# COMAR Title 18 — Department of Assessments and Taxation ## Subtitle 03 — Personal Property Assessments ### Chapter 01 — General **Authority:** Tax-Property Article, §§2-201, 2-202, 5-101, 8-101(c), and 8-107, Annotated Code of Maryland **Administrative History:** Effective date: January 7, 1982 (8:26 Md. R. 2106) **Administrative History:** Regulation .03 amended effective September 19, 1988 (15:19 Md. R. 2248) **Administrative History:** Regulation .05 amended effective September 19, 1988 (15:19 Md. R. 2248) **Administrative History:** Regulation .05B amended effective June 5, 1995 (22:11 Md. R. 823) **Administrative History:** Chapter revised effective March 11, 1996 (23:5 Md. R. 383) **Administrative History:** Regulation .02 amended effective October 31, 2022 (49:22 Md. R. 980) **Administrative History:** Regulation .02A amended effective April 24, 2006 (33:8 Md. R. 734) **Administrative History:** Regulation .02B amended effective January 1, 1997 (23:25 Md. R. 1786); April 29, 2002 (29:8 Md. R. 701); April 24, 2006 (33:8 Md. R. 734) #### Regulation .01 Categories and Valuation. *COMAR 18.03.01.01* A. Personal property in the State (other than operating property of railroads and public utilities) falls into three classes: (1) Stock in business or inventory; (2) Distilled spirits; (3) All other personal property. B. Stock in Business. (1) Stock in business or inventory is goods held by a taxpayer for sale or goods placed on consignment to another for sale. Stock in business does not include goods manufactured by the taxpayer or obtained from others and held by the taxpayer for purposes other than sale, or goods manufactured by the taxpayer but placed in possession and control of another as in the case of leased goods. (2) Stock in business is assessed at cost or market value, whichever is lower. (3) In the case of manufacturers who sell some portion of their product at retail, that portion sold at retail is assessed at the cost a retailer would pay for the goods. (4) Materials and Supplies. All materials and supplies that are consumed in the day-to-day operation of any business shall be treated as inventories of stock and trade. This includes items such as contractors' supplies, office supplies, wrapping paper, and bags used in a mercantile operation. It excludes such items as bottles, cases, and other returnable containers used by soft drink or beer industries, as well as supplies of rental uniform and linen operations. C. Distilled Spirits. In the valuation and assessment of inventories of distilled spirits of wholesale whiskey businesses, the Maryland Alcoholic Beverage Tax may not be included as part of the inventory value. D. All Other Personal Property. (1) Except for operating property of railroads and public utilities and certain distilled spirits, “all other personal property” includes all personal property other than inventory. (2) “All other personal property” is assessed at full cash value. Taxpayers shall report property which has been acquired by purchase at cost in the year of acquisition. Taxpayers shall report property which has been acquired other than by purchase (including property manufactured by the taxpayer) at what the property would have sold for in the year of acquisition. #### Regulation .02 Depreciation. *COMAR 18.03.01.02* A. Term Defined. “Salvage value” means the value of personal property after all depreciation under this regulation has been applied. B. In the assessment of all other personal property under Tax-Property Article, §8-101(c)(7), Annotated Code of Maryland, a 10 percent rate of depreciation per year is applied to the original cost of most property. Exceptions to the 10 percent depreciation rate can be found in §C of this regulation. Personal property may be depreciated to its salvage value. C. Depreciation Schedule. The following annual rates of depreciation shall be applied to the different types of personal property indicated: (1) All personal property not otherwise listed in this depreciation schedule shall be depreciated at 10 percent per year; (2) Except as provided in §C(10) of this regulation, long-lived electric generation machinery and equipment of nonutility entities that generate electricity for sale shall be depreciated at 3-1/3 percent per year; (3) Vessels (over 100 feet) shall be depreciated at 5 percent per year; (4) To be depreciated at 20 percent per year: (a) Mobile telephones; (b) Heavy equipment (tractors, bulldozers); (c) Autos, trucks, and tractors not requiring registration; (d) Radio and television transmitting equipment; (e) Music boxes; (f) Open-air theatre equipment (outdoor