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                                                                                              SDAT Business Personal Property 

                    INSTRUCTIONS FOR FORM 2 

SOLE PROPRIETORSHIP AND GENERAL PARTNERSHIPS 
                 Business Personal  Property Tax Return  
                    General Information and Requirements 

                       Maryland  State Department of Assessments and Taxation, Taxpayer Services Division  
               Business Personal Property Division, 301 West Preston Street Room 801, Baltimore Maryland 21201   -1052 

1) WHO MUST FILE   A RETURN                                       You may request a 60 day extension of the filing deadline, at no 
A Maryland personal property return (Form2) must be filed         cost, by visiting http://pprextensions.dat.maryland.gov/ 
by all sole proprietorships and general partnerships if they      Extension requests must be made on or before April 15th.  
possess (own, lease, rent, use or borrow) business personal       Increased use of this  site is anticipated as April 15th 
property or need a business license. A business which fails to    approaches so the Department suggests you apply for 
file this return will likely receive an estimated assessment.     extensions as  soon as the site opens in December.  
Limited partnerships, limited liability companies and limited     Please note that Department  of Assessments and Taxation  
liability partnerships that are registered with the               does not accept paper extensions. No additional extension to 
Department's Charter Division are required to file a Form 1.      file will be allowed after the 2 months. Extensions approved  
                                                                  by the Internal Revenue Service or Maryland Comptroller of 
2) WHEN AND WHERE TO FILE                                         the Treasury for income tax returns will not be accepted. 
At the beginning of each year, the Department makes the 
business personal property return available on its website. It    4) FORMS 
is the responsibility of the entity to obtain and file the return To ensure proper posting to your account always provide the 
on time. The due date for filing is April 15, of filing year.     business name and your Department ID number. Please use 
Should April 15 fall on a weekend, the return will be due on      this number in all communications with the Department. 
the Monday immediately following. 
                                                                  5)  MAILING ADDRESS  CHANGES 
        The Department encourages  all customers to file          Make necessary address corrections on the form and check 
        through the online portal, Maryland Business              the address correction box on page 1 of the return. 
        Express (MBE) at  
        https://egov.maryland.gov/BusinessExpress/  
                                                                  6)  LATE FILING  PENALTIES 
        If mailing your return please send to Department of       A business which files an annual return postmarked after the 
        Assessments and Taxation, Personal Property               due date of April 15 of filing year (or June 15 if an extension is 
        Division, P.O. Box 17052, Baltimore, MD 21297-            approved) will receive an initial penalty of 1/10 of one 
        1052.                                                     percent of the county assessment, plus interest at the rate of 
                                                                  two percent of the initial penalty amount for each thirty (30) 
        Amended returns or second filings are to be sent to       days or part thereof that the return is late. If returns are filed 
        the Department of Assessments and Taxation,               late, do not pay penalties at time of filing return. They will be 
        Personal Property Division, 301 W. Preston Street,        assessed at a later date. 
        Baltimore, MD 21201-2395.  
                                                                  7) PERIOD  COVERED 
3) EXTENSION OF TIME TO FILE                                      All returns shall cover the calendar year regardless of any 
The Department may grant a 2 month extension to file the          fiscal year.  All information required in this return shall be 
return.                                                           given as of January 1, except line items 2 and 4, which refer 
All preparers and taxpayers  with Internet access should use      to the twelve calendar months of prior year). There may be 
the Department's website to  ensure prompt and accurate           times when  supporting detail should be provided with the 
recording of an unlimited number of requests free of charge    .  return. Please see Form SD1   , Supplemental Details. 
You will receive a confirmation number and a printed list as      Information supplied on the return and enclosures are not 
proof of your submission. Always print and keep a copy of the     open to public inspection. 
confirmation page.  The Department will automatically accept 
it as evidence of a  valid approved extension in case there is    8)  WHAT MUST BE  REPORTED 
ever a  problem.                                                  Generally all tangible personal property owned, leased, 
                                                                  consigned or used by the business and located within the

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SDAT Business Personal Property

