Maryland’s RELIEF Act Includes a Sales Tax Credit for Small Businesses Adversely Affected by the Pandemic
Spring is almost here, the snow is melting, and everyone is starting to panic about tax season. Filing business taxes is never easy, and even the most well-organized small business owners often get an unpleasant surprise when they meet with a tax accountant about their business taxes. Clickbait authors know that headlines about quadruple-digit tax credits are a sure way to attract clicks, so you get your hopes up about how much money you will save on taxes this year, but when you actually sit down with your accountant, you find out that the truth is more complicated. Many times, two tax credits that target the same demographic are mutually exclusive; you cannot claim both, so you must choose the one that will benefit you more. A Maryland small business lawyer can help you make plans for your small business during tax season and beyond.
How the RELIEF Act Can Help Maryland Small Business Owners
This year, Gov. Larry Hogan signed into law the Recovery for the Economy, Livelihoods, Industries, Entrepreneurs, and Families (RELIEF) Act, aimed at helping Maryland residents get through the lean times of early 2021 as the COVID-19 pandemic enters its second year. Most of the publicity surrounding the RELIEF Act has covered its provisions aimed at protecting low-income individuals and families from economic disaster. While this aspect of the RELIEF Act has featured in fewer news headlines, the new law also contains a provision that creates a new tax credit for small business owners whose businesses saw a sharp drop in income during the pandemic, whether or not they were forced to close due to stay-at-home orders.
The sales tax credit for small businesses will allow eligible small business owners to keep the money that they collected as sales tax during the months of March, April, and May. The only businesses eligible to receive the tax credit are the ones whose gross income from sales is less than or equal to $100,000 per month, in other words, the smallest businesses. There are about 67,000 businesses in Maryland that meet this requirement. The maximum tax credit that any company can claim is $3,000 per month. According to Andrew Schaufele, director of the Bureau of Revenue Estimates at the Comptroller’s office, the average tax credit received by each eligible business that claims the tax credit will be closer to $122; this figure is based on the amount of revenue earned this year by very small businesses this year. In all likelihood, not every business eligible for the tax credit will claim it, because businesses that claim the vendor tax credit, which is not part of the RELIEF Act, cannot also claim the RELIEF Act sales tax credit.
Contact Us Today for Help
Working with our Washington DC small business lawyers can help take the stress out of tax season for your small business, no matter how much the COVID-19 pandemic affected your business. Contact Tobin, O’Connor & Ewing for help today.