This Week in State Tax

The Maryland Comptroller recently issued guidance regarding the use of Multiple Points of Use certificates (MPUs) in connection with the purchase of certain digital products, digital codes, data and information technology services, and software publishing services. Effective July 1, 2025, when a buyer knows at the time of purchase of one or more of these products or services will be used concurrently both inside and outside Maryland, or resold to a member of an affiliated group, the buyer may present to the vendor an MPU. A valid MPU certificate relieves the vendor of the obligation to collect and remit sales tax on the transaction and shifts responsibility for payment of the tax on the proportion of the product to be used in Maryland to the buyer or the related party. [See Chapter 604 of the Acts of 2025 (HB 352) for provisions governing MPUs as well as the imposition of tax on data and information technology services and software publishing services.]

Technical Bulletin No. 54 outlines the procedures that buyers must use in issuing MPUs and the parameters required for vendors to accept one. Buyers intending to issue an MPU must follow several steps. First, if a buyer does not have an existing sales tax account, they must register for one with the Comptroller’s office; businesses with an existing account are not required to register for a separate account. Second, all buyers intending to issue MPUs (both new and existing account holders) must apply to the Comptroller via e-mail to become qualified to use MPUs.  Once qualified, a buyer intending to issue an MPU certificate to a vendor must submit a request for authorization to the Comptroller through MDTaxConnect.gov. For software subscriptions, one request is sufficient to cover all future recurring payments and automatic renewals. Each MPU authorization request must include ten specific pieces of information, including the names of the parties involved, the transaction date, price, and an estimate of the percentage of use in Maryland. Any reasonable method of apportionment that is supported by the buyer’s records may be used in estimating the use in Maryland. If the transaction involves resale to related parties, the request must also include the identity of the related parties. Buyers are responsible for providing the MPU certificate to the vendor either before or at the time of purchase.

Vendors may not accept and will not be relieved from their obligation to collect Maryland sales tax on a transaction if they: (a) fail to verify, through MDTaxConnect.gov, that the buyer was authorized to issue the certificate; (b) “know or should have known” that the sale was not for a qualifying product; or (c) “know or should have known” the sale was not for use both inside and outside Maryland. If a vendor does not accept an MPU certificate, or the buyer chooses not to issue one, the buyer may still seek a refund for any sales tax paid on use of the product that occurred outside Maryland. If no MPU is issued,  Maryland sales tax is to be charged on the full price of the product.

The process outlined in Technical Bulletin No. 54 supersedes that described in Maryland Tax Tips #29 for the purchase of digital products and codes to be used concurrently inside and outside Maryland.  For further information, please contact Jeremy Jester and see our earlier TWIST of June 23, 2025. 

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New York State has launched an outreach initiative to increase compliance with its Abandoned Property Law. In recent months, the New York Comptroller’s Office of Unclaimed Funds (Comptroller) issued notice letters to businesses operating in New York that have not filed unclaimed property reports with the Comptroller. These letters encourage businesses to review their records for unclaimed funds and to complete an online “self-audit” checklist;  if a response is not received to the initial notice, a reminder letter is sent.

Recipients of the letter are given 30 days to complete the checklist and submit it to the Comptroller’s Voluntary Compliance Unit. The checklist asks a series of questions about whether the business has certain types of unclaimed property, such as outstanding payroll, vendor or accounts payable checks, accounts receivable credit balances, merchandise credits or gift card/certificates due to New York residents and the means it uses to track such items. Additionally, the checklist asks if the business has unclaimed amounts owed to unknown owners and if the company reports unclaimed funds under a related business. The online checklist does not require the business to disclose the amount of potential unclaimed property.