State of Maryland on January 1, must be reported. Property For manufacturing exemption requests, an application must
not in use must still be reported. All fully depreciated and be submitted on or before September 1, of the initial
expensed personal property must also be reported. Personal assessment year or within 6 months after the date of the first
property includes but is not limited to office and plant assessment notice for the taxable year that includes the
furniture, machinery, equipment, tools, furnishings, manufacturing personal property in order to qualify for the
inventory, and all other property not considered part of the current tax year. Section 7-104 of the Tax- Property Article of
real estate. the Annotated Code of Maryland has been revised to include
the following subsection (d) that allows the owner of
Personal property in this State (other than operating property manufacturing personal property to file an application within
of railroads and public utilities) falls into two subclasses: 6 months after the date of the first assessment notice for a
Stock in business or inventory is goods held by a taxable year that includes the manufacturing personal
taxpayer for sale and goods placed on consignment property. If the application is approved, the exemption shall
to another for sale in the expectation of a quick be granted for the taxable year. The exception to the
turnover. Stock in business does not include goods September 1 deadline is applicable to taxable years beginning
manufactured by the taxpayer but held by the after June 30, 2009. No manufacturing exemption can be
taxpayer for purposes other than sale or goods granted unless a timely application is filed. Once filed, no
manufactured by the taxpayer but placed in additional manufacturing applications are required in
possession and control of another as in the case of subsequent years. Exemption applications can be found on
leased property. Stock in business is assessed at cost the website,
or market value whichever is lower. LIFO method of https://dat.maryland.gov/businesses/Pages/Business-
valuation is prohibited. Personal-Property.aspx.

All other personal property includes all personal In addition, state law requires that certain types of personal
property other than inventory and is assessed at full property be fully exempt throughout Maryland from any
cash value. Taxpayers shall report such property assessment and taxation. These include aircraft, farming
which has been acquired by purchase at cost in the implements, residential (non-business) property, most
year of acquisition. Taxpayers shall report such registered vehicles, boats not more than 100 feet in length,
property which has been acquired other than by customized computer software, intangible personal property
purchase (including property manufactured by the (e.g., stocks, bonds, patents, goodwill, trademarks, etc.).
taxpayer) at what the property would have sold for
in the year of acquisition. To assess "all other Businesses owning exempt personal property described
personal property" the Department generally applies above should report the total cost of that property on Form
a 10% rate of depreciation per annum to the SD1, Supporting Detail .
reported property. Exceptions to the 10% rate can
be found on the Depreciation Rate Chart . Normally, Full or partial exemptions may apply depending on the
property will not be depreciated below 25% of the location of the property for: manufacturing/R&D machinery
original cost. and equipment, manufacturing/R&D inventory and
commercial inventory. Contact the Department's web site for
All questions must be answered in full. If the reporting a complete listing of these exemptions.
taxpayer does not own the class of property covered by any
question, the word "none" or the figure "O” should be The law specifically includes the following activities as part of
written in the appropriate blank space. Estimated the manufacturing process: (1) the identification, design or
assessments may be issued when questions remain genetic engineering of biological materials for research or
unanswered or the answers are incomplete, evasive or manufacture; and (2) the design, development or creation of
unclear. Real property is notto be reported on the return. computer software for sale, lease or license.

9) EXEMPTIONS The personal property of certain home-based businesses is
Property tax exemptions provided by statute shall be strictly exempt if: 1) it is owned by a sole proprietorship; 2) it is
construed. Before an exemption can be obtained the located at the owner's principal residence; and 3) its total
taxpayer must show affirmatively that the exemption is original cost, including inventory and excluding licensed
clearly allowed. vehicles, is less than $10,000. An initial return must be filed
to receive this exemption. Partnerships and other legal
Businesses may file amended returns to correct reporting entities are not eligible for this exemption.
errors or claim missed exemptions (except for missed
manufacturing exemptions) within three years of the April 15 Low Assessments Tax Property Article § 7-245 A person's
date that the return was originally due. personal property is not subject to valuation or to property
tax if all of the person's personal property statewide had a

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SDAT Business Personal Property

total original cost less than $2500. This exemption shall take
SPECIFIC INSTRUCTIONS FOR FORM 2
effect July 1, 2018, and shall be applicable to all taxable years
SOLE PROPRIETORSHIP AND GENERAL PARTNERSHIPS
beginning after December 31, 2018.

