Overview
L. 2022, H795 (c. 634), effective 07/01/2022, amends the gross receipts tax on short-term leases or rentals of heavy equipment property.
Key Updates
- Exemptions:
The tax does not apply to a short-term lease or rental of heavy equipment property to:- The federal government
- The State of Maryland
- A county or a municipality
- Reporting Changes:
A person who owns a business with gross receipts subject to this tax is no longer required to submit to the county or municipality where the heavy equipment rental business is located a list of:- All personal property
- The original cost
- The date of acquisition of the property
that is subject to the gross receipts tax and exempt from the personal property tax.
- Administrative Impact:
As a result of this change, a county or municipality is no longer required to calculate the amount of property tax that would have been due for all property that is exempt from personal property tax.
Summary of Changes
Exempt Entities
Exemptions now include leases or rentals to:
- The federal government
- Maryland
- Counties
- Municipalities
Simplified Reporting
Rental businesses no longer need to report details of equipment to counties or municipalities for property tax exemption purposes.
Elimination of Local Tax Calculations
Counties and municipalities are relieved from calculating “would-have-been-due” property taxes on exempt equipment.
These updates reduce the administrative burden on businesses and local governments, aligning reporting and tax exemptions more clearly with actual practice.
Frequently Asked Questions
What is the purpose of the 2022 amendment to the gross receipts tax on heavy equipment rentals?
The amendment simplifies the administrative process for businesses and local governments by adjusting tax exemptions and eliminating certain reporting and calculation requirements related to short-term leases of heavy equipment.
Who is exempt from the gross receipts tax under the new amendment?
Short-term leases or rentals of heavy equipment to the federal government, the State of Maryland, counties, and municipalities are now exempt from this tax.
What reporting responsibilities were removed for equipment rental businesses?
Rental businesses are no longer required to submit a list of personal property, including cost and acquisition date, that is exempt from personal property tax to local jurisdictions.
How does this change affect counties and municipalities?
Counties and municipalities are no longer required to calculate hypothetical property taxes on exempt heavy equipment, reducing their administrative burden.
When did the new tax exemption rules take effect?
The updated rules under L. 2022, H795 (c. 634) took effect on July 1, 2022.