Coronavirus Tax Law Changes in Maryland

The economic collapse triggered by the COVID-19 shutdown has prompted the federal government and Maryland state government to enact various tax law changes. Below are summaries of the various tax changes at both the federal and Maryland state level.

The deadline for filing 2019 tax returns has been extended from April 15 to July 15. The extension is automatic, and nothing needs to be filed to take advantage of it. The extension of the filing deadline does not mean that refunds will be delayed. The IRS is continuing to process and send out 2019 tax refunds on their normal timetable. For those who pay estimated taxes, the deadline for Quarter 1 estimated taxes has been extended out to July 15.

The federal government also passed an economic stimulus package called the Coronavirus Aid, Relief, and Economic Security (CARES) Act. In an effort to boost the economy, the CARES Act is sending stimulus payments to all eligible taxpayers. The stimulus payments will be as much as $1,200 for a single taxpayer and $2,400 for joint taxpayers. Families will also get an additional $500 for each child under the age of 16.

Businesses or self-employed taxpayers will not be required to pay their Social Security payroll taxes for 2020 (although they will be required to repay these amounts in the following years).

Maryland has extended all its tax filing deadlines to match the federal tax extensions. The deadline for filing Maryland tax returns has been pushed back from April 15 to July 15. Also, monthly filing and remittance deadlines for certain business taxes have been extended to July 15. For individuals who have filed for an extension of their federal tax returns, the deadline for the Maryland return is extended to October 15. These include sales taxes, payroll withholding taxes, amusement taxes, fuel taxes and alcohol and tobacco taxes.

Not all of Maryland’s COVID-19 tax law changes are aimed at providing economic relief to struggling taxpayers. In fact, most of Maryland’s coronavirus tax law changes seem more focused on relieving the state’s sudden loss of revenue. One of the very first things the Maryland General Assembly at the start of the outbreak was to enact a brand-new tax on digital advertising. No state in the U.S. has ever attempted to tax digital advertising because it is widely considered to be a violation of federal law. In a far less controversial move, Maryland also increased passed a very large ($1.75) increase in the cigarette excise tax.