.01 Personal, Professional, or Insurance Services.

A. Except for taxable services set forth in Tax-General Article, §11-101(m), Annotated Code of Maryland, the tax does not apply to a personal, professional, or insurance service that involves a sale as an inconsequential element for which no separate charge is made. Examples of services to which the tax does not apply are services customarily rendered by physicians, dentists, lawyers, accountants, insurance agents, pest exterminators, barbers, beauticians, funeral directors, and storage warehouseperson.

B. Purchases.

(1) A person providing nontaxable services shall pay the tax on all purchases of materials, supplies, tools, and equipment used by the person or transferred by the person as part of the nontaxable service unless a specific statutory exemption applies, such as that for medicines and medical supplies. Examples of purchases to which the tax applies are purchases of forms, office supplies, insurance policy blanks and jackets, insecticides, grooming supplies, packing materials, and utilities.

(2) A person providing taxable services shall pay tax on purchases of materials, supplies, tools, equipment, and digital codes or digital products used by the person but may issue a resale certificate for the purchase of tangible personal property, digital codes, or digital products transferred as part of a taxable service and taxable services resold in unchanged form. For example, a janitorial company may purchase paper towels tax-free by issuing a resale certificate if those towels are used to stock the bathroom of a customer receiving taxable cleaning services. The janitorial company shall pay tax on its purchase of cleaning agents which the janitorial company uses to clean the bathroom of a customer receiving taxable cleaning services.

C. Sales.

(1) If a person providing services also makes independent sales of tangible personal property, digital codes, or digital products, that person shall collect and remit the sales and use tax on those sales unless a specific statutory exemption applies.

(2) Examples of sales subject to tax are sales of packaged cosmetics, hair tonics, and lotions by barbers and beauticians.