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The state of Maryland repealed, on May 18, the withholding of 3% of the contract price from non-resident contractors who do not have a tax clearance certificate from the Comptroller's Office. The ruling is applicable to contracts entered into on or after July 1, 2007.

It had been required that the person or entity contracting with the nonresident contractor must withhold 3% of the contract price until 30 days after the contractor made a written request for a tax clearance certificate with the Maryland Comptroller of the Treasury. The Comptroller issued either a certificate of no tax due or a certificate of tax due within 30 days of the request by the contractor, which the party who withheld the tax had to abide by, either by releasing the funds to the contractor, or remitting any tax owed by the contractor to the Comptroller of the Treasury.

The withholding requirement generally applied to any real estate improvement general contract of $500,000 or more, or any subcontract with a subcontractor for $50,000 or more.

Anyone having questions about the new ruling can contact Tax Specialist Crystal Martin at 800-745-8233 or 717-757-6999 or send her an email by using the form below.


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