Nexus Information for Corporations

The Maryland corporation income tax applies to every Maryland corporation and every other corporation that has a nexus with Maryland. Nexus indicates a taxable connection between a corporation and a taxing authority. If a corporation conducts business activity within Maryland and exceeds the provisions of 15 U.S.C. Section 381 (P.L. 86-272), it has a nexus and must file a corporation income tax return, using Form 500. The following list includes some in-state activities which generally create nexus and are outside the protection of 15 U.S.C. Section 381 (P.L. 86-272):

• Maintaining a business location in Maryland, including any kind of office.
• Ownership or use of property in Maryland, real or personal, whether the property is rented office space or equipment used in the manufacture and distribution of goods.
• Employees soliciting and accepting orders in Maryland.
• Installation or assembly of the corporation's product.
• Maintaining a stock of inventory in a public warehouse or placement of the corporation's inventory in the hands of a distributor or other non-employee representative.
• Sales persons making collections on regular or delinquent accounts.
• Technical assistance and training with Maryland offered by corporate personnel to purchasers or users of corporate products after the sale.
• Corporate personnel repairing or replacing faulty or damaged goods.
• Mobile stores in Maryland (such as trucks with driver-salesmen) from which direct sales are made.

For more information, see Administrative Release No. 2, Interstate Commerce Tax Act - Domestic and Foreign Corporations - Nexus Requirements - Apportionment of Corporate Net Income

For situations involving the Maryland sales and use tax, see Nexus Information for Sales and Use Tax.