According to Maryland, sales and use “tax is imposed on the entire price whether paid in the form of money, promises, barter or anything else of value.” You received free merchandise in lieu of commissions. All tangible property owned and used in Maryland is subject to the 6 percent sales and use tax. If this merchandise is going to be resold by you at another jewelry show, you might have been able to eliminate the sales tax by providing your resale certificate (and then you would collect sales tax from the buyer of that merchandise). Your CPA would be your first point of contact if you want to address this further or you could contact Maryland via e-mail (sut@comp.state.md.us) or 1-800-492-1751.

If it were me, I’d start by dropping Martin O’Malley a note. He says he encourages and seeks questions and suggestions when it comes to our great state. Go to www.governor.maryland.gov/mail/ and request his opinion and explanation on this matter. If he doesn’t want to talk about the Maryland sales tax (I hear he’s having a tough time these days with trying to balance our state budget and reign in excessive spending) you can go to www.business.marylandtaxes.com/taxinfo/salesanduse/default.asp. Of course, the best suggestion I can give you is to ask your accountant, or if you do your own taxes and use TurboTax or some other tax preparation program, get the answer from their help desk. It sounds like that “Free” merchandise wasn’t free after all.

Below is information from the Maryland State Sales Tax Site: The tax is imposed on the entire price, whether paid in the form of money, promises, barter or anything else of value. It includes the amount of liabilities assumed by the buyer, the value of services performed for the vendor and, except for federal food stamps, the face value of any coupon for which the vendor can get reimbursement from another source. The taxable price is not reduced for any expense or cost for labor or service rendered, material used or any property sold except as explained below. The taxable price may be reduced by separately-stated charges for installation, professional services, interest payments and delivery services. Additionally, the tax does not apply to consumer excise taxes, deposits, cash discounts and mandatory gratuity charges on food and beverage sales for groups of ten or fewer. Reductions to the taxable price must be made known to the buyer by documentary evidence in existence at the time of the sale. However, if these charges are included in a lump-sum price with no separate statement, the tax must be collected on the entire amount of the sale. Based on this, I would say you have to pay the tax!