Bill
SB 979
The bill centralizes local hotel tax collection from large online intermediaries to the Maryland Comptroller, redistributing funds to counties and municipalities.
Local Government — Accommodations Intermediaries — Hotel Rental Tax — Collection by Comptroller and Alterations
Status: Approved by the Governor (Chapter 638). Introduced Jan 29, 2025. Major effective dates: general effective date July 1, 2027; certain preemption provisions begin Jan 1, 2028.
Purpose
- Centralize collection of local hotel rental taxes for large accommodations intermediaries (online platforms/marketplaces) by requiring those intermediaries to remit local hotel rental tax to the Maryland Comptroller’s Office instead of to each county. Clarifies administration, audit authority, and state law supremacy over conflicting local laws or agreements concerning collection.
Key provisions
- Scope/thresholds: The centralized collection requirement applies to an accommodations intermediary only if it facilitates either (a) $100,000 or more in booking transactions/sales for use of an accommodation in Maryland in the previous or current calendar year, or (b) 200 or more booking transactions/sales in the previous or current calendar year.
- Administration and distribution: The Comptroller must establish procedures to receive payments and distribute local hotel rental tax revenues to counties and municipalities. Accommodations intermediaries must file hotel rental tax returns as prescribed by the Comptroller.
- Administrative retention: The Comptroller may retain up to 1.5% of the local hotel rental tax revenue it collects to defray administrative costs.
- Prevailing law and agreements: State tax law (certain titles of the Tax – General Article and related local government provisions) will prevail over conflicting local laws, ordinances, resolutions, and — beginning Jan 1, 2028 — over agreements between counties and accommodations intermediaries.
- Audit and enforcement: The bill establishes requirements and limitations for Comptroller audits or investigations of accommodations intermediaries (procedural/audit standards included in the law).
- County-specific changes:
- Garrett County: monthly interest on unpaid hotel rental tax increased from 0.5% to 1.0%.
- Talbot County: shortens the no-penalty period for late payment from 120 days to one month.
- Howard County: authorizes increase of county hotel rental tax from up to 7% to up to 8%; any revenue above 7% must be distributed to the Howard County Tourism Council. (Howard County may choose to raise the rate.)
Who is affected
- Large accommodations intermediaries/online short‑term rental platforms (e.g., platforms that meet the thresholds).
- County and municipal governments (recipients of redistributed tax revenue); Howard, Garrett, and Talbot counties are specifically affected by rate/penalty changes.
- Hotels, short-term rental hosts, and local tourism bodies (through changes in collection mechanics and revenue distribution).
- Maryland Comptroller’s Office (administration, compliance, audits).
Fiscal and timing effects
- Effective July 1, 2027 (with some preemption provisions effective Jan 1, 2028).
- State (Comptroller) costs: estimated special fund expenditures increase by about $1.3 million in FY2028 (includes $800,000 one‑time computer programming) and ongoing personnel/operating costs (additional staff: 1 assistant AG, 1 senior tax attorney, 3 revenue examiners). Ongoing annual costs projected at roughly $438,100 by FY2030.
- State revenues: increased special fund revenues beginning FY2028 from the Comptroller’s retained 1.5% administrative fee.
- Local revenues: may increase beginning FY2028 if the centralized collection yields additional compliance and collections. Example: Howard County could receive an estimated additional $0.8 million beginning FY2028 if it adopts the authorized 8% rate.
Other notes
- The bill clarifies that short‑term rental units are included within hotel definitions for tax purposes.
- Small business impact assessed as minimal in the fiscal note.
- Companion bills: HB 429 and HB 1103.
Compiled from official sources — confirm details with the bill’s official record.
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