As of July 1, 2011, the Maryland State sales and use tax rate imposed on the sale of alcoholic beverages increased from 6% to 9%. Any item that directly related to the sale of alcoholic beverages, including labor, equipment, and supplies was subject to the increased 9% rate. Concerns were raised regarding the application of the 9% tax rate and as a result, the Maryland General Assembly recently passed Senate Bill 852/House Bill 918 to modify the law. The governor approved the legislation on May 22, 2012.
Beginning on July 1, 2012, the tax on the sale of an alcoholic beverage will continue to be 9%, but a 6% tax rate will now be imposed on those items and labor used in connection with the sale of an alcoholic beverage. Furthermore, the sales tax rate of 6% now applies to a mandatory gratuity or service charge for serving to a group containing more than 10 individuals, regardless of whether it relates to the sales of alcoholic beverages or food and non-alcoholic beverages.
Businesses should continue to calculate sales and use tax on the sale of alcoholic and non-alcoholic beverages separately. If these charges are not broken out separately on the bill, the entire bill will be subject to the 9% rate.
If you have any questions about how the sales and use tax change has an effect on your business, please contact Hertzbach for assistance.