equipment, posts, speakers, signs); (g) Motel and hotel furniture (rooms and lobby); (h) Self-service laundry equipment; (i) Theatre seats; (j) Bowling alley equipment; (k) Nursing home furniture, fixtures, and equipment (rooms and lobby); (l) Car wash equipment; (m) X-ray equipment, brain scanners, and MRI equipment; (n) Photocopy equipment; (o) Outdoor Christmas decorations; (p) Hospital room furniture and equipment; (q) Rental soda fountain equipment; (r) Rental pagers; (s) Model home furnishings; (t) Stevedore equipment; (u) Vending machines; (v) Fax machines; (w) Mainframe computers originally costing $500,000 or more; (5) To be depreciated at 30 percent per year: (a) Data processing equipment other than the type mentioned in §C(4) of this regulation; (b) Computer software; (6) Any of the following property owned by equipment rental companies shall be depreciated at 33-1/3 percent per year: (a) Rental televisions; (b) Rental stereo and radio equipment; (c) Rental video cassette recorders and tapes; (7) To be depreciated at 33-1/3 percent per year: (a) Drapes and shades; (b) Carpets; (8) To be depreciated at 50 percent per year: (a) Pinball machines; (b) Video games; (c) Rental tuxedos; (d) Rental uniforms; (9) Property determined by the Department to have an expected life in excess of 10 years at the time of acquisition shall be depreciated at an annual rate as determined by the Department; and (10) Personal property of nonutility nuclear power plants shall be depreciated at annual rates as determined by the Department, consistent with licenses and license extensions. #### Regulation .03 Possession and Ownership. *COMAR 18.03.01.03* If title to personal property is in one person and possession or control of the property in another, as lessee, custodian, consignee, bailee, or otherwise, either the title holder or person in possession or control is considered to be the owner of the property for purpose of property taxation. #### Regulation .04 Exempt Federal Facilities. *COMAR 18.03.01.04* Personal property owned by any person and permanently located on the following federal facilities is exempt from taxation: A. Aberdeen Proving Grounds; B. Andrews Air Force Base; C. Bainbridge Naval Training Center; D. National Naval Medical Center, Bethesda; E. Camp Detrick; F. Census Bureau, Suitland; G. Cheltenham, U. S. Navy; H. Custom House, Gay and Lombard Streets; I. Department of Agriculture, Beltsville; J. Edgewood Arsenal; K. Fort Howard Hospital; L. Fort McHenry; M. Fort Meade; N. Goddard Space, Beltsville; O. Indian Head Naval Ordinance; P. National Institutes of Health; Q. Naval Academy; R. Naval Support Center, Suitland; S. Oceanographic Center, Suitland; T. Patuxent River Naval Air Warfare Center; U. Perry Point Hospital; V. Public Health Service Hospital, Wyman Park; W. U.S. Coast Guard, Curtis Bay. ### Chapter 02 — Filings **Authority:** Tax-Property Article, §§2-201, 2-202, and 11-101, Annotated Code of Maryland **Administrative History:** Effective date: January 7, 1982 (8:26 Md. R. 2106) **Administrative History:** Regulation .01 amended effective March 11, 1996 (23:5 Md. R. 383); February 16, 2015 (42:3 Md. R. 318); December 12, 2022 (49:25 Md. R. 1050) #### Regulation .01 Annual Report. *COMAR 18.03.02.01* Annual reports required to be filed with the State Department of Assessments and Taxation, pursuant to the provisions of Tax-Property Article, §11-101, Annotated Code of Maryland, shall be submitted to the Department on a form generated by the Department, on a substantially similar form, or through an approved online filing system. The signature of the person signing the report shall be an original inked signature, an exact copy of an original inked signature, or an electronic signature acceptable to the Department under Commercial Law Article, §21-117, Annotated Code of Maryland. ### Chapter 03 — Penalties **Authority:** Tax-Property Article, §§2-201, 2-202, 11-101, and 14-704, Annotated Code of Maryland **Administrative History:** Effective date: July 29, 1985 (12:15 Md. R. 1528) **Administrative History:** Regulation .01 amended effective January 1, 1996 (22:26 Md. R. 2030) **Administrative History:** Regulation .01A amended effective July 3, 2006 (33:13 Md. R. 1065) **Administrative History:** Regulation .02 adopted effective June 30, 1986 (13:13 Md. R. 1496) **Administrative History:** Regulation .02 repealed and new Regulation .02 adopted effective March 11, 1996 (23:5 Md. R. 383) #### Regulation .01 Good Cause. *COMAR 18.03.03.01* A. Definition of Good Cause. (1) “Good cause” means: (a) A serious medical or health condition which causes an