> <text>If a sale is subject to a multiple points of use certificate, the buyer shall retain records as they exist at the time of sale supporting:</text> <paragraph num="(1)"> <text>The apportionment reflecting the primary use location in the State; and</text> </paragraph> <paragraph num="(2)"> <text>The method of apportionment.</text> </paragraph> </paragraph> <paragraph num="H."> <text>The taxpayer is required to make records available for inspection and examination by the Comptroller or authorized representative at any time during business hours.</text> </paragraph> <paragraph num="I."> <text>If the taxpayer fails to keep the records required, the Comptroller may compute the taxes due by using a factor that the Comptroller develops by:</text> <paragraph num="(1)"> <text>A survey of the business of the person including any available records;</text> </paragraph> <paragraph num="(2)"> <text>A survey of other persons engaged in the same or similar business; or</text> </paragraph> <paragraph num="(3)"> <text>Other means.</text> </paragraph> </paragraph> <paragraph num="J."> <text>The computation of the tax under §I of this regulation is presumptively correct.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Returns."> <paragraph num="A."> <text>Filing Requirements.</text> <paragraph num="(1)"> <text>Sales and Use Tax.</text> <paragraph num="(a)"> <text>Subject to §A(1)(b) of this regulation, a person who makes taxable sales or purchases during the course of a month shall file with the Comptroller a report of those sales or purchases, accompanied by payment of the taxes due, by the 20th day of the succeeding calendar month.</text> </paragraph> <paragraph num="(b)"> <text>A person who makes retail sales, sales for use, or purchases for use of cannabis, as defined in COMAR 03.06.01.47, during the course of a month shall file a separate report and payment for each physical location in the State at which the person makes retail sales, sales for use, or purchases for use of cannabis.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>A person deriving gross receipts subject to the admissions and amusement tax shall file with the Comptroller a report of those gross receipts, accompanied by payment of the tax due, by the 10th day of the succeeding calendar month.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Filing Bases.</text> <paragraph num="(1)"> <text>If the Comptroller determines from an application for a license, previous reporting history, or through audit that a taxpayer is expected to remit less than $100 per month in taxes, the Comptroller may assign a filing basis that is less frequent than monthly. Under those circumstances, the Comptroller may also specify a due date other than that specified in §A, above. In addition, vendors who do not normally make taxable sales subject to the sales and use tax or derive gross receipts subject to the admissions and amusement tax in each calendar month may be assigned a seasonal or other irregular filing basis as the Comptroller deems appropriate.</text> </paragraph> <paragraph num="(2)"> <text>A person assigned a filing basis which is other than monthly shall notify the Comptroller whenever the person has reason to believe that future tax payment obligations will average more than $100 per month.</text> </paragraph> <paragraph num="(3)"> <text>A person assigned a filing basis which is less frequent than four times per year, shall file with the Comptroller a supplemental return for any month other than the month or months for which scheduled returns are due, in which taxes due for that month exceed $100. This return, which is due by the due date set forth in §A, above, shall also encompass any previously unreported taxes accrued since the person's most recently filed return. Filing of this return does not affect a person's liability to file the next scheduled return.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The Comptroller shall mail appropriate returns to registrants who request them well in advance of due dates. The failure to receive a return from the Comptroller does not, however, alter a person's obligation to file on time. A person who has not received a return from the Comptroller far enough in advance of the due date to avoid a late filing shall request an additional form from the Comptroller or file a signed schedule providing the information normally required on a return, together with the taxes due, on or before the due date.</text> </paragraph> <paragraph num="D."> <text>A person registered with the Comptroller for sales and use tax purposes and admissions and amusement tax purposes shall file returns in accordance with that person's filing schedule, even if taxes are not due.</text> </paragraph> <paragraph num="E."> <text>Late Charges.</text> <paragraph num="(1)"> <text>Statutory late charges are applicable to a person who files a return without payment in full or after the due date specified for the return.</text> </paragraph> <paragraph num="(2)"> <text>The Comptroller is authorized to abate late charges for cause shown. The Comptroller shall consider a record of timely filing of returns as cause shown for abating late charges on one occurrence during any 12-month period, absent evidence of other noncompliance during this period. Abatements shall be made by the Comptroller without a request if qualification can be determined on an automated basis.</text> </paragraph> <paragraph num="(3)"> <text>A person whose late charges have been waived on the basis of a previous record of timely filing is expected to take whatever steps are necessary to file subsequent returns on time. A second abatement of late charges during any 12-month period may not be authorized in the absence of a clear showing of cause relating to that return alone. The fact that late charges might have been abated on the first late return, for reasons other than a previous good filing record, is not relevant to this determination.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Refunds of Admissions and Amusement Tax."> <paragraph num="A."> <text>A taxpayer who has erroneously paid more admissions and amusement taxes, penalty, or interest than properly and legally payable may apply to the Comptroller for a refund on a form available from the Comptroller.</text> </paragraph> <paragraph num="B."> <text>The Comptroller shall deny any request for a refund received more than 3 years after the tax or other charges for which the refund is requested were paid to the Comptroller by the taxpayer requesting the refund.</text> </paragraph> <paragraph num="C."> <text>The Comptroller shall pay interest on the refund from the 45th day after the claim is filed, in the manner required by statute, to the date on which the refund is paid, unless the claim for refund is based on an error or mistake of the claimant not attributable to the State or a unit of the State government.</text> </paragraph> <paragraph num="D."> <text>A person may appeal a denial of a refund by applying for a hearing. The hearing process is governed by COMAR 03.01.01.04.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Refunds of Sales and Use Tax."> <paragraph num="A."> <text>General.</text> <paragraph num="(1)"> <text>The Comptroller shall treat any request for a credit as a request for a refund.</text> </paragraph> <paragraph num="(2)"> <text>The Comptroller shall deny any request for a refund received more than 4 years after the tax was paid by the applicant to the Comptroller or to a licensed tax collector.