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