State & Local Tax Impacts of COVID-19 for Maryland

Thoughtware Alert Published: Dec 11, 2020
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Information current as of January 31, 2021.

The SARS-CoV-2 virus and the incidence of COVID-19 are changing life across the globe. Many taxing jurisdictions are taking mitigating actions to create social distance and aid taxpayers. The following is a running list of actions by jurisdiction, which generally result in additional time to file and/or pay. Further, many jurisdictions have closed their offices to in-person use by taxpayers and suspended their audit and administrative functions. This alert doesn’t cover similar waivers from local-level taxing authorities. These developments continue to quickly evolve; check with your BKD Trusted Advisor or visit our COVID-19 Resource Center for current information as needed.

Information Specific to Maryland

  • Individual, corporate, pass-through and fiduciary taxpayers are permitted an automatic income tax filing and payment extension with full waiver of any penalty and interest until July 15.
  • Business tax filing deadlines are extended to June 1, 2020, for returns with due dates during the months of March, April and May for businesses filing the following returns: sales and use tax; withholding tax; admissions and amusement tax; alcohol tax; tobacco tax; motor fuel excise tax; tire recycling fee; and the bay restoration fee.
  • Unclaimed property reports and payments for insurance companies are extended from April 30 to July 31.
    • Comptroller of Maryland Tax Alert 03-20, March 23, 2020.
  • Maryland has suspended the effect of the following statutes: Md. Code Ann. Tax-Prop. § 11-101 (annual personal property report); Md. Code Ann. Tax-Gen. § 10-901 (income tax payments); and Md. Code Ann. Tax-Gen. § 10-902 (quarterly estimated income tax return payments). As a result, the required filing and payment due dates are extended to July 15, 2020. The income tax-related suspensions are subject to any additional requirements imposed by the Maryland Comptroller.
    • Governor’s Executive Order No. 20-03-31-01, March 31, 2020.
  • Maryland has clarified its filing and payment extensions. The payment due date for quarterly estimated income tax payments for the period ending March 31, 2020, is automatically extended from April 15, 2020, to July 15, 2020. For Maryland individual income taxpayers who request a federal extension, the Maryland income tax return is automatically extended to October 15, 2020. For corporations that request a federal income tax extension, the Maryland income tax return is automatically extended to November 15, 2020. The comptroller is extending the due date to June 1, 2020, for the following tax return filings and payments: sales and use, withholding, admissions and amusements, alcohol, beer, tobacco, cigarette and other tobacco products, licensed retailers and tobacconists, motor carrier and motor fuel and bay restoration.
    • Maryland DOR Tax Alert 04-01-20, April 3, 2020.
  • Maryland will waive penalties and interest for late payment of quarterly estimated premium taxes due on April 15, 2020, if an insurance company is unable to make such payment timely because the pandemic has impacted the operation of its premium tax administrative offices. While the penalties and interest are waived through June 1, 2020, the due date for the payment of quarterly premium taxes remains April 15, 2020.
    • Maryland DOI Bulletin 20-19, April 7, 2020.
  • Maryland has further extended business-related tax returns due in the months of February, March, April and May 2020 to July 15, 2020 (previously June 1, 2020). The extension applies to sales and use; withholding; admissions and amusement; alcohol, tobacco and motor fuel excise taxes; tire recycling fee; and bay restoration fees. The extension also applies to the first and second quarterly estimated individual income tax payments for 2020.
    • Maryland Tax Alert 04-14-20A, April 14, 2020.
  • Maryland clarified that its employer withholding requirements aren’t affected by the current shift from working on the employer’s premises to teleworking because taxability is determined by the employee’s physical presence. In general, compensation paid to a Maryland nonresident who’s teleworking in Maryland is Maryland-sourced income and therefore subject to Maryland withholding. However, Maryland has a reciprocal agreement with the bordering states of Virginia, Washington, D.C., West Virginia and Pennsylvania, and residents of these states who earn wages, salaries, tips and commission income for services performed in Maryland are exempt from Maryland state income tax. Maryland will consider pandemic factors in making determinations related to nexus and income sourcing.
    • Maryland Tax Alert 04-14-20B, April 14, 2020.
  • Maryland issued clarification on its COVID-19 relief. The law establishes a refundable, 50 percent payroll tax credit covering up to $10,000 paid per employee, including benefits from the period of March 13 to Dec. 31. Business and individual taxpayers will get a 90-day extension for tax payments without interest or penalty for late payments if 2019 tax payments are made by July 15. The comptroller extended business-related tax filing deadlines to June 1. Businesses who paid sales and use taxes for March may request a refund of the payment. The current year’s deadline to submit annual reports and personal property tax returns is automatically extended to July 15.
    • Maryland DOR Notice, April 17, 2020
  • Maryland has updated its guidance on income tax withholding requirements for teleworking situations due to the COVID-19 pandemic to recognize the temporary nature of interim workplace models and employee deployment in light of the current health emergency. As such, the guidance clarifies that the agency won’t use these temporary measures to impose business nexus to alter the sourcing of business income or to impose additional withholding requirements on the employer.
    • Maryland Tax Alert 05-04-20, May 4, 2020.
  • Maryland has extended the deadline for insurance companies to report and remit unclaimed property for 2019 to July 31.
    • Maryland Comptroller of the Treasury, Unclaimed Property FAQ, June 25, 2020.
  • Maryland reminder that the deadline to submit annual reports and personal property tax returns has been automatically extended to July 15, 2020, as part of the response to the COVID-19 pandemic. However, the state won’t grant any further deadline extensions for annual business filings this year. To maintain good standing status, all businesses formed, qualified or registered to do business in Maryland must file an annual report every year.
    • Maryland State Department of Assessments and Taxation Release, June 29, 2020.
  • Maryland issued guidance related to the CARES Act conformity. As a conformity state, Maryland generally conforms to federal income tax laws except where Maryland has enacted decoupling legislation or where the revenue effect of an IRC amendment for a taxable year that begins in the calendar year in which the amendment is enacted is greater than $5 million. The Bureau of Revenue Estimates concluded that each of the CARES Act key provisions would have an effect of greater than $5 million in each year affected, 2018, 2019 and 2020. However, the Maryland decoupling statute permits decoupling only for the purposes of calculating Maryland taxable income for the year in which the amendment is enacted. Therefore, Maryland is automatically decoupled from the CARES Act provisions affecting tax year 2020 but conforms to CARES Act provisions affecting tax years 2018 and 2019. Maryland has already decoupled from bonus depreciation, but it does conform to the provision that classifies QIP as 15-year property for all tax years beginning after December 31, 2017.
    • Maryland Tax Alert 07-24, July 24, 2020.
  • Maryland has provided COVID-19 pandemic tax relief for 2021 businesses filing tax returns and payments. Most tax filings and payments coming due in January to April 2021 are now due April 15, 2021. If the IRS extends its April 15, 2021, filing deadline for 2020 corporate, pass-through entity, and individual income tax returns, Maryland will conform to the IRS action.
    • Maryland Tax Alert 01-06-21; January 6, 2021.

For more information, reach out to your BKD Trusted Advisor or use the Contact Us form below.

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