</text> </paragraph> <paragraph num="(3)"> <text>If the request for a refund is for taxes previously paid with a return, and from which a collection discount was deducted by the person making the request, the Comptroller:</text> <paragraph num="(a)"> <text>If the entire amount of the taxes previously paid with a return was subject to the collection discount, shall deduct from the approved amount the amount of the collection discount; or</text> </paragraph> <paragraph num="(b)"> <text>If the entire amount of the taxes previously paid with a return was not subject to the collection discount:</text> <paragraph num="(i)"> <text>Shall deduct from the approved amount the amount of the collection discount if, after excluding the approved amount from the total amount of tax previously paid with the return, the taxpayer would not exceed the collection discount limitation; or</text> </paragraph> <paragraph num="(ii)"> <text>May not deduct from the approved amount the amount of the collection discount if, after excluding the approved amount from the total amount of tax previously paid with the return, the taxpayer would still exceed the collection discount limitation.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(4)"> <text>The Comptroller shall pay interest on the refund from the 45th day after the claim is filed, in the manner required by statute, to the date on which the refund is paid, unless the claim for refund is based on an error or mistake of the claimant not attributable to the State or a unit of State government.</text> </paragraph> <paragraph num="(5)"> <text>For sales and use tax assessments made after June 30, 1989, a credit is authorized for tax overpayments for the periods covered by the assessments. The credit will be permitted during the course of the audit to the extent that it can be verified at that time. In all other instances, taxpayers should file a documented claim for a refund identifying the assessment claim to which the refund relates.</text> </paragraph> <paragraph num="(6)"> <text>A person may appeal a denial of a refund by applying for a hearing. The hearing process is governed by COMAR 03.01.01.04.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Special Provisions for Licensed Taxpayers.</text> <paragraph num="(1)"> <text>Refunds Up to $1,000.</text> <paragraph num="(a)"> <text>A licensed taxpayer who is entitled to a refund of not more than $1,000, but not to exceed the amount of tax to be paid with a current return, may request the refund by deducting the amount requested from the total tax due with any return, in the space provided on the return.</text> </paragraph> <paragraph num="(b)"> <text>A licensed taxpayer electing the method in §B(1)(a) of this regulation shall keep all records and documents relating to and supporting the request for a period of 4 years from the date of the return on which the request was made. If, within 4 years from the date of the return, the Comptroller determines that any portion of the refund taken with the return was improper, a deficiency assessment shall be levied, including penalty and interest, against the taxpayer for the improper amount.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Refunds in Excess of $1,000.</text> <paragraph num="(a)"> <text>A licensed taxpayer who wishes to claim a refund in excess of $1,000, or in excess of the amount to be reported with a return, may not deduct the amount from the return, but may only file a claim for refund.</text> </paragraph> <paragraph num="(b)"> <text>If any portion of the claim in §B(2)(a) of this regulation is approved, the Comptroller may either issue a check for the amount approved or credit the licensed taxpayer's account, or do a combination of both. The amount of any credit in a licensed taxpayer's account, up to the amount due with a subsequent return, may be deducted from the taxpayer's remittance enclosed with that return.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Cancelled and Returned Sales. If a licensed vendor has refunded the purchase price and tax to a customer for a cancelled sale, the vendor may deduct the amount of the purchase price refunded from the total amount reported as taxable sales on a return, and the amount of tax refunded from the total amount reported as tax collected on the return, provided the vendor keeps accurate records of the transaction.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Special Provisions for Requests for Refund of Sales and Use Tax Assumed or Absorbed by a Vendor.</text> <paragraph num="(1)"> <text>Subject to the provisions of §B of this regulation, a vendor who has assumed or absorbed sales and use tax on a retail sale or use may claim a refund of sales and use tax, penalty, or interest erroneously paid in excess of the amount properly and legally payable to the Comptroller.</text> </paragraph> <paragraph num="(2)"> <text>Records and documents relating to and supporting the request for refund of assumed or absorbed sales and use tax, penalty, or interest shall:</text> <paragraph num="(a)"> <text>Show that sales and use tax was separately stated from the sale price on any record of sale; and</text> </paragraph> <paragraph num="(b)"> <text>Conclusively demonstrate that the vendor paid the sales and use tax on behalf of the buyer.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Revocation of Sales and Use Tax Licenses."> <paragraph num="A."> <text>The Comptroller may deny a license to an applicant, reprimand a licensee, or suspend or revoke a license:</text> <paragraph num="(1)"> <text>If the applicant or licensee fraudulently or deceptively obtains or attempts to obtain a license for the applicant or licensee or for another, or fraudulently or deceptively uses a license; or</text> </paragraph> <paragraph num="(2)"> <text>For cause.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The Comptroller shall schedule a hearing before taking any of the actions described in §A of this regulation. The hearing process is governed by COMAR 03.01.01.04.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Bad Debts."> <paragraph num="A."> <text>A vendor is required to remit the sales and use tax on an accrual basis. If a vendor is unable to collect accounts receivable on which the sales and use tax has been remitted, a credit may be taken or refund applied for within 4 years of the vendor's payment of the tax.</text> </paragraph> <paragraph num="B."> <text>Vendors that are required to file federal income tax returns may claim a credit or refund only for the amount of tax that is uncollected on accounts that have been written off for federal income tax purposes.</text> </paragraph> <paragraph num="C."> <text>Vendors shall apply partial payments from buyers proportionately to uncollected principal, interest, and tax at the time of receipt. The amount of credit or refund may not be computed on any basis that results in partial payments being disproportionately applied to unpaid principal or interest.</text> </paragraph> <paragraph num="D."> <text>The amount of the credit or refund for repossessed merchandise shall be computed on the basis of the difference between the unpaid balance and the value of the merchandise at the time of the repossession.</text> </paragraph> <paragraph num="E."> <text>Vendors may take credits for bad debts directly by reducing otherwise reportable taxable sales and tax collections on returns. Since these credits are treated as reductions of tax collections and not as refunds, they may not be reported as refunds on returns and are not subject to the dollar limitations generally applicable to refunds claimed on returns. Bad debt credits taken on returns may not exceed the net tax due.</text> </paragraph> <paragraph num="F."> <text>Vendors who take credits for bad debts on returns shall maintain complete and accurate records to support the credits for a period of 4 years. If, within 4 years from the date of the return, the Comptroller determines that any portion of the credit taken was improper, a deficiency assessment plus late charges shall be levied for the underpayment.</text> </paragraph> <paragraph num="G."