ROUNDING SECTION I
Round cents to the nearest whole dollar. Fifty cents and
above should be rounded to the next highest dollar. 1. Check one: Sole Proprietorship (one owner) or General
Partnership (two or more owners)
10) AUDIT OF RETURN 2. Provide the name of owner or owners.
All personal property assessments, and any information and 3. Provide the complete mailing address for the business.If
figures reported on the personal property return, this is a new mailing address, check the box to theleft.
accompanying schedules and related documents are subject 4. Provide the SDAT Department ID number. To obtain the
to audit. As a result of such audits, the Department may issue Department ID, go to Maryland Business Express,
corrected assessments. http://egov.maryland.gov/BusinessExpress/EntitySearch The
ID number is necessary to ensure proper credit to the
11) TRANSFER OF PROPERTY account.
If a business transfers, sells, or disposes of all personal 5. List federal employee ID# (FEIN). If none, providesocial
property on or after January 1, and before July 1, it must security number of owner.
notify the Department in writing on or before October 1, of 6. List federal principal business code. It can be found onIRS
the applicable assessment year. The notification must contain Schedule C or Form 1065.
an itemized description of the property involved, the date 7. Provide the nature of business activity in Maryland (e.g.,
and manner of transfer and name(s) and address of the new restaurant, legal services, construction, etc.)
owner(s) of the property, the consideration received, and a 8. Total gross sales must include sales in Maryland and sales
copy of the sales agreement (if available). Upon proper by the Maryland location to out of state purchasers as well as
notification and compliance with Section 10-402 of the Tax transfers from the Maryland location of the reporting
Property Article, the assessment shall be transferred to the business to out of state locations.
new owner(s). See Form 21.
SECTION II
12) OUT OF BUSINESS
If a business discontinues operations or goes "out of A. Please provide the actual physical location of all personal
business" prior to January 1 of filing year, a return or letter of property in Maryland. P.O. Boxes are not acceptable. Indicate
explanation detailing the date the business ceased operations if this is a change of location.
and what happened to the property must be filed. Failure to Only an individual who owns a business should answer
provide this information will result in an estimated questions B and C
assessment being made against the business. B. Answer yes, if the location in number 3 above isthe
principal residence of the business owner.
13) AMENDED RETURNS C. Answer yes, if the total original cost of the property,
Amended returns can be filed to correct reporting errors or including inventory and excluding licensed vehicles, is less
claim a missed exemption (except for missed manufacturing than $10,000. If both questions B and areC answered yes,
exemptions see item 9) within 3 years of the April 15 date the business is exempt from personal property assessment
that the return was originally filed. and taxation. Skip to signature line on page 3.
Amended returns must be accompanied by information D. Indicate whether business owns, uses or leases any
explaining why the amended return is being filed and personal property in Maryland.
reconciling the differences with the original return. Write the E. Answer yes, if the business requires a license to operate
word "AMENDED" across the top of page 1 of the return. with any county/town in Maryland.
F. Indicate whether or not business is conducted in
14) TRADER’S LICENSE Maryland. If yes, specify date began.
Sometimes businesses requiring a trader's license experience G. If the business operates on a fiscal year, provide the start/
problems in obtaining one. Most of these problems are the end dates. If it operates on a calendar year, you may leave
result of one or more of the following five situations: this item blank.
1) Failure to file a personal property return (previous year). H. Does the business own or use any property that is fully
2) Failure to report commercial inventory on the personal depreciated and/or expensed? If yes, is it reported on this
property return (previous year). return? If the business owns or uses this type of property but
3) Unpaid personal property taxes (previous year). does not report it on the return, please comment in remarks
4) Unpaid late filing penalty owed to SDAT. section.
5) Failure to register with SDAT.

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SDAT Business Personal Property

I. Has the business disposed of or transferred any assets in or LINE ITEM 2
out of Maryland? If yes, please comment in remarks and/or Commercial Inventory is merchandise and stock in trade
complete Form SD1 (Supplemental Details). available for sale. This includes manufactured products sold
at retail by the manufacturer. An average of twelve (12)
SECTION III monthly inventories should be reported including two (2)
physical inventories. Book inventories may be used for
LINE ITEM 1 months when physical inventories were not taken. Values are
1. Furniture, fixtures, tools, machinery and equipment not to be reported at cost or market value. The LIFO method is
used for manufacturing or research and development . prohibited in computing values. If there are multiple locations
Includes but is not limited to office furniture, fixtures and of inventory in Maryland they must be reported by each
equipment, factory equipment and machinery, shelves, signs, location. Businesses that need a Trader's License must
counters, etc. report commercial inventory.

This form allows detailed reporting of property which falls Rental equipment including but not limited to video tapes,
under the different rates of depreciation. All property is to be stereos, televisions, tools, appliances and furniture is not
reported under Category A unless specifically listed in considered commercial inventory. These assets must be
another category. reported in Part B item.

