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Maine Sales Tax Guide

By Cristina Garza

🦞🌲🦞 Maine, known as the Pinetree state, is the only monosyllabic state in our union and also the only state to border only one other state. Far out! Additionally, we get 90% of our sweet, sweet lobster supply from Maine (this will only seem insignificant if you’ve never had a lobster roll). Many small businesses thrive out of this little state that packs a big punch! If you’re one of the many small business owners proud to call Maine home, you’ll need to comply with Maine's sales tax laws to keep the party going. No worries! We have assembled this all-in-one guide for sales tax so that you can meet the sales tax compliance requirements for a small business in Maine. 

After reading this guide, you will have learned:

  • How to be prepared for your call with the Maine Revenue Services.
  • How to contact the Maine Revenue Services.
  • When to charge sales tax in Maine.
  • What goods, products, and services are taxable in Maine.
  • When you establish a sales tax nexus with the state of Maine, and the nuances of various thresholds.
  • How to register for a sales tax license in Maine.
  • How to collect sales tax in Maine.
  • How to file and pay sales tax in Maine.

If, after reading, you still have any questions to help you determine your tax sales obligations in Maine and how to fulfill them, we are here for your small business bookkeeping needs! 

 

 

Maine Sales Tax Contacts

Maine Sales Tax Contacts

âś…  Do you need to get in touch with the Maine Revenue Services?

âś…  Are you uncertain about whether to visit, call them, or contact them through their website?  

âś… Do you wonder what information you should have ready before you contact them?

 

If you answered “Yes” to any of these questions, please read onward, as we have just the information you need! :)

The Maine Revenue Services is reachable by phone at (207) 624-9693. 

You can also shoot a message to them by email, or you may visit their only physical location in Augusta. If you are hoping for the fastest response, our suggestion is that you call rather than send a message or visit in person. 

When you do call the Maine Revenue Services, you will want to have some information on hand. It will save time to have the following information easily accessible before you call: 

  • Taxpayer Name
  • EIN
  • Sales & Use Tax ID Number

If you are calling on behalf of an individual or a business, or having a third party call on your behalf, you must have a Maine Power of Attorney (form  2848-ME, PDF) signed before you call or else you will be wasting your time; they can only help if you have a completed form. 

If you have any more questions, please feel free to contact us so we can assist you with your sales tax needs.

 

 

Maine Sales Tax Registration

Maine Sales Tax Registration

Are you a new business selling tangible property in Maine? If yes, you are going to want to register your business with the Maine Revenue Services so that you can pay your sales tax on time. 

You need not fret as this is a relatively simple process and one for which you’re about to be fully prepared. We are going to outline the steps below so you are totally ready to register for your sales tax license.

Here we go! Remember...

Preparation is key. 

Let’s get started!

 

 

How do I register to collect sales tax in Maine?

You can apply or register for a Maine sales tax permit by visiting the Maine Revenue Services and following the instructions provided.

Maine also has an old school paper based form (PDF) you can print and mail in, but this is going to be a slower setup and with greater possibility for errors. We don’t recommend it, but wanted to make the option available in case it suits the needs of someone out there. 

 

 

What information do I need to register for a Maine sales tax permit?

Great question!

Before you sign up for Maine sales tax permit you’ll want the following information on hand:

  • Business name
  • Business entity type 
  • Description of business activities
  • Date business activities began or will begin
  • Business address and mailing address
  • Business contact information
  • Associated business entities 
  • NAICS code that best matches the business
  • Federal Employer Identification Number (FEIN)

Don’t forget! Preparation is key. When you have all this information ready, you can go online and register for your permit at the Maine Business Tax Registration Application website. 

 

 

How much does it cost to register for a Maine sales tax permit?

You’re gonna love this: Maine charges exactly zero dollars and zero cents for a business to register to pay sales tax :) No price better than free, we say!

 

 

Do I need a Federal Tax ID Number or EIN to register for a Maine sales tax permit?

Quite right, yes! You will need one, but if you don’t already have one and need to get a new EIN, it’s a painless process. You can register for a Federal EIN right here :). 

 

 

Which agencies in Maine do I need to additionally register with?

You may need to apply to some of the following agencies: 

You’ll want to give this some thought and do a little research or investigating; every business is unique and, as such, there are different rules, regulations, and laws that may apply. 

We suggest contacting the Maine Revenue Services to verify which additional government agencies you may be required to register with. 

 

*****

 

Huzzah!!!

You are now prepared to register for your Maine sales tax permit in Maine. 

Let’s summarize what we have covered:  

  • Have all the required information easily accessible before registering online.
  • Acquire a tax ID or EIN before registering for a Maine sales tax permit.
  • Register online at the Maine Revenue Services website.
  • Look into what other agencies you may have to additionally register with.

Registering for your Maine sales tax permit will be stress free as long as you are prepared. We recommend organizing all the essential information in a folder, preferably using a system like Box.com or Dropbox (something we’re happy to handle for our customers). 

 

 

Maine Sales Tax FAQ

Maine Sales Tax FAQ 

By now, you may have already contacted the Maine Revenue Services and applied for a Maine sales tax permit. 