> <text>Vendors who recover amounts previously claimed as bad debt credits or refunds shall report these recoveries on their next sales and use tax report by increasing reportable taxable sales and tax collections by the amount recovered.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Tax-General Article, §§2-102, 2-103, 11-104, and 11-245, Annotated Code of MarylandCh. 203, Acts of 2003</annotation> <annotation type="History" subtype="Administrative History">Effective date: January 1, 1990 (16:25 Md. R. 2709)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02 amended effective August 19, 2013 (40:16 Md. R. 1341); March 2, 2026 (53:4 Md. R. 183)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02D, H amended effective August 21, 2023 (50:16 Md. R. 725)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03A amended effective October 1, 2003 (30:19 Md. R. 1329)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03A, C amended effective August 21, 2023 (50:16 Md. R. 725)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04D amended effective January 14, 1999 (26:1 Md. R. 22)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05A amended effective January 14, 1999 (26:1 Md. R. 22)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05A, C amended effective August 19, 2013 (40:16 Md. R. 1341)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05B amended effective August 31, 1992 (19:17 Md. R. 1606)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06 repealed and new Regulation .06 adopted effective January 14, 1999 (26:1 Md. R. 22)</annotation> <annotation type="History" subtype="Administrative History">Regulations .07 and .08 repealed effective August 6, 1990 (17:15 Md. R. 1853)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09 recodified to be Regulation .07 effective August 20, 1990 (17:16 Md. R. 1990)</annotation> <annotation type="History" subtype="Administrative History">Regulations .08 and .09 adopted effective December 9, 1991 (18:24 Md. R. 2641)</annotation> <annotation type="History" subtype="Administrative History">Regulations .08 and .09 repealed effective January 14, 1999 (26:1 Md. R. 22)</annotation> </annotations> </chapter> </subtitle> <subtitle num="07" heading="Central Payroll Bureau"> <chapter num="01" heading="General Regulations"> <regulation prefix="Regulation" num=".01" heading="Definition."> <text>“Organization” means any labor organization of State employees and any association of State management officials or supervisors.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Deduction of Organization Dues."> <paragraph num="A."> <text>Procedure.</text> <paragraph num="(1)"> <text>State law authorizes the Central Payroll Bureau, on written request of a State employee, to deduct organization dues from the employee's salary or wage, in certain specified circumstances. For employees paid through the Central Payroll Bureau, the initiation of a deduction of organization dues will be honored by the Central Payroll Bureau only upon receipt by the Central Payroll Bureau of a written request of the employee, on a form approved by the Central Payroll Bureau and processed through the organization. All subsequent changes regarding the deduction shall be made by the employee in writing on a form approved by the Central Payroll Bureau and processed through the organization. An employee may cancel the payroll deduction for organization dues by notifying the Central Payroll Bureau in writing of the decision to cancel.</text> </paragraph> <paragraph num="(2)"> <text>Requests by an organization for initiation, modification, or cancellation of an employee payroll deduction of organization dues submitted to the Central Payroll Bureau by approved electronic means must include control totals and a statement certifying that the organization retains the original employee authorization form in its possession.</text> </paragraph> <paragraph num="(3)"> <text>Employees in the regular, University of Maryland, and contractual payroll systems may request a payroll deduction of organization dues.</text> </paragraph> <paragraph num="(4)"> <text>The Central Payroll Bureau shall remit to the employee's designated organization all dues deducted.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The Central Payroll Bureau may not honor any request for an employee payroll deduction of organization dues unless the organization:</text> <paragraph num="(1)"> <text>Exists for purposes other than obtaining insurance;</text> </paragraph> <paragraph num="(2)"> <text>Serves the interest of the employees and the State as an employer, as certified by the Secretary of Budget and Management; and</text> </paragraph> <paragraph num="(3)"> <text>Was granted the dues deduction privilege before June 30, 1983, or has a minimum membership of 1,000 State employees who agree to the payroll deduction for organization dues.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Employees who are members of smaller organizations, that is, those with a potential field of membership of less than 1,000 State employees, may be permitted to have one deduction per employee for organization dues by the Central Payroll bureau provided that:</text> <paragraph num="(1)"> <text>The organization meets the criteria of §B(1) and (2) of this regulation; and</text> </paragraph> <paragraph num="(2)"> <text>Not less than 50 percent of the potential field of membership of the organization agree to the payroll deduction.</text> </paragraph> </paragraph> <paragraph num="D."> <text>The Central Payroll Bureau shall impose no charges for the deducting and remitting of organization dues, so long as only one deduction is used per employee. With respect to any additional deductions that are requested by an organization on behalf of its employee members, the organization shall be required to pay a reasonable charge in an amount to be established by the Central Payroll Bureau. In establishing the amount of the charge, the Central Payroll Bureau shall take into account personnel, computer, and material costs.</text> </paragraph> <paragraph num="E."> <text>The Central Payroll Bureau shall make a deduction for organization dues only if the net amount payable to the employee exceeds the amount of the dues deduction, after first taking into account all mandatory deductions and all other voluntary deductions having a higher priority in accordance with a schedule adopted by the Central Payroll Bureau.</text> </paragraph> <paragraph num="F."> <text>If the Central Payroll Bureau deducts, amends, or cancels the dues deduction in accordance with the written request of the employee, the Central Payroll Bureau shall be held harmless by both the employee and the organization.</text> </paragraph> <paragraph num="G."> <text>Disputes regarding the dues deduction shall be deemed to be disputes between the employee and the organization, and shall be resolved between them.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">State Personnel and Pensions Article, §2-403, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: August 26, 1985 (12:17 Md. 1700)</annotation> <annotation type="History" subtype="Administrative History">Recodified from COMAR 03.08.01 to 03.07.01, May 1991</annotation> <annotation type="History" subtype="Administrative History">Regulation .02A amended effective May 2, 2022 (49:9 Md. R. 529)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective January 1, 1999 (25:26 Md. R. 1919)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02C amended effective September 10, 2007 (34:18 Md. R. 1579)</annotation> </annotations> </chapter> </subtitle> <subtitle num="08" heading="New Tire Fee and Tire Recycling Fee"> <chapter num="01" heading="General Regulations"> <regulation prefix="Regulation" num=".01" heading="Definitions."> <paragraph num="A."> <text>For purposes of the new tire fee and the tire recycling fee, the following terms have the meaning indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“First sale” means a sale of a new tire that is not a sale to a wholesaler or out-of-state retailer.