If the Voluntary Compliance Unit determines it is likely that the business holds  unclaimed property, based on its review the checklist, the business is considered to have requested enrollment in the Comptroller’s Self-Directed Compliance Program (SDCP). The Comptroller will then inform the business of this fact and provide information about the next steps in the SDCP process. Acceptance into the SDCP may entitle the business to relief from penalties and interest on late remittance of unclaimed property. After acceptance into the SDCP, the business is expected to review its records, identify dormant unclaimed property, perform owner outreach, and submit an unclaimed property report to the Comptroller within six months.

Businesses that have not received the Comptroller’s self-audit checklist,  but that may have past due unclaimed property reportable to New York can also request an invitation to join the SDCP. If accepted, they may also be eligible for a waiver of penalties and interest related to past due property. For more information about navigating the New York SDCP, please contact: Will King, Marion Acord, Ryan Hagerty, Keela Ross, Karen Anderson, or Quin Moore.

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The Oregon Supreme Court recently held that inclusion of intangible property in the property tax base as part of the central assessment process was constitutional as applied to an air transportation company and utility company. For most Oregon taxpayers, property tax is imposed on a county-by-county basis based on the value of the real and tangible personal property located in each county. However, like many other states, Oregon provides for “central assessment” of certain taxpayers that are not easily amenable to local taxation. When an Oregon taxpayer is subject to central assessment, tax is assessed on all property owned by the taxpayer, explicitly including intangible property.

Two taxpayers—an airline and an energy company—were subject to central assessment and challenged application of the tax to their intangible property in separate suits. Each suit focused on alleged violations of state and federal constitutional provisions that require uniformity and equal treatment by irrationally subjecting similar taxpayers to disparate treatment. Although the Tax Court did not formally combine the two cases, it issued a joint decision finding the tax unconstitutional as it applied to the airline (because it impermissibly distinguished between national airlines and local bus and trucking companies) but upholding it as it applied to the energy company (because there were no comparable companies that were treated differently). Both the energy company and the state appealed the adverse portions of the decision.

The Oregon Supreme Court upheld the Tax Court’s approval of the system as it applied to the energy company, but it reversed the finding that it was unconstitutional as applied to the airline. The court read all the cited constitutional provisions—both those requiring uniformity and those requiring equal treatment—as subjecting the tax system to a rational basis review. The court proffered several potential rational justifications for using the central assessment approach including: the possibility that local officials may not have the expertise to effectively value intangible assets; the need to focus limited resources on the taxpayers with the highest potential revenue; the differing role intangible assets play in various industries; and the varying impact of related administrative costs on businesses in different industries. Given that central assessment was developed to effectively tax the value of businesses like airlines and utilities that often span multiple jurisdictions, the court held that the legislature could rationally choose to tax intangible property of a centrally assessed business but not a locally assessed business. Contact Nisha Mathew with questions about Delta Air Lines, Inc. v. Department of Revenue.

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The Washington Department of Revenue has begun the process of issuing taxpayer guidance regarding services that will become subject to retail sales tax on October 1, 2025 per the terms of Enrolled Substitute Senate bill 5814 passed earlier this year. The new taxable services include information technology training, technical support, and related services, custom website development services, investigation, security, and armored car services, temporary staffing services, advertising services, live presentations, sales of custom software and customization of prewritten software, along with certain digital automated services. For a further description of these services, please see our TWIST of May 25, 2025.

To assist taxpayers in navigating the expanded tax base, the Department will be developing and publishing further guidance and resources prior to October 1, with interim guidance expected in early September. In addition, the Department held multiple listening sessions in July for taxpayers to share their feedback regarding the changes, and this feedback will be compiled and published in early August. In addition, the Department has identified various issues that taxpayers may have with respect to each new service, such as determining the location of the sale for sourcing purposes, the scope of certain service definitions, and the potential impact of the use of electronic tools on the taxability of historically nontaxable professional services. As the Department continues to develop further guidance, taxpayers are encouraged to submit questions and comments by email to the Department. All information provided by the Department to this point, as well as a description of the guidance process and the questions they have identified, can be found on the Department website. For more information and further developments, contact Michele Baisler and stay tuned to TWIST.

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