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CPAs, business groups voice strong opposition to sales tax on services, but lawmakers’ search for revenue continues

Maryland’s business community this week turned out in united opposition to a bill that would expand the state's tax base to include sales taxes on professional services, including those provided by CPAs.

The question on everyone’s mind is: What happens next?

House Bill 1515, titled “Sales and Use Tax — Rate Reduction and Services,” would reduce the sales tax rate from 6% to 5% but extend the 5% sales tax to various everyday services that were previously untaxed, including accounting services.

Other never-before-taxed services that would be impacted include:

  • child care services;
  • legal and appraisal services;
  • real estate services;
  • shipping and delivery services;
  • transportation, towing, parking and automotive services;
  • home repair, cleaning and improvement services;
  • dry cleaning and laundry services;
  • salon and barber shop services;
  • veterinary and pet grooming services; and
  • advertising, printing and media streaming services.

The proposed bill is identical to a bill that the CPA profession and Maryland’s business community opposed and defeated in 2020.

As in 2020, CPAs and other business-minded groups are turning out en masse to voice their opposition to the bill. Maryland’s House Ways and Means Committee heard testimony about the proposed bill on March 11, and MACPA members were among the many on hand in Annapolis to speak out against the plan.

CPAs’ objections to HB 1515 include the following:

  • Complexity: Between remote work, the possibility of customers being located in multiple states, and companies with multiple offices and out-of-state staff, it is extremely difficult to source where the sale and delivery of professional services occurs. Complexity increases exponentially with multiple factors such as these.


  • The burden on small businesses: Most small businesses use outside CPA and accounting services — everything from bookkeeping and financial statement preparation to tax preparation and more. A sales tax on such services would put smaller businesses at a competitive disadvantage against bigger Maryland businesses who have in-house accounting staff to handle those duties. Additionally, requiring small businesses to deal with multi-state taxation issues is an excessive burden.


  • Additional compliance burden: All businesses will need to bear the additional costs of implementing a compliance structure on top of existing sales tax, income tax, and personal property tax processes.

  • Paying a tax on tax: Taxpayers would be paying a tax on having their taxes prepared, which, to them, would feel like double taxation.
  • Harm to Maryland’s business environment: No neighboring states tax professional services. In a geographically small state like Maryland, where most people live close to a neighboring state, this would increase our costs by 5% and put us at a competitive disadvantage with those other states. Additionally, the sales tax is designed to be a tax on consumption; when business-to-business services are taxed, it becomes a tax on production.
  • Failure in other states: Five other states — Utah, Minnesota, Florida, Michigan, and Massachusetts — have adopted a sales tax on professional services only to later reverse it, largely due to compliance and enforcement difficulties.  

What happens next?

Early indications are that HB 1515 may not find the necessary support in Maryland’s General Assembly this year. Maryland Gov. Wes Moore has said he “doesn’t see the need to raises taxes” this year, and he backed up that notion by submitting a $63 billion budget that does not include any tax increases. That budget remains largely intact after being unanimously approved this week by Maryland’s Senate.

Even lawmakers seeking solutions to the state’s looming budget shortfalls are reluctant to rush things. The bill’s sponsor, House Majority Leader David Moon (D-Montgomery County), said the proposal is meant as “a bit of a conversation starter” in anticipation of more serious future discussions of how Maryland might address its shortfalls. And Senate Budget and Taxation Committee Chair Guy Guzzone told Maryland Matters that the state’s rainy day cash reserves give lawmakers some time to explore all options. 

“We do have, out into the future, some significant issues to deal with,” Guzzone told Maryland Matters reporter Bryan Sears. “I know we’ll also figure out ways to deal with them in due time.”

March 15 update

The House of Delegates did not include broad-based increases in the sales tax (as proposed in HB 1515) in its budget that was announced on March 15.

House leaders are proposing tax and fee increases to raise more than $1.3 billion annually, aiming to fund state priorities without resorting to short-term fixes. According to The Baltimore Banner, here’s what they’re proposing:

  • Legalizing internet gambling, also known as “iGaming”: $300 million
  • Changing vehicle registration fees so that large vehicles pay more: $250 million
  • Enacting a corporate tax reform known as “combined reporting”: $225 million
  • Applying the vehicle excise tax to trade-ins: $155 million
  • Increasing the vehicle excise tax from 6% to 6.5%: $100 million
  • Increasing a vehicle registration surcharge to fund trauma centers: $85 million
  • Increasing tolls: $75 million
  • Adding a 75-cent fee on rides through ride-hailing services like Uber and Lyft: $45 million
  • Increasing fines for endangering road workers: $30 million
  • Increasing registration fees for electric vehicles: $20 million
  • Adding an excise tax on firearms and ammunition: $20 million

Speaker Adrienne A. Jones stressed the importance of sustainable revenue sources, particularly for initiatives like the Blueprint for Maryland’s Future, which targets improvements in education and transportation. However, both the Senate and Gov. Wes Moore oppose significant tax hikes, preferring to rely on reserves and funds from unexpected stock market gains.

The Senate has also introduced plans to boost transportation revenue by raising tolls for out-of-state drivers and implementing an annual fee for electric vehicles. However, the specific proposal that both chambers will agree upon remains uncertain as the April 8 session deadline approaches.

Related news from Annapolis

How you can help

Regardless of what happens this year, CPAs should expect lawmakers to continue exploring the idea of raising revenue through new taxes, including sales taxes on professional services. The issue will likely steal the spotlight on the MACPA’s legislative agenda for the 2025 General Assembly session.

Maryland CPAs can play an important role in the MACPA’s legislative efforts in a couple of important ways.

Become a legislative volunteer

Make plans to join the MACPA and your fellow CPAs at the 2025 edition of CPA Day in Annapolis next January. The annual event matches CPAs with their elected officials and allows you to discuss issues of importance directly with lawmakers. The MACPA will give you pointers on what to say and how to say it. All you need to do is show up with an eye on protecting the profession. Keep an eye on MACPA.org for details as the event draws closer.

Support our PAC

You can also support our legislative efforts significantly by donating to our political action committee. Issues like this are perfect examples of why supporting our PAC is more important than ever.

Through contributions from members like you, our PAC is able to work toward favorable outcomes on legislative issues that affect CPAs, educate legislators about matters that are important to the CPA profession, and keep MACPA members informed.

Your generous contribution will help ensure Maryland CPAs have a voice in Annapolis and will help ensure a vibrant CPA profession in the future.

Learn more and donate today by visiting MACPA.org/advocacy.

Further details about HB 1515 will be posted on the MACPA's blog as developments warrant. 

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Bill Sheridan