LAW ENFORCEMENT

"If you buy a product out of state
simply to avoid paying the sales and
use tax, you are putting Maryland
businesses at a disadvantage,"
announced Comptroller William
Donald Schaefer in May, 1999, as he
began a major enforcement action to
collect sales taxes owed on large out-
of-state purchases brought into
Maryland.

In effect since 1947, Maryland's
five percent sales and use tax applies
to all tangible property that is
consumed, possessed, stored or used in
Maryland, regardless of where it is
purchased. Items purchased out of
state—either directly, through mail
order, by telephone or over the
Internet—are taxable in Maryland to
the extent that they were not taxed at
the Maryland sales tax rate at the
place of purchase. Maryland is one of
the 45 states that impose this use tax
on out-of-state purchases.

The Comptroller's Field
Enforcement Division began checking
truck manifests for any liability under
Maryland's five percent sales and use
tax law. Within weeks, hundreds of
taxpayers paid the use tax.

Keeping tabs. Enforcement agent Mark Brandenburg (right)
from the State Comptroller's Office reviews truck manifests to
spot purchases from out-of-state vendors that may be liable
under Maryland's sales and use tax.

During fiscal year 1999, the
Comptroller and tax officials in
Delaware launched the nation's first
program to use tax refunds owed by
one state to pay tax liabilities due in
another state. Maryland received
nearly $153,000 that Delaware
withheld from its residents who owed
taxes to Maryland, while Maryland
returned to Delaware approximately
$164,000 in refunds offset from
Maryland residents with unpaid
Delaware tax liabilities.

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