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§ 2-211. Invoicing and prompt payment requirements

West's Annotated Code of MarylandState Finance and ProcurementEffective: June 1, 2023

West's Annotated Code of Maryland
State Finance and Procurement
Division I. State Finance [Titles 1-10a] (Refs & Annos)
Title 2. General Provisions (Refs & Annos)
Subtitle 2. Gifts and Grants (Refs & Annos)
Effective: June 1, 2023
MD Code, State Finance and Procurement, § 2-211
§ 2-211. Invoicing and prompt payment requirements
Currentness
Definitions
(a)(1) In this section the following words have the meanings indicated.
(2)(i) “Grant” means a legal instrument of financial assistance between a State grant-making entity and a nonprofit organization exempt from taxation under § 501(c) of the Internal Revenue Code that is:
1. used to enter into a relationship the principal purpose of which is to transfer anything of value from the State grant-making entity to the grant recipient to carry out a public purpose authorized by law and not to acquire property or services for the direct benefit or use of the State grant-making entity;
2. used to provide for one or more payments in reimbursement for services or other performance under the agreement on a scheduled or other incremental basis;
3. distinguished from a cooperative agreement in that it does not provide for substantial involvement between the State grant-making entity and the grant recipient in carrying out the activity contemplated by the award; and
4. executed, renewed, or extended on or after June 1, 2023.
(ii) “Grant” does not include an instrument that provides only:
1. direct government cash assistance to an individual;
2. a subsidy;
3. a loan;
4. a loan guarantee;
5. insurance; or
6. State funding that is required annually and is calculated through a formula set in statute.
(3) “Payment” includes all required processing and authorization by the Comptroller, as provided under State regulations.
(4) “Proper invoice” means a bill, a written document, or an electronic transmission readable by the State grant-making entity, provided by a grant recipient, that:
(i) requests an amount that is due and payable by law under a written grant agreement; and
(ii) meets the requirements of subsection (e) of this section.
Applicability of section
(b) This section does not apply to grants:
(1) made by a unit in the Judicial Branch of State government; or
(2) funded from general obligation bond proceeds or from a General Fund capital appropriation to the Board of Public Works.
Prompt payment policy
(c) It is the policy of the State to make a payment under a grant agreement within 37 days after:
(1) the day on which the payment becomes due under the grant agreement; or
(2) if later, the day on which the State grant-making entity receives a proper invoice.
Interest
(d)(1) Except as provided in paragraph (3) of this subsection, a grant-making entity shall be liable for interest that shall accrue at the rate of 9% a year on any amount:
(i) that is due and payable by law and under a written grant agreement; and
(ii) for which the grant-making entity has received, and failed to submit to the Comptroller within 30 days of its receipt, a proper invoice.
(2) Interest shall accrue beginning on the 38th day after the day on which the State grant-making entity receives a proper invoice.
(3) A State grant-making entity is not liable for interest:
(i) unless within 30 days after the date on the State's check for the amount on which the interest accrued, the grant recipient submits an invoice for the interest;
(ii) if the State grant-making entity has initiated legal proceedings to dispute the amount owed to the grant recipient;
(iii) accruing more than 1 year after the 31st day after the State grant-making entity receives an invoice; or
(iv) on an amount that represents unpaid interest.
(4) Interest for which a State grant-making entity is liable under this subsection:
(i) shall be paid from the State grant-making entity's operating budget; and
(ii) may not be paid from funds appropriated to fund a grant.
Invoice requirements
(e) A proper invoice, required as payment documentation, shall include without error:
(1) the grant recipient's federal employer identification number or Social Security number;
(2) the grant agreement identification number or another adequate description of the grant agreement; and
(3) any documentation required by regulation or the grant agreement.
Dates
(f) For the purposes of determining a payment due date and the date on which interest will begin to accrue if a payment is late, an invoice shall be deemed to be received:
(1) for invoices that are mailed, when a proper invoice is received by the State grant-making entity, as of the date the State grant-making entity annotates the invoice with the date and time of receipt; or
(2) for invoices electronically transmitted, on the date the transmission is received by the State grant-making entity, or the next business day if received after 5 p.m.
Duties regarding invoices
(g)(1) On receipt of an invoice, a State grant-making entity shall:
(i) mark the invoice with the date the invoice was received; and
(ii) review the invoice as soon as practicable to determine whether the invoice is a proper invoice.
(2) If the State grant-making entity determines that the invoice is a proper invoice and submits the invoice to the Comptroller, the Comptroller shall make payment within 5 business days.
(3)(i) If the State grant-making entity determines that the invoice is not a proper invoice, the State grant-making entity shall notify the grant recipient of all defects that prevent processing and specify all reasons why the invoice is not proper within 2 business days after the determination.
(ii) It is the responsibility of the grant recipient to submit a corrected invoice.
(4) State grant-making entities:
(i) may use media that produce tangible recordings of information to expedite the payment process, rather than delaying the process by requiring original paper documents; and
(ii) shall provide adequate safeguards and controls to ensure the integrity of the data and to prevent duplicate processing.
(5) Failure by a State grant-making entity to comply with the procedural requirements of this subsection does not constitute a late payment.
(6) This section does not create liability on the Comptroller for interest accrued on a late payment.

Credits

Added by Acts 2023, c. 154, § 1, eff. June 1, 2023; Acts 2023, c. 155, § 1, eff. June 1, 2023.
MD Code, State Finance and Procurement, § 2-211, MD STATE FIN & PROC § 2-211
Current through legislation effective through May 9, 2024, from the 2024 Regular Session of the General Assembly. Some statute sections may be more current, see credits for details.
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