</text> </paragraph> <paragraph num="(2)"> <text>“New Tire Fee” means the fee imposed under the Transportation Article, §22-421, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(3)"> <text>“Tire” means a continuous rubber or similar material or synthetic material which is pneumatically designed or intended to cover or encircle a wheel which is manufactured for use on any:</text> <paragraph num="(a)"> <text>Motor vehicle as defined in Tax-General Article, §9-101(g), Annotated Code of Maryland;</text> </paragraph> <paragraph num="(b)"> <text>Trailer as defined in the Transportation Article, §11-169, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(c)"> <text>Farm implement; or</text> </paragraph> <paragraph num="(d)"> <text>Machinery which is similar to the vehicles, trailers, or farm implements, in §B(1)(a)—(c) of this regulation.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>“Tire dealer” means a person who sells new tires to:</text> <paragraph num="(a)"> <text>A seller of tires in the State that is not a tire wholesaler; or</text> </paragraph> <paragraph num="(b)"> <text>A consumer of a tire on which a recycling fee has not been paid.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>“Tire recycling fee” means the fee imposed under Environment Article, §9-228, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(6)"> <text>Tire Wholesaler.</text> <paragraph num="(a)"> <text>“Tire wholesaler” means a person who transfers tires to a person who is not a consumer.</text> </paragraph> <paragraph num="(b)"> <text>“Tire wholesaler” does not mean a person who transfers a minimal number of tires on an irregular and noncontinuous basis.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Tire Wholesaler Certificate."> <paragraph num="A."> <text>A tire dealer does not pay the new tire fees or the tire recycling fees on tires sold to a tire wholesaler. If a tire dealer does not know, or cannot ascertain, whether a buyer is a tire wholesaler, the tire dealer should request a written statement from the buyer certifying that the buyer is a tire wholesaler.</text> </paragraph> <paragraph num="B."> <text>Form of Certificate. A particular form for the certificate is not required, but it shall:</text> <paragraph num="(1)"> <text>Set forth the buyer's name and address;</text> </paragraph> <paragraph num="(2)"> <text>Contain the buyer's new tire fee or recycling fee account number; and</text> </paragraph> <paragraph num="(3)"> <text>Be signed by the buyer or an authorized representative of the buyer.</text> </paragraph> </paragraph> <paragraph num="C."> <text>A tire dealer is not required to obtain a certificate for each subsequent purchase by a tire wholesaler.</text> </paragraph> <paragraph num="D."> <text>Notwithstanding the provision in Regulation .03 of this chapter, a tire dealer shall keep a certificate for a period of 4 years after the last sale upon which the tire dealer relies upon the certificate to avoid the payment of the new tire fee or the tire recycling fee.</text> </paragraph> <paragraph num="E."> <text>A certificate does not relieve a tire dealer from paying new tire fees or tire recycling fees unless the certificate is accepted in good faith. A tire dealer who knows or should know that a buyer is not a tire wholesaler is required to pay the fees on tires sold to that buyer without regard to any certificate which that buyer may provide.</text> </paragraph> <paragraph num="F."> <text>Buyers of tires who are not tire wholesalers do not have the option of buying tires free of new tire fees or tire recycling fees and paying the fees directly to the Comptroller.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Records."> <paragraph num="A."> <text>A seller of new tires in the State is required to keep, for a period of 4 years, unless permission is obtained from the Comptroller to destroy the records after a shorter period of time, all records in connection with the sale of new tires in the State.</text> </paragraph> <paragraph num="B."> <text>The records shall be adequate to distinguish a first sale of a new tire in the State by a tire dealer from all other sales of new tires in the State. This requires keeping all invoices, bills of lading, purchase orders, sales slips, cash register tapes, invoices, contracts, billing slips, journals, ledgers, inventory records, bank records, and tire wholesaler certificates upon which the dealer has relied.</text> </paragraph> <paragraph num="C."> <text>A seller of new tires in the State is required to make records available for inspection and examination by the Comptroller or authorized representative at any time during business hours.</text> </paragraph> <paragraph num="D."> <text>If a seller of new tires in the State fails to keep the records required, the Comptroller may compute any new tire fees or tire recycling fees which are due by using a factor that the Comptroller develops by:</text> <paragraph num="(1)"> <text>A survey of the business of the seller including any available records;</text> </paragraph> <paragraph num="(2)"> <text>A survey of other sellers of new tires engaged in the same or similar business; or</text> </paragraph> <paragraph num="(3)"> <text>Other means.</text> </paragraph> </paragraph> <paragraph num="E."> <text>If the seller of new tires in the State fails to keep the records required, the computation of the new tire fee and the tire recycling fee under § D of this regulation is presumptively correct.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Returns."> <paragraph num="A."> <text>Filing Requirements. A person who is responsible for paying the new tire fee or the tire recycling fee on tires sold during the course of a month shall file with the Comptroller a return reporting those sales, accompanied by payment of the new tire fee and the tire recycling fee, by the 21st day of the succeeding calendar month.</text> </paragraph> <paragraph num="B."> <text>Filing Basis.</text> <paragraph num="(1)"> <text>If the Comptroller determines from an application for a new tire fee account or tire recycling fee account, previous reporting history, or through audit that a person subject to the tire recycling fee and new tire fee is expected to remit less than $750 per month in total fees, the Comptroller may assign that person a filing basis that is less frequent than monthly.</text> </paragraph> <paragraph num="(2)"> <text>A person assigned a filing basis which is other than monthly shall notify the Comptroller whenever that person has reason to believe that future new tire fee or tire recycling fee payment obligations will average more than $750 in total fees per month.</text> </paragraph> <paragraph num="(3)"> <text>A person assigned a filing basis which is less frequent than four times per year, shall file with the Comptroller a supplemental return for any month, other than the month or months for which scheduled returns are due, in which fees due for that month exceed $750. This return, which is due by the due date set forth in § A of this regulation, shall also encompass any previously unreported fees accrued since the person's most recently filed return. Filing of this return does not affect a person's liability to file the next scheduled return.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The Comptroller shall make the tire fee return available to registrants, either electronically or by mail, well in advance of due dates. The failure to receive a return from the Comptroller does not, however, alter a person's obligation to file on time. A person who has not received a return from the Comptroller far enough in advance of the due date to avoid a late filing shall request an additional form from the Comptroller or file a signed schedule providing the information normally required on a return, together with the fees due, on or before the due date.