Sales and use tax relief for contractors.

The Maryland sales and use tax will be increased from 5% to 6% on January 3, 2008; however, there is a limited exception for contractors and subcontractors who buy materials after January 3rd for incorporation into real property under a contract that was made before January 3rd. In other words, contractors who entered into contracts in 2007 can buy materials for those projects at the 5% sales tax rate even after the 6% rate generally goes into effect. The Comptroller's office has created a certificate that contractors can submit to vendors in order to receive the 5% rate. Vendors are not required to accept the certificate and can charge the 6% rate, but in that case contractors may submit the certificate directly to the Comptroller's office for a rebate in the amount of the extra 1% sales tax paid. The certificate is available here.