The admin staff hasn’t really been keeping up with the latest Katsucon drama and we would really appreciate if our awesome contributors could step up and improve the article. One of the most contentious issues that we’ve seen in the lead up involves issues around Artists Alley. randomsome1 called the Maryland Comptroller’s office and got the low down on the tax situation for any artists selling merchandise and other goodies there. This is crossposted with permission from her:
So I just spent an hour or so on hold and on the phone with the comptroller & sales/use tax people of Maryland. (For the record, their hold jingle is dire.) I transcribed what I got from them for sharing with the group.
If an individual in the state of Maryland is selling artworks or crafts which have been made specifically for sale, do they need to collect sales tax?
A: Yes they do. What you and/or the show promoter will need is to get a temporary sales tax number, unless you plan to sell in Maryland on a regular basis. If your sales will not be regular, register for a temporary sales tax number. “Regularly” is defined by “four or more times a year.” People who sell regularly in MD should get a permanent tax number, and for more information should call Miss Foster @ 410 767 1543.
A temporary tax number does not have a yearly/quarterly filing requirement. Getting one does not actually make you a business—it’s just to say that you will be selling things. (If you officially want to sell as your studio instead of your name you have to register a fictitious name, which is a slightly different and kind of expensive beastie in its own right.) When you complete the application it asks how long the event will run. After there’s a 20-30 day window to file.
If you return to sell in MD and need to pay sales tax again, just call the temp sales tax phone number (from above) and Miss Foster will be able to talk you through using the number/temp license. She got me registered over the phone with my info from Otakon.
Would tax liability change if a seller proclaimed themselves to be an amateur or a hobbyist?
What about the provisions in the tax code regarding “casual and isolated sales”?
A: In the case of this event, quite a few people will have the option of making purchases so it does not count as a one time sale. As the purpose is for people to have more than one sale, and as the likelihood is extremely high that more than one sale will be made by each seller, this makes it exempt from the “casual and isolated sales” provision.
What about out-of-state sellers, small businesses, etc.?
A: They would also need the a temporary sales number. PA or other out-of-state sales tax numbers do not apply in MD, where the possession of merchandise will take place.
What could make sales at this show be tax exempt?
Sellers would not be required to collect sales tax if the purchase is made from a verified/certified reseller. (In this case, they would be required to collect proof of reseller status.) Otherwise they are liable for collecting and paying sales tax. To do otherwise is tax evasion.
What are the responsibilities of the individuals running a show that will feature sales of the previously mentioned artworks?
A: An event promoter could register for a sales & use tax number for the particular event, then at the end of the event the sellers will report their sales volumes and pay them the sales tax due; then the event promoter will report and pay that to the state of Maryland. If the sellers are registered with the state of Maryland they will pay the amount themselves directly. If any of you sold at Otakon—it’s like that.