Maine Grocers, Sales Tax, and Exemptions
- Sales Tax News
- Oct 2, 2013 | Gail Cole
Grocery stores must be a veritable feast for tax auditors. They carry so many and such a great variety of products that keeping track of which items are tax exempt and which items are subject to sales tax is inherently challenging. Add to that the fact that the same items may be taxed at different rates depending on how they're packaged or their location in the store, and, well, yikes.
If you think that grocery stores are filled only with "grocery staples," think again. They carry grocery staples, yes. But many, many items sold in grocery stores are not considered staples and are therefore subject to sales tax.
Examples of taxable items include:
- Alcohol, all varieties;
- Agricultural products such as fertilizers, insecticides, seeds;
- Bathroom and paper products, including tissues and toothpaste;
- Cleaning supplies, from ammonia to waxes;
- Food products, not to be confused with food.*
- Household supplies such as air fresheners, light bulbs and trash bags;
- Medical and dietary products such as Slimfast, beauty aids, and tonics; and
- Miscellaneous products like charcoal briquettes, pet supplies, seasonal products and video sales and rentals.
* Food products include candy and confections, fudge, ice, and soft drinks. This is a fascinatingly rich subject. Did you know, for example, that in Maine it is the first ingredient listed on a package that determines a confection from a grocery staple?
Prepared foods are subject to sales tax. They're defined as all meals served on or off the premises for immediate consumption, including cold sandwiches, heated foods, bakery items, deli platters, and food products not individually packaged for resale. However, bulk bakery items, such as a box of cookies or a whole pie, are presumed to be not for immediate consumption and are therefore tax exempt.
Many other items sold in grocery stores are also tax exempt. These include, but are not limited to:
- Grocery staples, or "food products ordinarily consumed for human nourishment" (Mom was right--candy doesn't make the cut);
- Returnable, reusable containers when sold with the contents;
- Kerosene, dyed special fuel, wood pellets, 100% compressed wood products, and propane for home heating or cooking.
In addition, taxable items may be purchased tax-free when the buyer is an exempt organization. Exempt organizations include government agencies, hospitals, schools, and organized places of worship. In order to obtain the exemption, such organizations must provide the vendor with a completed exemption certificate. These are available through Maine Revenue Services, or through an exemption certificate creation wizard.
Likewise, buyers who purchase items for resale may purchase those taxable items tax-free. In such cases, the buyer must provide the seller with a valid resale certificate.
Food stamps and WIC purchases
Taxable items may be purchased exempt from sales tax if they are paid for with federal electronic benefit transfer cards or Women, Infants and Children (WIC) Special Supplemental Nutrition Program food cards. If those cards are used for partial payment toward a purchase, the remainder of the purchase amount is subject to sales tax.
Feed the (seeing eye) dog
Food and supplies essential to the care and maintenance of seeing-eye dogs used to assist blind people are exempt from sales tax. Copies of sales receipts should be kept to support the exemption.
Maine grocers have enough in their baskets without worrying about sales taxes. An automated sales tax system frees up valuable time.
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