Repeal Maryland's Computer Services Sales Tax

• Computer facilities management and operation
• Custom programming.
• Computer system planning and design that integrate computer hardware, software, and communication. technologies.
• Computer disaster recovery.
• Data processing, storage and recovery.
• Hardware or software installation, maintenance, and repair.
• To view enacted language, click here (pdf).

This new law will have a negative impact on Maryland companies that consume computer services. From hardware and software installation and management to web design, if your company purchases computer services, you will be subject to a 6 percent sales tax effective July 1.

Repealing the computer services sales tax is a Maryland Chamber priority for the 2008 legislative session.  

• Maryland spends millions of dollars annually to attract and expand technology companies. Computer service companies employ 68,000 Marylanders, with an annual payroll of $5.2 billion, paying wages nearly twice the statewide average. Imposing a sales tax on these activities will jeopardize these jobs.

• Taxing computer services makes Maryland’s business climate and tax structure less competitive with other states, including Virginia. Only a handful states tax computer services.

• Maryland businesses will pay the majority of this $200 million computer services sales tax. The recent special session resulted in more than $800 million in new business taxes.

• Expanding the sales tax to computer services hurts small and growing companies the most. Large companies hire employees to perform many of the services outlined in the bill. Small businesses are more likely to hire outside companies to perform these services, and, therefore, would be more likely to pay the proposed sales tax.

• Maryland-based companies with multi-year computer support contracts will have to bear an unanticipated 6 percent reduction in revenues.

• This new tax on computer services could jeopardize BRAC jobs that would have relocated to Maryland. Maryland-based subcontractors will face a 6 percent price disadvantage when bidding to participate on federal contracts.

• There is a reason most states don't attempt to impose a sales tax on services. It will be very difficult to administer. Consider the nightmare of trying to identify where the taxable transaction took place.

Related:

• Take Action: Urge Your Legislators to Repeal the Computer Services Sales Tax
• Do You Have Questions About the Computer Services Sales Tax?
• Computer Services Tax Includes Web Design
• How They Voted: Sales Tax Expansion to Computer Services
• Business Leaders: This Tax Does Not Compute
• Tech Council of Maryland: Tech Council of Maryland Vows to Work for the Repeal of Computer Services Sales Tax
• Franchot: Reject Sales Tax on Computer Services

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