</text> </paragraph> <paragraph num="D."> <text>A person registered with the Comptroller for the new tire fee or the tire recycling fee shall file returns in accordance with that person's filing schedule, even if fees are not due.</text> </paragraph> <paragraph num="E."> <text>Late Charges.</text> <paragraph num="(1)"> <text>Statutory late charges, as provided in the Tax-General Article, § 13-601(a), 13-604, 13-701(a), and 13-708, Annotated Code of Maryland, are applicable to a person who files a return without payment in full or after the due date specified for the return.</text> </paragraph> <paragraph num="(2)"> <text>The Comptroller is authorized to abate late charges for cause shown. The Comptroller shall consider a record of timely filing of returns as cause shown for abating late charges on one occurrence during any 12-month period, absent evidence of other noncompliance during this period. Abatements shall be made by the Comptroller without a request if qualification can be determined on an automated basis.</text> </paragraph> <paragraph num="(3)"> <text>A person whose late charges have been waived on the basis of a previous record of timely filing is expected to take whatever steps are necessary to file subsequent returns on time. A second abatement of late charges during any 12-month period may not be authorized in the absence of a clear showing of cause relating to that return alone. The fact that late charges might have been abated on the first late return, for reasons other than a previous good filing record, is not relevant to this determination.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Appeals."> <text>A person may appeal an assessment by applying for a hearing. The hearing process is governed by COMAR 03.01.01.04.</text> </regulation> <annotations> <annotation type="Authority">Environment Article, §9-228; Transportation Article, §22-421, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: March 30, 1992 (19:6 Md. R. 670)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01B amended effective May 2, 2022 (49:9 Md. R. 529), March 16, 2026 (53:5 Md. R. 243)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02 amended effective March 16, 2026 (53:5 Md. R. 243)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03D, E amended effective March 16, 2026 (53:5 Md. R. 243)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04 amended effective March 16, 2026 (53:5 Md. R. 243)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05 repealed and new Regulation .05 adopted effective January 14, 1999 (26:1 Md. R. 22)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06 repealed effective January 14, 1999 (26:1 Md. R. 22)</annotation> </annotations> </chapter> </subtitle> <subtitle num="09" heading="General Accounting Division"> <chapter num="01" heading="General Regulations"> <regulation prefix="Regulation" num=".01" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Biennial” means once every 2 fiscal years.</text> </paragraph> <paragraph num="(2)"> <text>“Fees” means payment asked or given for services rendered.</text> </paragraph> <paragraph num="(3)"> <text>“Function” means a definable or specific work activity.</text> </paragraph> <paragraph num="(4)"> <text>“Port tariff” means the published list of approved fees and charges issued by the Maryland Port Administration.</text> </paragraph> <paragraph num="(5)"> <text>“Service” means work done or completed for which the fee or user charge was derived.</text> </paragraph> <paragraph num="(6)"> <text>“Unit of State government” means any administration, agency, association, authority, board, bureau, college, commission, council, foundation, fund, department, institute, public corporation, service, trust, university, or other unit of the Executive, Judicial, or Legislative branches of the State government and includes any subunit within any of these units.</text> </paragraph> <paragraph num="(7)"> <text>“Up-to-date data” means the accumulation and reporting of fees and user charge data for the most recent fiscal year closed as of June 30.</text> </paragraph> <paragraph num="(8)"> <text>“User charges” generally means fees directly associated with work performed and beneficial to a specific requestor and not to the public at large.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Reports."> <paragraph num="A."> <text>A unit of State government that imposes fees or user charges of any kind shall accumulate and report up-to-date data to the Comptroller as specified by this regulation. The data accumulated shall be reported:</text> <paragraph num="(1)"> <text>In the format prescribed by the Comptroller; and</text> </paragraph> <paragraph num="(2)"> <text>To the Comptroller's General Accounting Division once every 2 fiscal years.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The format prescribed to report up-to-date data is contained in the biennial reporting instructions distributed to each unit of State government by the Comptroller's General Accounting Division. These instructions are distributed in June of each even calendar year and shall be used by the unit of State government to report up-to-date fees and user charges for the even fiscal year ending June 30.</text> </paragraph> <paragraph num="C."> <text>Each unit of State government is responsible for providing the Comptroller with up-to-date data not later than August 15 of each even calendar year.</text> </paragraph> <paragraph num="D."> <text>From the up-to-date data so reported, the Comptroller shall prepare a Fees and User Charges Biennial Report.</text> </paragraph> <paragraph num="E."> <text>The Fees and User Charges Biennial Report shall contain, for each fee and user charge, the description of services or functions provided and a comparison of the actual revenue generated and total costs of providing the service or function.</text> </paragraph> <paragraph num="F."> <text>Data required for the Maryland Port Administration of the Department of Transportation shall be the data included in the port tariff.</text> </paragraph> <paragraph num="G."> <text>The Maryland Aviation Administration and the Maryland Port Administration shall disclose aggregate information on fees and costs if the disclosure does not include information that is proprietary in nature.</text> </paragraph> <paragraph num="H."> <text>A unit of State government which collects fees or user charges that may contain privileged or proprietary information may aggregate or standardize the information submitted as needed to preserve the sensitive nature of the information.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">State Finance and Procurement Article, §2-107, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: August 28, 1995 (22:17 Md. R. 1316)</annotation> </annotations> </chapter> </subtitle> <subtitle num="10" heading="Miscellaneous Administration"> <chapter num="01" heading="Slot Machines for Nonprofit Organizations"> <regulation prefix="Regulation" num=".01" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>Charity.</text> <paragraph num="(a)"> <text>“Charity” means a charitable organization that:</text> <paragraph num="(i)"> <text>Is or holds itself out to be a benevolent, educational, philanthropic, humane, patriotic, religious, or eleemosynary organization and solicits or obtains contributions solicited from the public for charitable purposes; and</text> </paragraph> <paragraph num="(ii)"> <text>Is in possession of an effective Internal Revenue Service determination letter evidencing the organization’s charitable status under §501(c) of the Internal Revenue Code.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>“Charity” includes a chapter, branch, area, office, or similar affiliate soliciting contributions within the State of Maryland for a charitable organization which has its principal place of business outside the State.