The state legislature is betting the answer for Maryland companies and nonprofits is “yes” and has modified the state’s tax law to require gender representation data to be reported by most companies and larger non-profits on annual business tax returns.
Citing a long list of corporate reports, the legislation concludes that the state has a significant stake in promoting equitable and diverse gender representation in the public, private and nonprofit ranks. When studied by leading companies, such diversity increases business performance on key metrics including stock performance, weathering recession, accumulation of debt, and net income growth.
Board diversity has also been found to correlate to an increase of women in line for senior-management positions and to an acceleration of women’s career paths.
Every year, all business entities which own or use business personal property within the state of Maryland are required to file an annual report with the State Department of Assessment and Taxation (SDAT) by April 15. For 2020, SDAT has added additional questions on gender to the familiar return. Covered entities must disclose the number of female board members and the total number of members on its board of directors.
The new requirement applies to all domestic stock corporations with total sales exceeding $5,000,000 except family-owned companies in which at least 75% of the shareholders are family members. The requirement also applies to all non-stock corporations with an operating budget exceeding $5,000,000. The requirement does not apply to LLCs, partnerships, trusts, or foreign entities.
Unlike more aggressive legislation in other states, Maryland has no mandate for businesses and non-profits to change the gender representation on their boards nor are any aspirational goals articulated in the Maryland legislation.
Aggregate data will be reported to the Comptroller each year and the report will be publicly available on the Comptroller’s website. According to SDAT, specific gender representation data filed by an entity will not be searchable by the public. The law sunsets in 10 years.
Contact the attorneys at McMillan Metro Faerber at (301) 251-1180 for more information.
This article is written for general informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem.
