Maine: Many Out-of-State Sellers Must Collect Sales Tax
- Oct 30, 2013 | Gail Cole
Maine Revenue Services has released an information bulletin regarding the registration of out-of-state sellers and other persons. It offers “guidance to business entities located outside of Maine in determining whether they are required to register as a retailer with Maine Revenue Services (MRS).”
Retailers, both in state and remote, are “responsible for complying with all applicable tax statutes and rules.” In other words, don’t wait for representatives from MRS to knock on your door and hand you a sales tax form. By the time they knock, if they knock, they’ll probably be there for an audit.
The bulletin explains the law that compelled Amazon.com to terminate its Maine affiliates. Under it, any seller that makes retail sales in Maine or “solicits order for such sales through salespeople” in Maine is required to “register with MRS and collect and remit sales tax in accordance with the Sales and Use Tax Law.”
Many helpful examples of the new “presumptive requirement to register in certain cases” are provided. These include, but are not limited to, when an affiliate of the seller:
- Has a substantial physical presence in Maine and sells a similar line of products as the seller under a similar business name;
- Maintains a place of business in Maine in order to facility the delivery of property or services to Maine customers;
- Uses a similar trademark; or
- Delivers, installs or provides other maintenance services for the seller’s customers in Maine.
Furthermore, sales tax must be collected when an affiliate “[c]onducts any activities in Maine that are significantly associated with the seller’s ability to establish and maintain a market in Maine for the seller’s sales.” The example provided is this:
“Person in Maine provides dog training seminars across the state. The person has an arrangement with a national dog food company to promote its product during the seminars. This activity establishes and maintains a market in Maine. The national dog food company is required to register and collect and remit sales/use tax in accordance with the Sales and Use Tax Law.”
Out-of-state sellers must also register with the state and collect and remit sales tax when:
- They enter into an agreement with a person in Maine whereby the person “directly or indirectly refers potential customers, whether by a link on an Internet website, by telemarketing, by an in-person presentation or otherwise, to the seller;” and
- Cumulative gross receipts from retail sales by the seller to customers in Maine who are referred to the seller by all persons with this type of an agreement with the seller are in excess of $10,000 during the preceding 12 months.”
Sellers may rebut the listed presumptions, but in doing so, they must demonstrate that “the person’s activities in Maine are not significantly associated with the seller’s ability to establish or maintain a market in Maine for the seller’s sales.”
The legislation described in this bulletin took effect on October 9 of this year, which is why Amazon terminated its relationship with Maine affiliates on October 6.
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