Maryland Legislature Passes Tax on Digital Products, Codes

The Maryland General Assembly has passed legislation (H.B. 932) that would impose sales tax on specified digital products and codes effective July 1, 2020. 

The bill, which passed both houses of the Maryland General Assembly last week, has been sent to the governor. 

Retail Sale Would Include Digital Products

“Digital products” are delivered electronically and would include: 

  • prerecorded/live music, book readings, and speeches; 
  • audio/video greeting cards sent by email; 
  • ring tones; 
  • movies, music videos, news and entertainment programs, live events, and video/ electronic games;  
  • e-books; and 
  • newspapers, magazines, chat room discussions, weblogs. 

Digital Codes That Are Exchanged for Digital Products Would Be Included

“Digital codes” would include a code (obtained in tangible form or through e-mail) that would entitle the buyer to obtain digital products. Digital codes would not include gift certificates or gift cards that could be redeemed for items other than digital products. 

Sourcing Would Be Addressed

For sourcing purposes, the retail sale would be presumed made in the state in which the customer’s tax address is located. 

By Emily Baugh, J.D., LL.M

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