The Tax

The State of Maryland recently enacted Senate Bill 2 - Tax Reform Act of 2007, extending Maryland’s 6 percent sales tax to computer services, as defined below.  The provisions regarding computer services are effective July 1, 2008, and are terminated June 30, 2012.

Article – Tax – General (11–101.)

(1) “Computer service” includes:

(i) computer facilities management and operation;

(ii) custom computer programming;

(iii) computer system planning and design that integrate computer hardware, software, and communication technologies;

(iv) computer disaster recovery;

(v) data processing, storage, and recovery;

(vi) hardware or software installation, maintenance, and repair.

(2) “Computer service” does not include:

(i) Internet access, as defined in the federal Internet Tax Freedom Act;

(ii) typing or data entry on word processing equipment;

(iii) computer training;

(iv) the installation, maintenance, or repair of tangible personal property other than computer hardware or software that includes computer hardware or software as a component part;

(v) a service otherwise described in paragraph (1) of this subsection that is provided as part of or in connection with:

1. Electronic fund transfers, financial transactions, automated teller machine transactions, or other banking or trust services;

2. Business management, account management, personnel, payroll, employee benefit, or other administrative services;

3. Educational, legal, accounting, architectural, actuarial, medical, medical diagnostic, or other professional services; or

4. Telecommunications services.

View source document, Senate Bill 2 (pdf)