Overview of the Exemption Increase
The Maryland State Department of Assessments and Taxation (SDAT) alerts taxpayers of the increase in the exemption from personal property assessment for all Maryland businesses from $2,500 to $20,000. This change comes as a result of recently enacted legislation, as reported in State Tax Update on May 19, 2022.
Automatic Adjustments to Previous Filings
The SDAT will automatically adjust assessments for filings submitted between January 1, 2022, and June 30, 2022, ensuring that reported business personal property less than $20,000 is not assessed.
Key points:
- Late filing penalties previously billed on 2022 business personal property returns reporting less than $20,000 have been abated.
- Filers who have already paid a late filing penalty on a return reporting less than $20,000 are being mailed a refund check for the penalty paid.
Changes Starting in 2023
Beginning in 2023, filers with a total original cost of personal property less than $20,000 will benefit from streamlined reporting:
- Businesses can now self-attest on their Annual Report that their personal property falls within the exemption range.
- There will be no requirement to submit a return detailing their personal property.
News Release: Maryland SDAT, July 11, 2022.
Frequently Asked Questions
What is the new personal property exemption amount for Maryland businesses?
The exemption has increased from $2,500 to $20,000. This means that any business with personal property valued under $20,000 is no longer subject to assessment by the Maryland State Department of Assessments and Taxation (SDAT).
Do businesses need to take any action if they filed earlier in 2022?
No action is needed. SDAT is automatically adjusting assessments for filings submitted between January 1, 2022, and June 30, 2022, ensuring that amounts under $20,000 are not assessed.
What happens if a business already paid a late filing penalty in 2022?
If the business reported less than $20,000 in personal property and paid a penalty, SDAT is issuing refund checks for those payments.
What changes apply to filings starting in 2023?
Beginning in 2023, businesses with less than $20,000 in personal property can simply attest to that fact on their Annual Report. They no longer need to submit a detailed property return.
How does this exemption affect reporting requirements?
It streamlines the process for small businesses. If a business’s personal property falls below the $20,000 threshold, it avoids both detailed reporting and the risk of late filing penalties.