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One Maine Lawmaker's Take on Use Tax

  • Feb 13, 2013 | Gail Cole

States with a general sales tax rely heavily on that tax revenue to fund services and infrastructure: it's about a third of all tax revenue collected by states. When sales tax revenue decreases, states notice. And the impact of online sales on state sales tax revenue has been noticeable. The Tax Foundation notes that "consumers can and do leave high-tax areas to make major purchases…," whether by going to another area with a lower tax rate, or by going online.

Thanks to a series of Supreme Court decisions, most notably Quill Corp. v North Dakota, states may not collect sales tax from businesses that do not have nexus in the state. For example, an online retailer based in Washington State is not required to collect sales tax on Oklahoma sales (providing it does not have nexus there, such as a distribution center).

Most states want that revenue, even if not all feel they're entitled to collect it. Some states have made deals with Amazon, the world's largest online retailer. Other states are reminding individuals and businesses to pay consumer use tax on remote purchases. Consumer use tax is not a new tax, but it is a tax that has historically gone largely unpaid. More and more states are now going after it.

One lawmaker in Maine is taking a different approach. Representative Corey Wilson (R-Augusta) presented a bill to the Maine Legislature's Taxation Committee that would free "Mainers from the legal responsibility to pay sales tax or its equivalent on small purchases from Internet-based retailers."  LD 119 "allows taxpayers to exclude from their estimated use tax liability $1,000 of annual Internet purchases from out-of-state sellers."

"When an individual unknowingly fails to admit the purchase and doesn't pay the use tax, suddenly the individual is guilty of a crime," Rep. Wilson said. He would like to give them a free pass.

The members of the Taxation Committee disagree. They voted unanimously against it.

Maine lawmakers have considered remote sales tax before, but the congressional delegation has long been "divided on the issue." Still, the issue may be revisited this year. Curtis Picard, executive director of the Retail Association of Maine, "expects the Legislature this session to consider numerous bills related to Internet sales and the use tax." It remains to be seen whether or not he'll be right.

It should be noted that use tax is explained on the Maine Department of Revenue website. For all who seek, let them find.

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Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.