</text> </paragraph> <paragraph num="(c)"> <text>“Charity” does not include a political party, political committee, political club, or an agency of the State government, or of a political subdivision.</text> </paragraph> <paragraph num="(d)"> <text>“Charity” does not include an organization licensed to operate slot machines at any time during the reporting year or an affiliate, a subordinate, an auxiliary unit, or a society related to the organization licensed to operate slot machines.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>“Eligible organization” has the meaning stated in Criminal Law Article, §12-304(a), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(3)"> <text>“Fraternal organization” means an organization in possession of an effective Internal Revenue Service determination letter evidencing the organization’s exempt status under §501(c)(8) or (10) of the Internal Revenue Code.</text> </paragraph> <paragraph num="(4)"> <text>“Religious organization” means a nonprofit organization which is organized and operated exclusively for religious purposes and is in possession of an effective Internal Revenue Service determination letter evidencing the organization’s exempt status under §501(c)(3) of the Internal Revenue Code.</text> </paragraph> <paragraph num="(5)"> <text>“Reporting year” means July 1 through June 30.</text> </paragraph> <paragraph num="(6)"> <text>“Slot machine” has the meaning stated in Criminal Law Article, §12-301, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(7)"> <text>War Veterans’ Organization.</text> <paragraph num="(a)"> <text>“War veterans’ organization” means an organization in possession of an effective Internal Revenue Service determination letter evidencing the organization’s exempt status under §501(c)(4) or (19) of the Internal Revenue Code.</text> </paragraph> <paragraph num="(b)"> <text>“War veterans’ organization” does not include an auxiliary unit or a society of a war veterans’ organization, or a trust or foundation for a veterans’ organization.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="License Requirements."> <paragraph num="A."> <text>An eligible organization shall submit an application to the Comptroller for an initial license or renewal license for each slot machine it proposes to operate.</text> </paragraph> <paragraph num="B."> <text>Each license application, whether initial or renewal, shall:</text> <paragraph num="(1)"> <text>Satisfy all requirements set forth in the application as provided by the Comptroller;</text> </paragraph> <paragraph num="(2)"> <text>Be signed by a principal officer of the organization applying for the license under penalty of perjury, as provided by Criminal Law Article, Title 9, Subtitle 1, Annotated Code of Maryland; and</text> </paragraph> <paragraph num="(3)"> <text>Include a license fee, the amount of which shall be determined by the Comptroller for the reporting year.</text> </paragraph> </paragraph> <paragraph num="C."> <text>An eligible organization may submit one application for licenses for up to five slot machines.</text> </paragraph> <paragraph num="D."> <text>A licensee shall promptly notify and amend the license application upon the principal officer’s separation from the licensed organization. The amended license application shall be signed by a principal officer of the organization under penalty of perjury, as provided by Criminal Law Article, Title 9, Subtitle 1, Annotated Code of Maryland.</text> </paragraph> <paragraph num="E."> <text>A license is renewed annually on or before June 30 of each year. The license renewal fee shall be determined by the Comptroller.</text> </paragraph> <paragraph num="F."> <text>A license is not transferrable.</text> </paragraph> <paragraph num="G."> <text>A licensee is subject to:</text> <paragraph num="(1)"> <text>The requirements of Criminal Law Article, §12-305(a), Annotated Code of Maryland;</text> </paragraph> <paragraph num="(2)"> <text>The operation requirements under Regulation .03 of this chapter;</text> </paragraph> <paragraph num="(3)"> <text>The annual report and record-keeping requirements under Regulation .04 of this chapter; and</text> </paragraph> <paragraph num="(4)"> <text>The inspection authority under Regulation .05 of this chapter.</text> </paragraph> </paragraph> <paragraph num="H."> <text>The Comptroller may suspend or revoke the license for each slot machine of a licensee if a licensee violates any regulation of this chapter.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Operation Requirements."> <paragraph num="A."> <text>License Sticker.</text> <paragraph num="(1)"> <text>Each slot machine shall have a valid license sticker issued by the Comptroller affixed to the machine.</text> </paragraph> <paragraph num="(2)"> <text>A renewed license sticker must be affixed to a slot machine on or before July 1 of the license’s reporting year.</text> </paragraph> </paragraph> <paragraph num="B."> <text>A licensee shall immediately report to the Comptroller:</text> <paragraph num="(1)"> <text>Information about any slot machine’s meter or counter that is not operational, is in need of repair, or is not repairable;</text> </paragraph> <paragraph num="(2)"> <text>Subject to Criminal Law Article, §12-307, Annotated Code of Maryland, any transfer of a slot machine and the reason for the transfer; or</text> </paragraph> <paragraph num="(3)"> <text>Physical loss of a slot machine or monies from a slot machine.</text> </paragraph> </paragraph> <paragraph num="C."> <text>A licensee shall notify the Comptroller of any repair of a slot machine that may affect any meter reading of the slot machine prior to the initiation of such repair.</text> </paragraph> <paragraph num="D."> <text>A licensee must:</text> <paragraph num="(1)"> <text>Record and make available for inspection weekly meter readings of any electrical and mechanical meter which records the coin-in, coin-out, and jackpot of every licensed slot machine; and</text> </paragraph> <paragraph num="(2)"> <text>Maintain a maintenance log for each licensed slot machine.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Tamperproof Meter or Counter.</text> <paragraph num="(1)"> <text>A slot machine must have a tamperproof meter or counter.</text> </paragraph> <paragraph num="(2)"> <text>Before a licensed slot machine may be operated, all meter or counter components, electrical or mechanical, must be sealed in a manner approved by the Comptroller.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Only members or guests of a licensee may play a slot machine.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Annual Report and Record-Keeping Requirements."> <paragraph num="A."> <text>Annual Report.</text> <paragraph num="(1)"> <text>On or before August 1 of each year, a licensee shall file an annual report with the Comptroller for the preceding reporting year.</text> </paragraph> <paragraph num="(2)"> <text>The annual report shall be submitted by mail or electronically in a form approved by the Comptroller.</text> </paragraph> <paragraph num="(3)"> <text>Charitable Disbursements.</text> <paragraph num="(a)"> <text>The annual report shall show that the licensee has made and met the charitable disbursement requirement under Criminal Law Article, §12-304(c), Annotated Code of Maryland, on or before the due date of the report.</text> </paragraph> <paragraph num="(b)"> <text>Information regarding each charitable disbursement shall include the name and address of the charitable organization receiving the disbursement, the charitable organization’s federal employer identification number, and a copy of a receipt from or a cancelled check to the charitable organization receiving the disbursement identifying the date and the amount of the disbursement.