Once you have a license to collect and remit sales taxes in Maine, you will probably be asking yourself two questions: 

  • When do I charge a sales tax in Maine?
  • What goods and services are subject to sales taxes in Maine? 

We are going to go over some common questions that our clients have asked. We believe these questions will help you appreciate the nuances of taxable goods so you can be confident in fulfilling your tax obligations. 

Let’s start with the first question…

 

 

What goods and services are considered taxable in Maine?

The following items are all taxable in the state of Maine: 

  • Sales of tangible goods at retail.
  • Repairs or alterations of tangible personal property.
  • Property rentals, leases, or licenses [e.g. commercial, mini-warehouse]
  • Selling service warranty contracts.
  • Short-term rentals for living accommodations (e.g. motel/hotel, beach houses, condos, timeshares, vacation homes, or RV homes).
  • Charges for admission to any place of amusement, sport, or recreation.
  • Manufacturing or producing goods for retail sales.
  • Operating vending machines or amusement rides.
  • Services are mostly exempted

 

The bottom line is …

Your business must pay taxes on sales of any non-exempt goods, and some taxable services.

*****

 

Let’s now review some of our clients’ frequently asked questions:

  • Is Maine an Origin or Destination sales tax State?
  • What creates a sales tax nexus in Maine?
  • What is the economic threshold in Maine?
  • Does Amazon have fulfillment centers in Maine?
  • Does Maine have a Click-Through Nexus?

To best understand your tax obligations, new businesses need to consider how they are doing business and the type of relationships they have with buyers and any third parties to their transactions. 

 Let’s discuss some questions that will help you understand the nature of your small business and the subsequent tax implications.   

 

Is Maine an origin or destination-based sales tax state?

Maine is a destination-based sales tax state, which simply means you charge sales tax based on the location of the purchaser rather than that of the seller. Maine keeps it fairly simple compared to other states by not permitting cities or localities to bump the rate, which means only one rate state-wide. 

 

 Protip: Charge the customer tax based on their location.

 

What creates a tax nexus with the state of Maine?  

Having nexus, also known as "sufficient business presence,” with Maine means your business has established a taxing connection with a state. When this happens, you are required to collect and remit sales tax in Maine because you created a sales tax Nexus.

Even if your business maintains its main headquarters in another state, you may still have to charge and pay sales tax to the Maine Revenue Services even if you never step foot in Maine.   

So, how do you create a sales tax nexus in Maine?

Sales Tax Nexus in Maine

 

A business establishes a nexus in Maine by:

  • having a business location in Maine;
  • having property stored in Maine;
  • employing any person in Maine;
  • contracting with a salesperson or other agent in Maine;
  • leasing equipment used in Maine;
  • performing services in Maine;
  • licensing the use of intangible property in Maine, or transporting property in Maine using the taxpayer’s vehicles.

Let’s talk a bit more specifically about where your goods are stored such as in the instance of an Amazon warehouse. 

 

 

Does Amazon have fulfillment centers in Maine?

No, Maine has no distribution centers at this time.

This information is relevant for our customers who sell products on Amazon or are recognized as Amazon FBA (Fulfillment by Amazon) sellers. When Amazon stores products in one of its fulfillment centers in any state including, it triggers a sales tax requirement. 

 

 

Does Maine have economic nexus?

Yes! Maine now has an economic nexus law. What does this mean? As of July 1st, 2018 remote sellers are liable to pay sales tax beyond a certain threshold. This means even businesses without a physical presence or traditional nexus can be required to register for, collect, and pay sales taxes.

The threshold for registering is having a cumulative gross revenue of over $100,000 in sales to Maine purchasers or 200 separate transactions.

For  more information see the Maine’s remote sellers page.

 

 

Does Maine have click-through nexus?

Yes! Maine has click-through nexus for remote sellers. This means if your business is involved in affiliate marketing sales to Maine purchasers, you may be liable to pay sales tax even if you aren’t located in the state of Maine. 

 

 

Is Maine a streamlined sales tax state?

No, Maine is not at this time a member of the SSP. However there has been legislative progress towards that end so it may be joining soon!

 

More effectively manage your tax needs by keeping this guide handy. 

 

You and your business can be better equipped to avoid situations like paying fines, paying back taxes that you did know you had to pay in the first place, or facing an audit by the tax authorities in Maine.

 

Collecting Sales Tax in Maine

Collecting Sales Tax in Maine

By now you know if you are a business that has established a nexus with Maine. So you have an understanding about whether, or when, you are required to collect sales tax. Knowing this is just half the battle! Now, we are going to help you with the next half of the battle: how to navigate the process of collecting taxes.

Let’s review some common questions our clients have asked regarding their Maine Sales Tax obligations. 

  • How do I collect Maine Sales Tax?
  • Who is eligible for Maine Sales Tax exemptions?
  • What should I do if my customer is exempt from sales tax in Maine?
  • What happens if I lose a Maine nontaxable transaction certificate? 

