Over the summer, Maryland introduced new rules that apply sales and use tax to certain technology and IT services. As a result, many organizations are now seeing this tax added to invoices from MSPs, software vendors, and other technology providers.
And here’s the part most organizations don’t know:
Nonprofits in Maryland can be exempt from this tax — but the exemption is not automatic.
Qualifying nonprofits must apply for a Sales & Use Tax Exemption Certificate. Until that certificate is approved and shared with your vendors, you will continue to be charged tax, even if your organization ultimately qualifies for exemption.
This means many nonprofits are already paying tax unnecessarily on essential IT services.
How to Apply for the Maryland Nonprofit Tax Exemption
The Maryland Comptroller provides full guidance here:
**https://www.marylandcomptroller.gov/businesses/nonprofits.html**
We’ve distilled the process below.
1. Gather the required documents
You’ll need:
- Your IRS 501(c)(3) or other qualifying determination letter
- Articles of Incorporation
- Bylaws
2. Apply through Maryland Tax Connect (recommended)
Maryland now processes all Sales & Use Tax Exemption Certificate (SUTEC) applications through its online portal.
3. If you prefer a paper application
Maryland no longer publishes the paper form publicly, but you can request one by emailing:
4. What you receive after approval
Maryland issues a wallet-sized certificate that includes:
- An 8-digit exemption number
- An expiration date (typically 5 years)
You’ll provide this certificate to vendors to remove sales and use tax from eligible purchases.
Why This Matters for Your Technology Spend
Maryland’s updated rules apply tax to certain:
- IT support and maintenance services
- Digital products
- Software and cloud subscriptions
- Some MSP and help desk services
- Certain managed, monitoring, design, or upkeep services
Many nonprofits are paying it – especially on eligible IT MSP services and cloud-based tools.
Filing for exemption ensures that your organization is not paying tax on purchases the state does not require.
Important Clarification About the Exemption
Maryland’s exemption applies only to purchases made for your organization’s exempt purposes.
It does not cover:
- Personal purchases by employees or members
- Purchases tied to unrelated business income activities
If your nonprofit engages in activities outside your exempt purpose, the exemption may not apply to those purchases.
What Your Organization Should Do
- Collect your documentation (IRS letter, bylaws, articles).
- Apply for the exemption through Maryland Tax Connect.
- Send your exemption certificate to your vendors — including us — once approved.
- Review your IT invoices from MSPs and software providers. Many are already applying this tax.
- Ask each vendor whether the services you purchase from them are considered taxable under the new Maryland rules.
A short application now could reduce ongoing operating costs for years.
Why We’re Sharing This
This is a new tax, and information around it has not been well understood or clearly communicated on how this “tech tax” impacts nonprofit organizations. Given how critical IT services are to your mission — and how easily this exemption can be missed — we want to make sure our clients and the broader nonprofit community have the clarity they need.
If your organization needs help understanding how this may impact your technology spend, we’re always here to support you with clear, platform-agnostic guidance.
