The Maryland General Assembly enacted the following changes in the sales and use tax law which
are effective July 1, 1995.
Short-term rental vehicles: The 11½% sales and use tax rate has been extended through
June 30, 1999, on the rental of any passenger car or Class M multipurpose vehicle for a
period of 180 days or less, for which the vendor does not provide a driver and which will
not be used to transport individuals or property for hire. Taxpayers collecting the 11½%
tax should continue to report receipts and taxes collected on Line 4 of their sales and
use tax return. The legislation also extended the provision which included all sales and
charges made in connection with the short-term vehicle rental as part of the taxable price
subject to the tax. These charges include insurance, freight, handling, equipment and supplies,
delivery and pick-up, cellular telephone and other accessories but do not include sales of motor
fuel subject to the motor fuel tax. The provision entitling a vendor to claim a credit against the
vendor’s sales and use tax liability for an amount equal to the titling tax imposed by §13-809 of
the Transportation Article on qualifying passenger and Class M vehicles has also been extended.
Long-term vehicle rentals: An exemption has been created for the lease of a motor vehicle
leased for a period of at least one year. This exemption is applicable to all motor vehicle lease
contracts entered into on or after July 1, 1995. Charges for all vehicle leases entered into prior
to July 1, 1995, remain subject to the 5% sales and use tax.
Local sales tax on food and beverages: The General Assembly has enacted legislation which would
permit code home rule counties to impose a local sales and use tax not to exceed one percent on the
sales of food and beverages in resort areas for the sole purpose of providing revenues to pay the
principal and interest on bonds issued relating to the construction, reconstruction, repair,
renovation or equipping of a convention center facility in the resort area.
Computer software maintenance contracts: An exemption has been created for the sale of an
optional computer software maintenance contract if the purchaser does not have the right under the
terms of the contract to receive software products that are separately priced and marketed by the
seller at no additional cost. If the purchaser does have the right to receive separately priced
and marketed products from the vendor as part of the maintenance contract, the price of the
contract is subject to the sales and use tax. This provision does not affect mandatory maintenance
contracts, which remain subject to the tax. 1995 Changes in the Sales and Use Tax Law