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Filing Requirements.</text> <paragraph num="(a)"> <text>If a licensee fails to file a full and complete annual report by August 1, the Comptroller shall mail a notice within 30 days demanding that the report be filed within 10 days of the date on the notice.</text> </paragraph> <paragraph num="(b)"> <text>The Comptroller may suspend or revoke the license of each slot machine licensed to the licensee for a licensee’s failure to file a complete annual report.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Audits.</text> <paragraph num="(1)"> <text>The Comptroller may examine or audit an annual report filed by a licensee.</text> </paragraph> <paragraph num="(2)"> <text>To determine whether an annual report is correct or otherwise to enforce this chapter, the Comptroller may:</text> <paragraph num="(a)"> <text>Examine any records, data, or other documents that may support the information included in the annual report;</text> </paragraph> <paragraph num="(b)"> <text>Conduct an investigation; and</text> </paragraph> <paragraph num="(c)"> <text>Hold a hearing.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Record-Keeping Requirements.</text> <paragraph num="(1)"> <text>A licensee shall keep the records substantiating the information required for the annual report for a period of 4 years or for a shorter time as determined by the Comptroller.</text> </paragraph> <paragraph num="(2)"> <text>A licensee shall make the records available for inspection and examination by the Comptroller at any time during business hours.</text> </paragraph> <paragraph num="(3)"> <text>A licensee must keep a separate accounting of proceeds and disbursements from its slot machines.</text> </paragraph> <paragraph num="(4)"> <text>Except as otherwise provided in this regulation, a licensee shall comply with the record-keeping requirements of COMAR 03.01.03.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Inspections."> <paragraph num="A."> <text>The Comptroller, or the Comptroller’s duly authorized designee, shall be fully authorized to inspect and search, without warrant, at reasonable hours, any place of business in which slot machines are authorized to be kept and operated by a licensee.</text> </paragraph> <paragraph num="B."> <text>If the Comptroller, or the Comptroller’s duly authorized designee, finds during an inspection or investigation that the operation of a slot machine may be in violation of Criminal Law Article, Title 12, Subtitle 3, Annotated Code of Maryland, or a regulation in this chapter, the Comptroller may seal the slot machine rendering it inoperable, subject to the hearing requirements under Regulation .06 of this chapter. Only the Comptroller, or the Comptroller’s duly authorized designee, may remove the seal from a slot machine.</text> </paragraph> <paragraph num="C."> <text>The Comptroller may suspend or revoke the license of any licensed slot machine if the seal placed on a slot machine is removed by someone other than the Comptroller or the Comptroller’s duly authorized designee.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Hearings and Appeals."> <text>Except as provided in this chapter, the Comptroller shall follow the hearings and appeals procedure set forth in COMAR 03.01.01.04 and .05 before a denial, suspension, or revocation of a license is issued under Criminal Law Article, §12-304, Annotated Code of Maryland.</text> </regulation> <annotations> <annotation type="Authority">Criminal Law Article, Article, §12-304, Annotated Code of Maryland; Ch.315, Acts of 2011, and Chs. 8 and 9, Acts of 2012</annotation> <annotation type="History" subtype="Administrative History">Effective date: November 12, 2012 (39:22 Md. R. 1428)</annotation> </annotations> </chapter> </subtitle> <subtitle num="11" heading="Online Fantasy Competitions"> <chapter num="01" heading="Fantasy Sports Competition Regulations" reason="Repealed"> <annotations> <annotation type="History" subtype="Administrative History">Effective date: January 2, 2017 (43:26 Md. R. 1443)</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.14 repealed effective November 2, 2020 (47:22 Md. R. 936)</annotation> </annotations> </chapter> </subtitle> <subtitle num="12" heading="Digital Advertising Tax"> <chapter num="01" heading="General Regulations"> <regulation prefix="Regulation" num=".01" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Access” means the transmittal, display, embedding, or other availability to a user for viewing or interaction.</text> </paragraph> <paragraph num="(2)"> <text>“Device” means any medium through which digital advertising services may be accessed, including stationary or portable computing devices, tablets, phones, and smart devices.</text> </paragraph> <paragraph num="(3)"> <text>Digital Advertising Services.</text> <paragraph num="(a)"> <text>“Digital advertising services” means advertising services on a digital interface that are:</text> <paragraph num="(i)"> <text>Programmatic; and</text> </paragraph> <paragraph num="(ii)"> <text>Visually conveyed.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>“Digital advertising services” includes advertisement services on a digital interface, including advertisements in the form of banner advertising, search engine advertising, interstitial advertising, and other comparable advertising services; and</text> </paragraph> <paragraph num="(c)"> <text>“Digital advertising services” does not include:</text> <paragraph num="(i)"> <text>Advertisement services on digital interfaces owned or operated by or operated on behalf of a broadcast entity or news media entity as defined in Tax-General Article, §7.5-101, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(ii)"> <text>Any advertising services that are not programmatic; or</text> </paragraph> <paragraph num="(iii)"> <text>Any advertising services that are not visually conveyed.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(4)"> <text>Digital interface.</text> <paragraph num="(a)"> <text>“Digital interface” means any type of software, including a website, part of a website, or application, that a user is able to access; and</text> </paragraph> <paragraph num="(b)"> <text>Can be accessed or conveyed either on or off the Internet.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>“Location” means the actual, physical location of a digital interface when a digital advertising service is accessed by a user.</text> </paragraph> <paragraph num="(6)"> <text>“Other comparable advertising services” includes the following digital advertising services:</text> <paragraph num="(a)"> <text>Display advertising;</text> </paragraph> <paragraph num="(b)"> <text>Internet programmatic video advertising;</text> </paragraph> <paragraph num="(c)"> <text>Multichannel video programming distributor advertising conveyed via cable television, satellite television, or a digital fiber-optic distribution system;</text> </paragraph> <paragraph num="(d)"> <text>Advertising on social media;</text> </paragraph> <paragraph num="(e)"> <text>Native advertising; and</text> </paragraph> <paragraph num="(f)"> <text>Incentivized or rewarded advertising.</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>Programmatic.</text> <paragraph num="(a)"> <text>“Programmatic” means capable of automating advertising services.</text> </paragraph> <paragraph num="(b)"> <text>Programmatic digital advertising services may be sold in real time by employing technology that uses computer- or software-driven workflow or machine learning algorithms to deliver advertisements to users based on advertiser-defined parameters, including precise user targeting data such as user:</text> <paragraph num="(i)"> <text>Geographic locations;</text> </paragraph> <paragraph num="(ii)"> <text>Types of devices;</text> </paragraph> <paragraph num="(iii)"> <text>Recent online search behaviors;</text> </paragraph> <paragraph num="(iv)"> <text>Browsing history;</text> </paragraph> <paragraph num="(v)"> <text>Shopping history;</text> </paragraph> <paragraph num="(vi)"> <text>Purchase history; and</text> </paragraph> <paragraph num="(vii)"> <text>Biographical and other information compiled in databases.