Md. law to ease retailers' sales tax burden

April 02, 1993|By David Conn | David Conn,Staff Writer

Sometimes the state giveth back.

Gov. William Donald Schaefer did just that yesterday by signing into law a bill intended to ease the sales tax burden on small retailers and the companies that supply them.

Yesterday's bill was a reaction to a section of the tax law passed in 1992 that was aimed at people who avoided paying sales taxes, especially at large warehouse-type stores. But retailers had complained that last year's tax law created an administrative burden that cost small retailers money, and earned very little for the state.

Before last year's law, retailers were exempt from paying sales tax on items they intended to resell to the public. They merely had to show a retailer's resale certificate to the supplier from which they bought the goods. The exemption was intended to help small retailers, such as grocers and restaurateurs, who often buy small amounts in cash.

But with the rise in popularity of the warehouse-type retailers, such as Price Club and Pace Membership Warehouse, there were concerns that people were using the easily acquired resale certificates to buy personal items in bulk, and tax-free.

So last year's law required retailers to pay the sales tax upfront if their total purchase amounted to $500 or less, and if they paid at the time of purchase, rather than being billed later. Retailers were allowed to request a refund when they submitted their next monthly sales tax filing to the state, as long as they had sold the goods in question.

Under last year's law, "You had to wait till after you sold the product and after you filed your sales tax form" to receive a refund, said Steve Lazarus, who owns Steve's Supermarket on South Charles Street in Federal Hill. "The state's holding onto your money for a month, or longer. . . For some retailers, especially small retailers, this was an imposition."

It was also a hassle, he said, for the truck drivers who delivered the goods to a store and had to be responsible for collecting taxes, too.

The law signed yesterday lowers the minimum sales amount to $200, and exempts purchases no matter how small if the goods are delivered to a retailer's door, or if the retailer is billed later.

"Everyone perceived [last year's law] as being unnecessary and a complete bureaucratic fumble," said Thomas Saquella, director the Maryland Retail Merchants Association.

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