Sales tax housekeeping in Maine

Numerous changes affecting Maine sales and use tax have taken effect recently, or soon will. The most notable are listed below.

Economic nexus is legit. Maine began enforcing economic nexus on July 1, 2018, under a statute established before the Supreme Court of the United States overruled the physical presence rule (thus granting states the right to tax remote sales). LD 1452, effective October 1, 2019, aligns Maine law with the Supreme Court decision in South Dakota v. Wayfair, Inc.

Get to the source. LD 1798 codifies an existing delivery rule, aligning Maine’s sales tax sourcing rules with those of the Streamlined Sales and Use Tax Agreement (see Sections 309 through 315). In a nutshell:

A. When tangible personal property or a taxable service is received by a purchaser at a seller’s business location, the sale is sourced to that business location.

B. When the property or taxable service isn’t received by the purchaser at a seller’s business location, the sale is sourced to the location where the purchaser receives the property or service.

C. When A and B don’t apply, the sale is sourced to purchaser’s address (per business records).

D. When A, B, and C don’t apply, the sale is sourced to the purchaser’s address (per sales records).

E. When A, B, C, and D don’t apply, the sale is sourced to either the ship-from address, the address from which electronically transferred property or services were first available for transmission, or any location “that merely provided the digital transfer of the tangible personal property or taxable service sold.”

Give it away. Goods donated from tax-exempt organizations are exempt from use tax. This isn’t new, but LD 1798 cleans up the statute.

House on wheels. As of October 1, 2019, retail sales tax applies to camper trailers and motor homes purchased to be rented or leased as living quarters. However, camper trailers and motor homes purchased to be leased or rented as tangible personal property are excluded from retail sales tax. Businesses that sell camper trailers and motor homes may want to seek clarification on this.

Marijuana isn’t food. Products containing any amount of marijuana are excluded from the definition of “grocery staple” starting October 1, 2019. These include longtime items like pot brownies and newer inventions like infused beef jerky and soda.

Marketplace facilitators must collect sales tax. Effective October 1, 2019, marketplace facilitators are required to collect and remit sales tax on all sales made through the marketplace, their own and third-party sales.

Resale certificate shelf life. All resale certificates, whether new or renewed, are valid for four calendar years as of October 1, 2019.

Sweet exemptions. Commercial producers of honey and maple syrup are eligible for the commercial agricultural production sales tax exemption as of July 1, 2019.

There other tax changes in Maine. For example:

  • The state has new record-keeping, processing, and tracking rules for its infamous blueberry tax.
  • The tax on smoking tobacco increases to 43 percent of the wholesale sales price as of January 2, 2020.
  • Tobacco product distributors and manufacturers no longer need to renew their licenses annually.
  • Tobacco products include electronic smoking devices and the liquids used in them as of January 2, 2020.

For additional details and information, see Maine Revenue Services, 2019 Legislative Changes.

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