Code of Maryland Regulations › Title 03 - COMPTROLLER OF THE TREASURY › Subtitle 06 - SALES AND USE TAX › Chapter 03.06.01 - Sales and Use Tax › Section 03.06.01.08 - "Taxable Price" Defined

Current through Register Vol. 51, No. 14, July 12, 2024
A. The sales and use tax is computed on the "taxable price" of a transaction subject to the tax. The term "taxable price" is broadly defined by statute to include, with certain specific exceptions, the total consideration for the transaction, which may be either in the form of money, rights, property, promises or anything else of value, or by exchange or barter. The total monetary value of the consideration, that is, of all those things which in fact are, or are promised to be, paid or delivered by or on behalf of the purchaser, to or on behalf of the vendor in the consummation and complete performance of a sale, whether or not the vendor receives any benefit from them, constitutes the "price" on which the tax is to be computed. Deductions are not permitted for any expense or cost, including the cost of any labor or service rendered, any material used or any property sold regardless of how any contract, invoice or other evidence of the transaction is stated or computed, except for those items specifically described in §D, or in Regulation .10 with respect to certain utilities or Regulation .28 with respect to leases.
B. Components of Taxable Price-Examples.
(1) The following illustrate some items which might appear as a separate amount in the vendor's computation of a bill that nevertheless are a part of the "taxable price", and which therefore may not be deducted before computation of the tax:
(a) Any charges for any services to bring the subject of a sale to its finished state ready for delivery and in the condition specified by the buyer, including charges for assembly, fabrication, alteration, lubrication, engraving, monogramming, cleaning, or any other servicing, customizing or dealer preparation.
(b) Any discount which is dependent upon an event occurring after consummation of the sale, such as a discount allowed for the prompt payment of a bill.
(c) Any charge based on the amount or frequency of a purchase, such as a small order charge, the method of billing, such as a split billing, or the nature of the item sold, such as a slow-moving charge for an item not frequently sold.
(d) Excise or other taxes not statutorily imposed directly upon the buyer or act of buying and for which the buyer has no direct legal liability independent of any contractual obligation to the vendor, regardless of how they are stated, such as manufacturer's, wholesaler's, or retailer's taxes, except for certain utility taxes described in Regulation .10 and certain personal property taxes in lease situations as described in Regulation .28.
(e) Any commission or other form of compensation for the services of an agent, factor, consultant, broker, or similar person.
(f) Any charges for warranties, maintenance or service agreements, or insurance coverage required by the vendor to be taken as a condition of the sale. If the sale could be consummated without the payment of these charges, the charges are not part of the taxable price if separately stated. For example, if the lessee of an automobile who has a contractual obligation to return the automobile undamaged may elect to purchase insurance protecting the lessee against the possibility of having to pay for damages, but need not purchase this insurance in order to lease the vehicle, a separately stated charge for this insurance is not part of the taxable price.
(g) Any portion of the price described as a "donation", when the donation is in fact required by the vendor as a condition of the sale.
(h) The amount of any rebate which may be made to the buyer by anyone other than the vendor, or by the vendor upon the performance by the buyer of any condition following the sale.