Maryland Corporate Diversity Addendum: Filing, Triggers, and Penalties

The Maryland Corporate Diversity Addendum is a disclosure form that certain businesses must file with the State Department of Assessments and Taxation (SDAT) alongside their Annual Report. It collects two things: whether members of underrepresented communities serve on your board or in executive leadership, and whether your entity engages in specific diversity practices. Only the second part affects your eligibility for state benefits. Fall short, and you lose access to state contracts, capital grants, and tax credits worth $1 million or more.

Who Has to File

The addendum applies to any entity required to file an Annual Report with SDAT. That covers commercial businesses formed in Maryland or registered to do business here, plus nonprofits such as corporations, foundations, schools, and hospitals where no net earnings go to private shareholders.¹

The requirement has been in effect for state benefits applied for after June 30, 2022. If your Annual Report responses indicate the addendum applies to you, SDAT expects the completed form to accompany that report.²

Who Can File an Exemption Affidavit Instead

Four categories of entities can skip the full addendum and submit a signed exemption affidavit instead:

Sole proprietorships
Single-member LLCs
Privately held companies where at least 75 percent of shareholders are family members
Businesses with annual operating budget or sales below $5 million that have not applied for, and do not intend to apply for, a state benefit

The affidavit must be signed by a corporate officer or principal under penalties of perjury. No diversity data is required beyond that.³

What the Form Asks

The addendum has two sections. Both must be completed for the submission to count, but only one carries consequences for your benefit eligibility.

Board and Executive Demographics

You report whether any members of underrepresented communities serve on your board or hold executive leadership positions. The form lists specific categories: Alaska Native, Asian-Pacific Islander, Black or African-American, Hispanic or Latino, Native American, and Native Hawaiian. Check all that apply, or select “None of the above.”⁴

Here is the point most companies miss. The content of your demographic answer has no effect on your eligibility for state benefits. The regulation says so explicitly. A board with no underrepresented members is not penalized; a fully diverse board is not rewarded. The question is data collection, not a qualification test.⁴

Diversity Indicators

The second section asks whether your entity engages in specific practices. These are the “diversity indicators,” and your answers here directly control whether you can receive a state benefit. There are 12 in total, including:

Maintaining written workforce diversity, equity, and inclusion policies
Offering DEI training
Assigning a senior-level employee to oversee DEI efforts
Including DEI objectives in managers’ performance plans
Providing career advancement opportunities to employees from underrepresented communitiesli>
Maintaining a supplier diversity policy that provides opportunities to businesses owned by members of underrepresented communities
Measuring the percentage of contract dollars going to those suppliers
Collaborating with educational institutions serving underrepresented student populations

⁴

You Need Four of the Twelve

To qualify for a state benefit, your entity must satisfy at least 4 of the 12 diversity indicators, roughly 33 percent. Fewer than four, and you will not be eligible for the benefit you’re applying for. The threshold does not scale with entity size or benefit type.²

Read that alongside the demographic point above and the design becomes clear. The addendum is pass-fail on practices, not on people. A company with no underrepresented members on its board can qualify by meeting four indicators. A company with a diverse board but no qualifying practices cannot.

When the Addendum Actually Matters: The $1 Million Trigger

The addendum’s teeth only come out when your entity seeks a “state benefit” above a set dollar threshold. Maryland defines a state benefit as any of the following in a single fiscal year (July 1 through June 30):

State capital grant funding totaling $1 million or more
State tax credits totaling $1 million or more
A state contract with a total value of $1 million or more

If you’re not seeking benefits at these levels, the form may still be part of your Annual Report filing, but the practical stakes drop sharply because the enforcement mechanism is denial of state benefits.⁵

How and When to File

The addendum is not a standalone document. It is submitted with your entity’s Annual Report to SDAT. If your Annual Report responses indicate it applies, attach the completed form to the same filing. Sending it separately will significantly delay processing.²

When you apply for a specific state benefit, you may also need to provide the completed addendum or exemption affidavit directly to the agency administering that benefit. The regulation requires the agency to deny the benefit unless the entity has either completed the addendum and met the threshold or filed a valid exemption affidavit.³

What Happens If You Don’t File or File Falsely

Skipping the addendum has one main consequence: the state agency must deny your benefit. There are no standalone fines. No addendum, no state contract or grant.

Filing false information is far more serious. The 2026 form warns that materially false statements can lead to criminal prosecution for perjury and procurement fraud, debarment from future state contracts, and voiding of any state benefits or contracts awarded based on the inaccurate filing.²

Agencies that discover false representations after an award have additional remedies. They can cancel the award in whole or part, require repayment of capital grants, recapture tax credits, initiate debarment proceedings, or pursue any other available legal remedy.⁶

One Important Boundary: Certain Tax Credits

The addendum cannot block access to certain enumerated state tax credits. If your entity would qualify for tax credits totaling $1 million or more but for its failure to meet the diversity indicators threshold, the agency cannot deny credits listed in the regulation, which include specific provisions of the Maryland Tax-General Article such as sections 10-701 and 10-703 among others.³

The carve-out is limited to those listed credits. It does not extend to procurement contracts or capital grants.

Practical Compliance Steps

If your entity does business in Maryland and expects to seek state contracts, grants, or tax credits at the $1 million threshold, compliance breaks down into a short sequence:

Confirm whether you qualify for an exemption. Sole proprietors, single-member LLCs, qualifying family-held companies, and small entities that will not seek state benefits can file a signed affidavit instead of the full addendum.
Audit your diversity practices against the 12 indicators. Identify which ones you currently satisfy. You need at least four. Some indicators, such as publishing DEI commitments, can be adopted with minimal investment.
File the addendum with your Annual Report, not separately. Answer both the demographic question and the diversity indicators section in full. An incomplete response can render you ineligible for state benefits.
Keep documentation for every indicator you check. Agencies can audit later, and the penalties for material misrepresentation include repayment, contract loss, and potential criminal liability. Only check what you can substantiate.

1
Cornell Law Institute. Maryland Code of Regulations 24.01.07.01 – Definitions
2
Maryland SDAT. 2026 Corporate Diversity Addendum
3
Justia. Maryland Code of Regulations 24.01.07.03 – Qualification for a State Benefit
4
Cornell Law Institute. Maryland Code of Regulations 24.01.07.02 – Corporate Diversity Requirements
5
Maryland Department of General Services. Corporate Diversity Addendum
6
Library of Maryland Regulations. Code of Maryland Regulations 24.01.07 – Corporate Diversity