Refer to the Depreciation Rate Chart to determine where Leased property and off rent equipment are not considered
property owned by the business should be reported (see commercial inventory and should be reported on a separate
sample below). Property reported in columns B through G schedule showing the names and addresses of lessees, lease
requires a detailed description (e.g., Column C - Vending numbers, description of property, installation date and
Machines, Copiers, etc.). Failure to provide the required original cost by year of acquisition for each location. Schedule
detail will result in the reported property being assessed at should group leases by county where the property is located.
10% rate of depreciation.
LINE ITEM 3
This property shall be reported at original cost in the year of Supplies. Supplies are consumable items not held for sale
acquisition without deduction of depreciation, investment (e.g., contractor's supplies, office supplies, etc.). Report the
credit or trade-in of previously owned property. Include all average cost.
fully depreciated personal property and property expensed
under IRS Rules. LINE ITEM 4
Manufacturing/R&D Inventory is raw materials, supplies,
EXAMPLE goods in process and finished products used in and resulting
Property reported on this line item should be placed under from manufacturing by the business. Include manufactured
the proper depreciation rate column by the year of products sold at retail by the manufacturer under line item,
acquisition. An example of the correct method of filling out commercial inventory. An average of twelve (12) monthly
this section is provided for reference. Property reported in inventories should be reported including two (2) physical
categories B through G require an explanation on the lines inventories. Book inventories may be used for months when
provided below the box. If additional space is needed to show physical inventories were not taken. Values are to be
the necessary detail, attach a supplemental schedule. reported at cost or market value. The LIFO method is
prohibited in computing values. If there are multiple locations
ORIGINAL COST BY YEAR OF ACQUISITION of inventory in Maryland they must be reported by each
SPECIAL DEPRECIATION RATES B-G (See TOTAL location.
chart) COST
A B C D E F G
2014 INFORMATION AND ASSISTANCE
2013 1150 12800 13,750
2012 3104 8400 11,504 Form preparation, assessment procedures & additional form:
2011 1500 5261 6,761 410-767-1170, Toll Free within Maryland: 1-888-246-5941
2010 Maryland Relay Service -1-800-735-2258 TT/VOICE
2009 2500 2,500 (Maryland Relay Service for speech and hearing impairment) Email:
2008 9127 500 9,627
sdat.persprop@maryland.gov
2007 &
prior Online Services: Filing Extensions, Online Filing & Forms:
Totals 14881 3000 5261 21200 44,142 https://dat.maryland.gov

Describe property identified in B -G above: Category D2011 PersonalComputer;
CategoryE-2012,2013 RentalDVDs andVideo Tapes, 2008 Vending Machine; Category C
-2009 Copier $2,000, Fax $500

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SDAT Business Personal Property