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(8)"> <text>“User” means an individual or any other person who accesses a digital interface with a device.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Revenues Derived from Digital Advertising Services in the State."> <paragraph num="A."> <text>Revenues from digital advertising services are derived in the State when any portion of those services are accessed through a device located within the State. Sourcing of digital advertising revenues to the State is based upon the portion of those devices located within the State.</text> </paragraph> <paragraph num="B."> <text>The amount of digital advertising gross revenue attributable to the State shall be computed as follows:</text> <paragraph num="(1)"> <text>An apportionment factor shall be developed as a fraction, where the numerator is the number of devices that have accessed the digital advertising services from a location in the State, and the denominator is the number of devices that have accessed the digital advertising services from any location.</text> </paragraph> <paragraph num="(2)"> <text>Devices whose location are indeterminate shall be excluded from both the numerator and denominator of the apportionment factor, without any adjustment to the amount of revenue to be apportioned.</text> </paragraph> <paragraph num="(3)"> <text>The developed apportionment factor shall be applied to the digital advertising gross revenue received by the taxpayer to compute the digital advertising gross revenue attributable to the State.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Determining the Location of a Device.</text> <paragraph num="(1)"> <text>The location of a device shall be determined by the taxpayer using the totality of the data within their possession or control, including both technical information and nontechnical information included in the contract for digital advertising services.</text> </paragraph> <paragraph num="(2)"> <text>Each taxpayer shall use the information within their possession or control which most reliably identifies a device’s location.</text> </paragraph> <paragraph num="(3)"> <text>Technical information which may be used to determine a device’s location includes, but is not limited to:</text> <paragraph num="(a)"> <text>Internet protocol;</text> </paragraph> <paragraph num="(b)"> <text>Geolocation data;</text> </paragraph> <paragraph num="(c)"> <text>Device registration;</text> </paragraph> <paragraph num="(d)"> <text>Cookies;</text> </paragraph> <paragraph num="(e)"> <text>Industry standard metrics; or</text> </paragraph> <paragraph num="(f)"> <text>Any other comparable information.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>The location of each device shall be determined by a totality of the facts and circumstances to be:</text> <paragraph num="(1)"> <text>Within the State;</text> </paragraph> <paragraph num="(2)"> <text>Not within the State, but within the United States;</text> </paragraph> <paragraph num="(3)"> <text>Not within the United States; or</text> </paragraph> <paragraph num="(4)"> <text>Indeterminate.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Revenues Derived from the United States."> <paragraph num="A."> <text>Revenues from digital advertising services are derived in the United States when any portion of those services are accessed by devices within the United States. In determining the location of devices in this section, taxpayers shall use a method consistent with their determination of revenues derived from the State.</text> </paragraph> <paragraph num="B."> <text>Taxpayers will determine the location of a device using the totality of the data within their possession or control, as described in Regulation .02 of this chapter.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Computation of Digital Advertising Gross Revenues Tax in Year of a Rate Change."> <text>Unless an act that changes the digital advertising gross revenues tax rate provides otherwise, if the rate changes on a date other than January 1, a person shall compute the digital advertising gross revenues tax using the tax rate that applies to each part of the year.</text> </regulation> <regulation prefix="Regulation" num=".05" heading="Digital Advertising Gross Revenues Tax returns and Declarations."> <paragraph num="A."> <text>Each person required under Tax-General Article, Title 7.5, Annotated Code of Maryland, to file a digital advertising gross revenues tax return or estimated digital advertising gross revenues tax declaration or return shall file a return or declaration with the Comptroller, whether or not:</text> <paragraph num="(1)"> <text>The person owes digital advertising gross revenues tax; or</text> </paragraph> <paragraph num="(2)"> <text>The Comptroller sends the person a form or otherwise requests that the return or declaration be filed.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Each digital advertising gross revenues tax return and estimated digital advertising gross revenues tax declaration and return shall be:</text> <paragraph num="(1)"> <text>Signed in the same manner required for the signing of a federal return under §§6061—6064 of the Internal Revenue Code; and</text> </paragraph> <paragraph num="(2)"> <text>Made under oath.</text> </paragraph> </paragraph> <paragraph num="C."> <text>To properly identify persons listed in a return or other document, a person shall include in the document the taxpayer identification, Federal Employer Identification, or other identifying number that the Comptroller requires:</text> <paragraph num="(1)"> <text>Of the person required to file the return or document; and</text> </paragraph> <paragraph num="(2)"> <text>Of the person on whose behalf the return or document is filed.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Each person required to file a digital advertising gross revenues return or estimated digital advertising gross revenues tax declaration or return shall:</text> <paragraph num="(1)"> <text>Comply with the regulations of the Comptroller;</text> </paragraph> <paragraph num="(2)"> <text>Keep the records that the Comptroller requires; and</text> </paragraph> <paragraph num="(3)"> <text>Attach to a digital advertising gross revenues return or otherwise file with the Comptroller any records or statements that the Comptroller requires.</text> </paragraph> </paragraph> <paragraph num="E."> <text>The Comptroller shall provide that a digital advertising gross revenues tax return may be completed using whole dollar amounts instead of expressing amounts in exact dollars and cents by:</text> <paragraph num="(1)"> <text>Disregarding a fractional part of a dollar less than 50 cents; and</text> </paragraph> <paragraph num="(2)"> <text>Increasing to a dollar a fractional part of a dollar of at least 50 cents.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Digital Advertising Gross Revenues Declaration of Estimated Tax."> <text>Each person that reasonably expects estimated digital advertising gross revenues tax for a calendar year to exceed $1,000,000 shall file a declaration of estimated digital advertising gross revenues tax in the form and manner prescribed by the Comptroller.</text> </regulation> <annotations> <annotation type="Authority">Tax-General Article, §§2-102, 2-103, and 7.5-102, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: December 13, 2021 (48:25 Md. R. 1079)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01B amended effective March 2, 2026 (53:4 Md. R. 183)</annotation> </annotations> </chapter> </subtitle>