annual report to be filed late; (b) A penalty which is unjustly excessive; (c) A taxpayer's records or place of business is destroyed by casualty, causing an annual report to be filed late; (d) A taxpayer has filed timely annual reports for each of the 4 preceding taxable years, provided that the report is filed by December 31 of the calendar year in which it is due; or (e) Any other extraordinary circumstance which a person of ordinary business prudence and intelligence would consider reasonable cause for an annual report to be filed late. (2) “Good cause” does not mean failure: (a) To receive an annual report form; (b) Of an agent or employee of a taxpayer to file a timely annual report; or (c) To be aware of the requirement to file an annual report. B. The excusing conditions in this regulation shall have been experienced by the person who prepares the annual report, so that the report could not have been timely filed. Additionally, it shall be shown that no one other than the person experiencing the condition could have prepared the report. C. The Department may abate or reduce a penalty imposed under Tax-Property Article, §14-704, Annotated Code of Maryland, for good cause shown. #### Regulation .02 Timely Filing—Wrong Office. *COMAR 18.03.03.02* An annual report that is filed with the wrong Departmental office, but is timely filed, is not considered untimely filed. ### Chapter 04 — Banks or Trust Companies **Authority:** Tax-Property Article, §§2-201, 2-202, and 7-221.1, Annotated Code of Maryland **Administrative History:** Effective date: **Administrative History:** Regulations .01—.04 adopted as an emergency provision effective March 16, 1996 (23:7 Md. R. 549); emergency status expired October 1, 1996; adopted permanently effective January 13, 1997 (24:1 Md. R. 30) #### Regulation .01 Definitions. *COMAR 18.03.04.01* A. In this chapter, the following terms have the meanings indicated. B. Terms Defined. (1) “Bank or trust company” has the meaning stated in Tax-Property Article, §7-221.1, Annotated Code of Maryland. (2) Computer Hardware. (a) “Computer hardware” means electronic equipment connected to a computer that is used for the entry, organization, manipulation, or viewing of data. (b) “Computer hardware” includes monitors, keyboards, cables, central processing units, servers, mainframes, personal computers, printers, automated teller machines, check readers, and check sorters. (c) “Computer hardware” does not include furniture. (3) “Computer program” has the meaning stated in Tax-General Article, §11-225, Annotated Code of Maryland. (4) Word Processing. (a) “Word processing” means the production of documents by use of computer hardware and software. (b) “Word processing” does not include the production of documents that reflect, or are directly generated by, deposit or loan account activity. #### Regulation .02 Taxable Property. *COMAR 18.03.04.02* A computer program or computer hardware used by a bank or trust company in connection with word processing is subject to valuation and property tax. #### Regulation .03 Exempt Property. *COMAR 18.03.04.03* A computer program or computer hardware owned and used by a bank or trust company in connection with the processing of deposits or loans is not subject to valuation or property tax. #### Regulation .04 Mixed Use. *COMAR 18.03.04.04* If a computer program or computer hardware owned by a bank or trust company is used in both taxable and exempt activities, its taxable status is determined by the primary use of the property. ### Chapter 05 — Manufacturing Processes **Authority:** Tax-Property Article, §§1-101(r), 2-201, 2-202, 7-108, 7-109, and 7-225, Annotated Code of Maryland **Administrative History:** Effective date: April 19, 1999 (26:8 Md. R. 619) #### Regulation .01 General. *COMAR 18.03.05.01* Under Tax-Property Article, §§7-108, 7-109, and 7-225, Annotated Code of Maryland, counties and municipalities are authorized to exempt from local taxation personal property used in a manufacturing process. There are three general activities that encompass the overall manufacturing process, each of which qualifies for the exemption. Each activity may exist without the others being present. These activities are research, development, and manufacturing. #### Regulation .02 Definitions. *COMAR 18.03.05.02* A. In this chapter, the following terms have the meanings indicated. B. Terms Defined. (1) Development. (a) “Development” means the design, development, and governmentally required premarket testing of prototypes, products, and processes, which involves the translation of research findings or other knowledge