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Maine Considers Online Sales Tax

  • Mar 20, 2013 | Gail Cole

Lawmakers in Maine are currently considering legislation that would require more online vendors to collect and remit Maine sales tax. Maine thus joins a national conversation sparked by the recent re-introduction of The Marketplace Fairness Act of 2013.

Develop Agreements with Online Retailers

LD 435, introduced by Senate President Justin Alfond (D), would require the State Tax Assessor “to develop agreements with online retailers for the collection of Maine sales and use tax by those online retailers.”

Online retailer is defined as “a person that (sic) makes sales to Maine residents but that (sic) does not collect sales and use tax from those Maine residents because the online retailer is not located in Maine.”

The Affiliate Connection

LD 319 , introduced by House Majority Leader Seth Berry (D), is “An Act to Provide Tax Fairness to Small Businesses in the State." It points out that the state loses more than $60,000,000 annually because out-of-state retailers don’t collect and remit Maine sales and use. Furthermore, Maine businesses that do collect the tax “are put at a competitive disadvantage with businesses” that don’t.

Seeking to establish fairness and collect more revenue, the bill would require a seller to collect and remit sales tax if:

  • “[A] person affiliated with the seller has a substantial presence in the State;” or
  • “[A] person who has a substantial presence in the State engages in certain activities, such as selling a line of products similar to that of the seller, or maintaining an office or distribution center in the State to facilitate the delivery of the seller's products.

Alternatively, the bill would require a seller “to register with the State and collect and remit sales and use tax if the seller has an agreement with a person to refer potential customers to the seller and the seller generates more than $10,000 in sales in the State annually.”

LD 319 would also require legislative approval of any agreement between the executive branch and a seller that would allow the seller to avoid collecting and remitting sales tax. More than one state in the past has made such an agreement with Amazon, the world’s largest online retailer.

Both LD 435 and LD 319 are currently being considered by the Committee on Taxation.

Streamlined Sales Tax

LD 319 also directs the Bureau of Revenue Services to “identify changes in the sales and use tax laws necessary to conform … to the national effort known as the ‘Streamlined Sales and Use Tax Agreement’ … by January 15, 2014."

The Governor Says?

Governor Paul LePage (R), whose bid for office in 2010 was backed by the Tea Party, is said to be “supportive of the concept of collecting taxes from Internet sales.” Last year he created the e-Fairness Task Force to “explore potential avenues for the collection of sales taxes at the point-of-sale.” The findings are expected to be announced later this year (Bangor Daily News).

Yet the governor prefers a federal solution to the issue. In a March 2012 letter to Senators Susan Collins and Olympia Snow, he supported “a federal law that would require all internet companies to collect sales tax on purchases.” At the time, he said "the Marketplace Fairness Act would create a more even playing field for local brick and mortar stores.” The National Governors Association supports the Marketplace Fairness Act of 2013.

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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.