Worcester County, MD SUBTITLE IX Food and Beverage Sales Tax

[Added 8-8-1995 by Bill No. 95-11]

§ TR 1-901 General provisions.

(a) Imposition and rate; exemptions.

(1) Imposition and rate, other provision.

A. The Board of County Commissioners may impose a tax within Ocean City on the sale of food and also on beverages. This tax, if imposed, shall be at the rate as a per centum of the taxable price of the sale of food and beverages as the Board may, by resolution, determine, but may not be imposed at a rate in excess of one percent.

B. The Board of County Commissioners shall set forth, by resolution, the date on which the tax shall first be collected, which may be on any date following the effective date of this Subtitle.

C. The Board of County Commissioners may also set forth, by resolution, any other matters necessary or desirable in connection with the imposition or collection of the tax.

(2) Exemptions. The food and beverage sales tax does not apply to:

A. A sale of food or beverages for consumption off the premises by a person who operates a substantial grocery or market business at the same location where the food or beverage is sold;

B. A sale of food or beverage from a vending machine; or

C. A sale of food or beverage that is exempt from any sales and use tax imposed by the Tax-General Article of the Annotated Code of Maryland, as amended from time to time.

(b) Definitions. In this Subtitle, the following words and phrases have the meanings indicated, unless the context clearly indicates a different meaning:

BEVERAGE

Any liquid for human consumption except an alcoholic beverage as defined in § 5-101 of the Tax General Article of the Annotated Code of Maryland which is sold for off-premises consumption.

FOOD

Food for human consumption, including the following foods and their products: beverages, including coffee, coffee substitutes, cocoa, fruit juices and tea; condiments; eggs; fish, meat and poultry; fruit, grain and vegetables; milk, including ice cream; and sugar. "Food" includes food that a person serves for consumption on the premises of the buyer or of a third party; food for immediate consumption; and snack food, including, by way of example, potato chips and sticks; corn chips; pretzels; cheese puffs and curls; pork rinds; extruded pretzels and chips; popped popcorn; nuts and edible seeds; and snack mixtures that contain any one or more of the foods listed in this sentence. "Food" does not include alcoholic beverage as defined in § 5-101 of the Tax-General Article of the Annotated Code of Maryland, as amended from time to time; a soft drink or carbonated beverage; or candy or confectionery.

MAYOR AND CITY COUNCIL

The Mayor and City Council of the Town of Ocean City, Maryland, a body politic and corporate and a municipal corporation of the state.

OCEAN CITY

The corporate limits of the Town of Ocean City, Maryland.

PERSON

Any individual, corporation, company, association, firm, copartnership or any group of individuals acting as a unit and includes any trustee, receiver, assignee or personal representative thereof.

PREMISES

Any building, grounds, parking lot or other area that a person owns or controls or that another person makes available primarily for the use of the patrons of one or more persons.

SUBSTANTIAL GROCERY OR MARKET BUSINESS

A business at which at least ten percent of all sales of food and beverages are sales of grocery or market food items, not including food and beverages normally consumed on the premises even though it is packaged to carry out.

TAXABLE PRICE

The value, in money, of the consideration of any kind that is paid, delivered, payable or deliverable by a buyer to a person in the consummation and complete performance of a sale of food or beverage without deduction for any expense or cost, including the cost of any labor or service rendered, any material used or any property sold.

(c) Collection. Every person receiving any payment for food or beverage on which a tax is levied under this Subtitle shall collect the amount of tax imposed from the buyer on whom it is levied at the time payment is made. The taxes required to be collected hereunder shall be deemed held in trust by the person required to collect them until remitted as hereinafter required.

(d) Reports and remittances. The person collecting the tax shall make out a report, upon forms and setting forth information the Board of County Commissioners prescribes and requires, showing the amount of taxable sales that have been collected and the tax required to be collected; and he shall sign and deliver the report to the Board, with a remittance of the tax required hereunder. The reports and remittances shall be made on or before the twenty-first day of each month, covering the sales and the amount of tax collected during the preceding calendar month. If the reports and remittances are mailed to the Board of County Commissioners, a postmark on the eighteenth day of the month is deemed to be evidence of timely payment. A person responsible for collection of the tax shall keep a complete set of records of all sales, taxable and non-taxable, in such form as the Board of County Commissioners may require. Such records shall be available for inspection and audit by the Board of County Commissioners and preserved for a period of four years.

(e) Processing fee retained by remitter. The person collecting the tax may apply and credit against the amount of tax payable by him an amount equal to one and one-half percent of the gross tax to be remitted by him to the Board of County Commissioners, to cover his expense in the collection and remittance of the tax. However, nothing in this subsection applies to any person who fails or refuses to file his return with the Board of County Commissioners within the time prescribed within this Subtitle.