LINE ITEM 5 and should not be reported on the Personal Property Tax
Tools, machinery and equipment used for return. Vehicles registered outside Maryland may also be
manufacturing or research and development . Answer this exempt. Exempt vehicles include those registered in another
question in detail even though such property may by law or taxing jurisdiction and of a classification (A-P) described in
resolution be exempt. Reporting property on this line item is Title 13, Subtitle 9, Part II of the Maryland Transportation
not a substitute for a manufacturing application. If exemption Article.
is claimed for the first time, a manufacturing/research &
development exemption application must be submitted on or Interchangeable Registrations include: dealer plates (Class
before September 1 of filing year before the exemption can 1A, 1B, 1C); recycler plates (Class 2); finance company plates
be granted , or within 6 months after the date of the first (Class 3); special mobile equipment plates (Class 4); and
assessment notice for the taxable year that includes the transporter plates (Class 5).
manufacturing personal property in order to qualify for the This property shall be reported at original cost in the year of
current tax year. Section 7-104 of the Tax-Property Article of acquisition without deduction or depreciation, investment
the Annotated Code of Maryland has been revised to include credit, or trade-in of previously owned property. Include all
subsection (d) that allows the owner of manufacturing fully depreciated personal property and property expensed
personal property to file an application within 6 months after under IRS rules.
the date of the first assessment notice for a taxable year that
includes the manufacturing personal property. If the Motor vehicles with Interchangeable Registrations and
application is approved, the exemption shall be granted for unregistered/unlicensed vehicles are not exempt and will be
the taxable year. The exception to the September 1 deadline assessed as Category C property at 20% depreciation per
is applicable to taxable years beginning after June 30, 2009. annum (subject to a minimum assessment of 25% of the
No manufacturing exemption can be granted unless a timely original cost).
application is filed. Once filed, no additional manufacturing
applications are required in subsequent years. Contact the 7. Non-farming Livestock: Report book value and market
Department or visit our web site at www.dat.maryland.gov to value.
obtain an application. This property shall be reported at
original cost in the year of acquisition without deduction of 8. Other Tangible Personal Property: Include other tangible
depreciation, investment credit or trade-in of previously personal property not reported elsewhere on this return.
owned property. Include all fully depreciated personal Report total cost on the return and supply a separate
property and property expensed under IRS rules. schedule including a description, the original acquisition cost,
and the date of acquisition of the property. Please see
For manufacturing the primary test for exemption requires additional instruction under Other Personal Property
substantially transforming, or a substantial step in the Assessment Exemptions.
process of substantially transforming tangible personal
property into a new and different article by use of labor or 9. Property Owned by Others and Used or Held by the
machinery. The term manufacturing does not include Business: All property that is not owned by the business but
products mainly intellectual, artistic or clerical in nature, is held by the business as lessee, on consignment, or
services, public utility services, or property used primarily in otherwise must be reported.
administration, management, sales, storage, shipping, File separate schedule showing names and addresses
receiving or any other non-manufacturing activity. of owners, lease number, description of property,
installation date and separate cost in each cost.
Research and development means basic and applied research
in the sciences and engineering, and the design, development
and governmentally required pre-market testing of 10. Property Owned by the Business and Used or Held by
prototypes, products, and processes. Research and Others: All property that is owned by the business but is held
development activities are exempt whether or not the by others as consignee, lessee or otherwise must be
company has a product for sale. reported.
All leased property must be reported, including
The following activities do not constitute research and manufacturing equipment, and property leased to tax exempt
development: market research; research in social sciences, organizations.
psychology, or other nontechnical activities; routine product Manufacturer lessors shall report property which has been
testing; service activities; sales; or research and development acquired other than by purchase at the retail selling price in
of a public utility. the year the property was manufactured (including property
manufactured by a business for its own use). Manufacturing
6. Vehicles: Itemize motor vehicles with Interchangeable lessors may not report this property using the cost of
Registrations and vehicles that are unregistered (unlicensed). manufacture.
Vehicles registered in Maryland and classified A-P are exempt

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SDAT Business Personal Property

A separate schedule showing the names and addresses of
lessees, lease numbers, description of property, installation SIGNATURE AND DATE
date and original cost by year of acquisition for each location The return must be signed by an owner or partner. This
must be supplied. Provide the physical street address of signature must be an original not a copy. The date should
lessees. Post Office Box numbers are not acceptable. reflect the date the return was signed by the owner or
partner and sent to the Department. Please include
Excel schedules of leasing data may be submitted. requested phone number and E-mail address to assist us in
Verify that the entity name and ID number are resolving potential discrepancies.
prominent on the schedule. Schedule may be filed
electronically and submitted to
sdat.persprop@maryland.gov

DEPRECIATION RATE CHART FOR 2019 RETURNS

STANDARD DEPRECIATION RATE

Category A: 10% per annum*
All property not specifically listed below.

SPECIAL DEPRECIATION RATES (The rates below apply only to the items specifically listed. Use Category A for other assets.)

Category B: 20% per annum*
Mainframe computers originally costing $500,000 or more.

Category C: 20% per annum*
Autos (unlicensed), bowling alley equipment, brain scanners, car wash equipment, contractor's heavy equipment (tractors,
bulldozers), fax machines, hotel, motel, hospital and nursing home furniture and fixtures (room and lobby), MRI equipment,
mobile telephones, model home furnishings, music boxes, outdoor Christmas decorations, outdoor theatre equipment,
photocopy equipment, radio and T.V. transmitting equipment, rental pagers, rental soda fountain equipment, self-service
laundry equipment, stevedore equipment, theatre seats, trucks (unlicensed), vending machines, x-ray equipment.

Category D: 30% per annum**
Data processing equipment, canned software.

Category E: 331I3% per annum*
Blinds, carpets, drapes, shades. The following applies to equipment rental companies only: rental stereo and radio
equipment, rental televisions, rental video cassette recorders and rental DVDs and video tapes.

Category F: 50% per annum*
Pinball machines, rental tuxedos, rental uniforms, video games.

Category G: 5% per annum*
Boats, ships, vessels, (over 100 feet).

Long-lived assets
Property determined by the Department to have an expected life in excess of 10 years at the time of acquisition shall be
depreciated at an annual rate as determined by the Department.

* Subject to a minimum assessment of 25% of the original cost.
** Subject to a minimum assessment of 10% of the original cost.

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