Just two days after the Senate set the tone, Maryland’s House of Delegates has passed its version of the Maryland Tax Reform Act of 2007, and here’s the good news for CPAs: Following the Senate’s lead, the House has decided that accounting, consulting and tax preparation should not be subject to sales and use taxes.
Because there are differences between the House and Senate versions of the bill, a conference committee made up of a handful of senators and delegates will convene this week to iron out the differences. It’s possible a final version could be presented sometime next week.
And how do the two versions differ?
The House proposal has a higher personal income tax rate (adding three new individual income tax brackets of 5.25, 5.5 and 5.75 percent), a higher corporate income tax rate (8.75 percent vs. 7 percent), more services subject to sales tax, fewer spending cuts, and contains combined reporting, which was eliminated from the Senate version.
In addition, under the House version, sales taxes would increase from 5 percent to 6 percent and the hotel room tax rate would jump from 5 percent to 10 percent.
We will continue to monitor developments from Annapolis and update you as events warrant.