into a plan or design for a new product, process, or technique for a business or for a significant improvement to an existing product, process, or technique whether intended for sale or use. (b) “Development” includes: (i) The conceptual formulation and design of product alternatives; (ii) Construction of prototypes; and (iii) Operation of pilot plants. (c) “Development” does not include: (i) Routine or periodic alterations to existing products, production lines, manufacturing, and other ongoing operations, even though those alterations may represent improvements; (ii) Routine product testing activities, except for governmentally required premarket testing; or (iii) Activities that are primarily a service, or development activities of a public utility. (2) Manufacturing. (a) “Manufacturing” means the process of substantially transforming, or a substantial step in the process of substantially transforming, tangible personal property into a new and different article of tangible personal property by use of labor or machinery, converting a tangible raw material into a tangible product. (b) “Manufacturing” includes, pursuant to Tax-Property Article, §1-101(r), Annotated Code of Maryland: (i) The operation of sawmills, grain mills, or feed mills; (ii) Mining; (iii) The identification, design, or genetic engineering of biological materials; and (iv) The design, development, or creation of computer software for sale, lease, or license. (c) “Manufacturing” does not include, pursuant to Tax-Property Article, §1-101(r), Annotated Code of Maryland: (i) Activities that are primarily a service; (ii) Activities that are intellectual, artistic, or clerical in nature; or (iii) Public utility services. (3) Research. (a) “Research” means basic and applied research in the sciences and engineering, involving a planned search or critical investigation aimed at discovery of new knowledge with the hope that this knowledge will be useful in developing a new product, process, or technique for the business or in bringing about a significant improvement to an existing product, process, or technique. (b) “Research” does not include: (i) Market research; (ii) Research of a public utility; or (iii) Research in the social sciences, psychology, or other nontechnical activities. #### Regulation .03 Substantial Step. *COMAR 18.03.05.03* When a manufacturing operation is performed by different businesses, the activity of any one business is considered manufacturing only if it represents a substantial step in the overall operation. #### Regulation .04 Secondary Factors. *COMAR 18.03.05.04* A. When it is not clear whether a raw material has undergone a substantial transformation, the Department will consider secondary factors in determining whether manufacturing has occurred. B. Secondary factors include: (1) The scale and character of the operation; (2) The number of employees; and (3) Whether the nature of the operation is consistent with the common understanding of the term “manufacturing”. #### Regulation .05 Application Required. *COMAR 18.03.05.05* A business shall file a completed exemption application before an exemption will be approved by the Department. ### Chapter 06 — Small Businesses **Authority:** Tax-Property Article, §§2-201, 2-202, and 7-227, Annotated Code of Maryland **Administrative History:** Effective date: April 19, 1999 (26:8 Md. R. 619) **Administrative History:** Regulation .02 amended effective December 12, 2022 (49:25 Md. R. 1050) #### Regulation .01 Definition of Principal Residence. *COMAR 18.03.06.01* “Principal residence” means the one location where an individual regularly resides and is the location designated by the individual for the legal purpose of voting, obtaining a driver's license, and filing income tax returns. #### Regulation .02 Criteria for Exemption. *COMAR 18.03.06.02* To qualify for the small business personal property exemption under Tax-Property Article, §7-227, Annotated Code of Maryland, the following criteria shall be met: A. The business personal property shall be owned by an individual and used in connection with a business, occupation, or profession that is a sole proprietorship; B. The business personal property for which the exemption is claimed shall be located at the individual's principal residence which is also the principal place of business of the sole proprietorship; and C. The total original cost of all business personal property owned by the individual, excluding vehicles exempt under Tax-Property Article, §7-230, Annotated Code of Maryland, shall be as provided by Tax-Property Article, §7-227, Annotated Code of Maryland.