(f) Failure to report and remit; personal liability; criminal offense. If any person fails or refuses to remit to the Board of County Commissioners the tax required to be collected and paid under this Subtitle within the time and in the amount specified in this Subtitle, there shall be added to the tax by the Board of County Commissioners interest at the rate of one and one-half percent per month on the unpaid tax for each month or portion thereof from the date upon which the tax is due, as provided in this Subtitle; and if the tax remains delinquent and unpaid for a period of thirty days from the date it is due and payable, there shall be added thereto by the Board of County Commissioners a penalty of ten percent of the unpaid tax, and an additional ten percent for each additional ninety days that such tax is not paid. The Board of County Commissioners may proceed to collect delinquent and unpaid taxes by suit or distraint. Intentional failure to pay collected tax funds shall constitute theft pursuant to Article 27, Section 342 of the Annotated Code of Maryland. A person or persons responsible for collection of the food and beverage tax shall be individually, personally, jointly and severally liable for any tax collected. "Persons" in this context shall include, by way of example, all corporate officers and directors and all general partners of partnerships and managers of limited liability companies.

(g) Distribution of proceeds; liability for improper collection.

(1) From the total proceeds collected from the tax by the Board of County Commissioners from time to time for the sale of food or beverages, the Board shall deduct a reasonable sum or percentage, not to exceed five percent, for the cost of imposing and collecting the tax and credit this deduction to the general funds of the County. The remaining portion of the total proceeds shall be distributed to the Mayor and City Council to be deposited in a sinking fund maintained by the Mayor and City Council to be used for the sole purpose of paying the principal and interest on bonds as well as reimbursement for prepaid principal and interest issued relating to the convention center facility.

(2) Distribution of these several payments shall be made by the Board of County Commissioners by the tenth day of each month with respect to all tax revenue received during the immediately preceding month.

(3) The Mayor and City Council shall be liable to the Board of County Commissioners for any refunds legally required to be made by the Board of County Commissioners of any food or beverage tax proceeds as well as for the cost, including attorneys fees, expended in defending such tax collection.

(h) State administrative fee. The Retail Sales Tax Division of the Comptroller's office shall supply to the Board of County Commissioners information in aid of verification of liability for the tax. The Retail Sales Tax Division may make a reasonable charge for this assistance, which shall be paid by the Board of County Commissioners and treated as a part of the reasonable costs of collecting the tax.

(i) Amendments to laws and procedures. The Board of County Commissioners may promulgate and from time to time change or repeal rules and regulations not inconsistent with this Subtitle and deemed necessary to provide for an orderly, systematic and thorough collection and distribution of the tax imposed in this Subtitle. If and as applicable, the laws and the regulations in effect as to the sales and use tax in Maryland shall be adopted and followed by the Board of County Commissioners in promulgating or changing a rule or regulation.

(j) Surety bond of Treasurer. The surety bond of the Treasurer of the County may be increased by the Board of County Commissioners in relation to the moneys collected and distributed under this Subtitle. The premium for any increase in the surety bond shall be deemed part of the cost of imposing and collecting the tax imposed in this Subtitle.

(k) Bond.

(1) The Board of County Commissioners, in order to protect the revenues to be obtained under this Subtitle, may require any person collecting the tax to file with the Board a surety bond issued by a surety company authorized to do business in this state and approved by the State Insurance Commissioner as to solvency and responsibility, in such amount or amounts from time to time as the Board of County Commissioners may fix, to secure the payment of the tax due or which may become due from the person collecting the tax. If the Board determines that the person is to file such a bond, the Board shall give notice to the person to that effect, specifying the amount of bond required. The person collecting the tax shall file the bond within five days after receiving the notice unless, within that period, the person requests, in writing, a hearing before the Board, at which hearing the necessity, propriety and amount of the bond shall be determined by the Board of County Commissioners. This determination is final and shall be complied with within fifteen days after the person collecting the tax receives notice thereof.

(2) In lieu of the bond required by Subsection (k)(1), securities approved by the Board of County Commissioners or cash in such amount as the Board prescribes may be deposited, which shall be kept in the custody of the Board. The Board, at any time, without notice to the depositor of the securities or cash, may apply them to any tax due, and for that purpose the securities may be sold by the Board at public or private sale without notice to the depositor of the securities.

(l) Termination of tax. This tax shall terminate at the end of the month in which sufficient total taxes have been generated to pay in full the maturing principal of and interest on any bonds issued by the Mayor and City Council relating to the convention center facility or such later date as may be provided by state law. The Board of County Commissioners shall notify the Comptroller of the State as to the month in which the tax shall terminate.

(m) Applicability. The procedures under Title 9, Subtitle 7, Article 24 of the Annotated Code of Maryland, as amended from time to time, apply to this Subtitle.