Purpose: To provide guidelines for State agencies to follow when determining whether a business is or is not a “resident business.” The purpose of this revision is to update telephone numbers and to further clarify the Reporting Definition of “resident business”.
Background: This Board of Public Works Advisory was originally issued when the Board of Public Works adopted a “resident business” definition to be used for certain, primarily reporting, purposes. The term “resident business” is also used in a regulation that implements reciprocal preferences as authorized by statute. The advisory definition and the statutory definition of “resident business” differ intentionally because they are used for different purposes. This advisory will refer to the two definitions as the Reporting Definition and the Reciprocal-Preference Definition.
Reporting Definition: At the September 27, 1995, Board of Public Works meeting, the Board defined a “resident business” as:
A business enterprise:
- that has a Maryland address (ie: having a physical location in Maryland from which it regularly conducts business and is registered to do business),
- is registered to do business in the State of Maryland,
- employs Maryland residents (meaning more than one), and
- regularly conducts business within the State.
- The term includes subsidiaries, divisions and branches of businesses headquartered outside of the State of Maryland.
Agencies are to use this definition:
- to prepare Action Agenda items,
- to capture and report statistics concerning the State’s procurement activities, including minority business reports, and
- to construct bidders lists for use in the bid/proposal solicitation process.
: Before defining a business as a “resident business” when preparing an Action Agenda item, the procurement agency must verify that the business legitimately meets the criteria listed in the reporting definition. To verify that a business is registered to do business in Maryland, contact the Compliance Division
of the Comptroller’s Office at 410.767.1908. This is the same telephone number used to verify that a vendor’s tax payments are current. When contacting this number please refer to the business’s name and federal ID number or social security number.
If the name of the business is not on the Comptroller’s file, verification that the business is registered to do business in Maryland may be obtained through the State Department of Assessments and Taxation, 410.767.1330. Corporations and other limited liability entities must register with SDAT and meet the other definitional tests in order to be considered a resident business for reporting purposes. Generally, sole proprietorships and general partnerships do not have to be registered with SDAT in order to do business. Such a business may be considered a resident business if it meets the other definitional standards.
Each Action Agenda item requesting the Board of Public Works to approve the award of a contract must state the following:
The Office of the State Comptroller has verified, under Control Number _________, that the recommended contractor has no known deficiencies in the payment of its Maryland tax obligations. Verification has also been obtained from the Comptroller’s Office, or Department of Assessments and Taxation, as applicable, that the contractor is appropriately registered to conduct business within the State to the extent required by the laws of Maryland.
The contractor IS [IS NOT] a resident business under the guidelines of BPW Advisory P-003-95
Reciprocal Preference Definition: Effective October 12, 1996, the Board adopted a regulation that explains when and how a procurement agency may apply reciprocal preferences against a non-resident bidder in favor of a resident bidder when the non-resident bidder’s home state applies preferences against Maryland businesses. For purposes of applying reciprocal preferences, COMAR 21.05.01.04 A(3) defines a “resident business” as:
A business whose principal office or principal base of operations is located in the State.
This regulation derives from the statutory authority found at section 14-401 of the State Finance & Procurement Article of the Maryland Code. For guidance regarding the reciprocal application of other states’ resident business preferences, see BPW Advisory P-005-96.
Questions concerning a contractor’s tax status should be addressed to:
Office of the State Comptroller