Processing Invoices for Payment
Prompt Pay Act
The State Prompt Pay Act requires all invoices to be processed by State agencies and received by the Maryland State General Accounting Division within 25 days (see Maryland Accounting Procedures Manual section 3.1.6 Prompt Paymnet of Invoices). In order to meet this deadline the State requires agencies to start processing the invoice within seven days of the invoice date. Payment will then be made by the State within 30 days of the service date (the later of the invoice receipt or merchandise receipt). Any invoices received by the University for services that have not yet been provided and for which there is no purchase order will be returned to the vendor with a cancellation notice.
Annotated Code of Maryland
State Finance and Procurement
Division II. General Procurement Law
Title 15. Procurement Contract Administration and Dispute Resolution
Subtitle 1. Procurement Contract Administration
§ 15-101. Invoice defined
In this subtitle, “invoice” means an invoice that meets the requirements of § 15-102 of this subtitle.
§ 15-102. Information required in invoice
A contractor who submits an invoice for a procurement contract shall include in the invoice:
(1) the contractor's federal employer's identification number or Social Security number;
(2) the procurement contract or purchase order number or another adequate description of the procurement contract; and
(3) any documentation required by regulation or the procurement contract.
§ 15-103. Payment by State within 30 days
It is the policy of the State to make a payment under a procurement contract within 30 days:
(1) after the day on which the payment becomes due under the procurement contract; or
(2) if later, after the day on which the unit receives an invoice.
§ 15-104. Interest on balances
In general
(a) Except as provided in § 15-105 of this subtitle, interest shall accrue at the rate of 9% per annum on any amount that:
(1) is due and payable by law and under the written procurement contract; and
(2) remains unpaid more than 37 days after a unit receives an invoice.
Interest accrual
(b) Interest shall accrue beginning on the 31st day after:
(1) the day on which payment becomes due under a procurement contract; or
(2) if later, the day on which the unit receives an invoice.
§ 15-105. Unit liability for interest
A unit is not liable under § 15-104 of this subtitle for interest:
(1) unless within 30 days after the date on the State's check for the amount on which the interest accrued, the contractor submits an invoice for the interest;
(2) if a contract claim has been filed under Subtitle 2 of this title;
(3) accruing more than 1 year after the 31st day after the unit receives an invoice; or
(4) on an amount that represents unpaid interest.
Independent Contractor vs. Employee
Before an individual can be paid for a service it must first be determined if they would be considered an employee or an independent contractor by the IRS. There is a 20 point checklist that must be reviewed to determine the appropriate classification. If after reviewing this checklist a clear determination still cannot be made then an IRS SS-8 form may be filed with the IRS for a determination. Otherwise, they should be paid as an employee, because the IRS could issue severe penalties for misclassifying an individual as an independent contractor when the IRS considers them an employee.
IRS 20 Point Checklist (PDF)
IRS SS-8 Form
Corporate Purchasing Cards
Corporate purchasing cards should be used for all small dollar purchases ($2,500.00 or less) whenever possible, except where specifically disallowed by the State of Maryland’s procurement card policies. See link to manual below.
Corporate Purchasing Card Manual
Purchase Orders
Normally all purchases of goods or services not made via a Corporate Purchasing Card require the issuance of a purchase order by the Procurement Department. To request a purchase order a requisition must be entered on-line through the PeopleSoft Financials System. Contact the Procurement Office for more information at 301.687.4242.
Procurement and Material Handling
Types of Unacceptable Invoices
From the Comptroller of Maryland Accounting Procedures Manual Section 3.1.10
“Vendor statements of amounts due are not acceptable; no “Old Balances” should be included; except for utility payments which must be certified that the amount was not previously paid. Invoices for funeral flowers, special gifts, or other emoluments and non-related work expenses will not be paid to any vendors from the State Treasury. These are personal expenses and are chargeable to the individual incurring such expenses. When invoices for catering/food services are submitted, documentation must be included which provides the name and purpose of the function and who attended it, by name or affiliation. Invoices will not be paid for food served during normal staff type meetings. Invoices will not be paid for expenses incurred at State employees’ social functions such as Christmas parties. Invoices for parking fees or other driving violations of employees will not be paid. Costs for alcoholic beverages are not to be included under any circumstances.”
Comptroller of Maryland - Accounting Procedures Manual
Taxes
From the Comptroller of Maryland Accounting Procedures Manual Section 3.1.5
“Since the State of Maryland is exempt from all forms of taxes, except excise tax on air flights, tax items should not be included in any invoice payments – with the following exceptions:
- Sales Tax may be included when paying rent for rooms (hotel, motel, etc.), since in such instances an employee is not making a direct purchase for his agency;
- For the same reason, the Baltimore City parking tax may be included;
- Oil companies remit the State Gasoline Tax directly to the Gasoline Tax Division of the State Comptroller’s Office. Therefore, the inclusion of State Gasoline Tax items in payments to oil companies are required, but the Federal tax should be excluded; and,
- Purchases made from other than State funds (funds of patients, students, inmates, etc.).”
A copy of the University’s Sale Tax Exemption Certificate may be obtained from the Accounts Payable Office 301.687.4325. The sales tax exemption may be only used for purchases being paid for directly by the University, the State, or through the use of a University Procurement Card. The exemption may not be used by student or other organizations whose funds are held outside of the State Treasury.
Any questions about invoice processing should be directed to Accounts Payable at 301.687.4325 or accountspayable@cpe-xj.net.