Nonprofit Alert: Renewing Your Maryland Sales and Use Tax Exemption Certificate
May 31, 2017 - By: SC&H Group
The following SC&H Group blog post discusses the upcoming deadline, requirements, and considerations for renewing Maryland sales and use tax exemption certificates, allowing qualifying organizations to continue benefiting from significant tax savings.
Every five years, nonprofit organizations must renew their sales and use tax exemption certificates, which allow qualifying organizations to purchase tangible personal property (e.g., office and fundraising supplies and equipment) without paying sales and use tax.
Such is the case for all nonprofit organizations holding a valid certificate with a September 30, 2017 expiration date. In late May, these organizations should have received a notice of the upcoming renewal period from the Comptroller’s Office. (If you do not receive a notice by June 15, contact Taxpayer Service at 410-260-7980.)
To renew exemption certificates, organizations must complete an application online or via mail by August 1, 2017.
Understanding Key Requirements of Certificate Renewal
Before completing the renewal application, organizations should gather the following information:
- Federal Employer Identification Number (FEIN)
- Maryland Sales and Use Tax Exemption Certificate Renewal Notice
- Maryland State Department of Assessments and Taxation (SDAT) Dept. ID
- IRS nonprofit classification [e.g., 501(c)(3)]
When completing the application, an organization must acknowledge its exempt status and indicate any changes that would affect this status. If the organization has changed its name, it must upload a copy of the amended articles of incorporation. Also, it must submit IRS documentation if there has been a change in the FEIN. The application must be signed by an officer of the organization.
Other Considerations when Completing the Application
While organizations are encouraged to submit renewal applications online, paper submissions are permitted and available by request from Taxpayer Service. But, the processing time will be longer since paper applications must be manually reviewed.
Maryland-based organizations that do not have—and are not required to have—a SDAT Dept. ID must submit the renewal application by mail. Please note that some Maryland-based organizations without a SDAT Dept. ID may be asked to register for one with SDAT prior to submitting a renewal application.
An organization located in Delaware, Pennsylvania, Virginia, West Virginia, or Washington D.C. does not need a Maryland SDAT Dept. ID and can submit the renewal application online. However, its application must include a Letter of Good Standing from the state in which it is physically located.
For organizations covered under a group exemption, the parent organization’s group exemption number and FEIN must be provided. Also, government agencies do not need to renew exemption certificates, since these certificates do not expire.
Ultimately, nonprofit organizations with expiring Maryland sales and tax exemption certificates must gather appropriate information, take heed of key considerations, and complete their renewal applications by August 1, 2017. By ensuring continued exempt status, organizations can reduce the costs of tangible personal property purchases and set the foundation for ongoing growth.
To learn more about sales and use tax exemption and other strategies for reducing tax exposure, contact SC&H Group’s Tax Services practice here.