After reading this, you will be better equipped to determine when --and when not-- to collect sales tax in Maine.

 

 

How do I collect Maine sales tax?

Because Maine is a destination-based sales tax state with no localities, your business charges a single flat rate throughout the state. You may incorporate or part out the tax into the final price at your discretion, but you must post notice either on the sales slip or on your premise that sales tax is incorporated. 

 

 

What are the current Maine sales tax rates?   

Maine’s state-wide sales tax rate is 5.5% for tangible goods and 6% for their Service Provider Tax at the time of this article’s writing. However, since sales tax rates may change, we shall refer you to check out the Maine Revenue Services tax rate lookup page. Any change will be reflected on that page.

It always helps to be accurate and up to date with this type of information! :) 

 

 

What is exempt from Maine sales tax?

Here is a sample list of exemptions: 

  • purchases for resale
  • Everyday clothing items
  • Medical supplies
  • Groceries 

Maine has far too many exempt items to list here, but they go into greater detail on page 7 of this PDF.

 

 

Who are eligible for Maine sales tax exemptions?

At this point, you should know what products are exempt from sales tax in Maine. You also want to know who may be exempt. 

Under Maine law, the type of buyer or the way the goods will be used can qualify can buyer for a sales tax exemption. A good example of this is a merchant purchasing goods for resale, aka a wholesaler.

Other common examples of an exempt buyer may include:

  • Government agencies
  • Non-profit organizations
  • Religious groups
  • Out-of-state buyers (should their business not have nexus in their home state).

Note that a non-profit or contractor status doesn’t necessarily immediately confer tax exempt status. Maine keeps a list of tax-exempt organizations..

 

 

What should I do if my customer is exempt from sales tax in Maine?

Purchasers who are tax exempt must have completed an exemption certificate and must present their completed exemption certificate at the time of purchase. It is then incumbent upon the seller to hold on to this exemption certificate. Failure to do so may leave you unable to justify tax exempt sales.

Maine provides a website to determine whether an exemption certificate is valid. Note that determining the validity via the website doesn’t reduce the requirement to hold on to the certificate for bookkeeping purposes.

 

 

What happens if I lose a Maine Sales Tax exemption certificate?

Hmm... Obviously this issue is best to be avoided! Imagine finding out you’ll be audited and discovering you cannot produce an exemption certificate for a buyer! That nightmare scenario would mean you could be held liable to pay all taxes on behalf of the buyer. This is a bad scene and can be avoided by taking proper care with your paperwork… which happens to be one of our specialties! :) 

 

 

Does Maine have a sales tax holiday?

Negative, the tax man never sleeps in Maine. 

 

***** 

 

 

We have now covered who you need to collect sales taxes from, how to determine whether goods for sale are deemed taxable, what goods and services fall under tax exemptions, who is eligible for tax exemption certificates, and, finally, the process of collecting sales tax in Maine state. 

Now that we’re this far down the rabbit hole there’s only one thing we need to learn about next… how to pay the piper! 

 

Filing and Paying Sales Tax in Maine

Filing and Paying Sales Tax in Maine

It is time to talk about filing and paying your sales taxes in Maine. In this section, We are going to cover the following frequently asked questions from our clients:

  • When is Maine Sales Tax due?
  • What are the Maine Sales Tax thresholds?
  • What if a Maine Sales Tax filing date falls on a weekend or holiday?
  • How do I file a Maine Sales Tax Return?
  • How do I correct a Maine Sales Tax return?
  • What happens if I don’t collect sales tax?
  • What happens if I file or pay my sales tax return late?
  • Do I need to file a return if I don’t collect any sales tax in Maine?
  • If I close my business, do I need to file a final sales tax return?
  • Does the Maine Revenue Services offer a discount for filing on time?

By the time you finish reading this, you will feel confident enough to file and pay your Maine Sales Tax.

 

When is Maine sales tax due?

Maine sales tax payments are due based on the filing interval. Filing intervals are based on the company’s tax liability [detailed ahead, be patient! :p] 

 

Filing Interval

Due day

Annually

No later than January 15th

Semi-Annually

No later than the 15th of January and July

Quarterly

No later than the 15th of the month following the quarter

Monthly

No later than the 15th day of the month following the month being reported

 

 

What are the Maine sales tax filing interval thresholds?

The thresholds for filing intervals are based on the expected or actual tax liability owed:

 

Tax Amount Owed monthly*

Filing interval

Less than $50

Annually

Less than $100

Semi-Annually

Between than $100 and $599

Quarterly

More than $600 a month

Monthly

 

*anticipated if new business, actual if existing company

 

Not sure how to determine your tax filing frequency?

You can review your eCommerce or Point-of-Sale Software to see the volume of sales you have generated. 

Don't worry though! The state will let you know when your due dates change. :) 

Keep an eye out for notices in your mail from the State of Maine so that you don't miss any shift in deadlines.

 

 

What if a Maine sales tax filing date falls on a weekend or holiday?

The deadline is moved to the next business day, typically the Monday following the weekend or the day after the holiday. Where possible, we always suggest filing well before the holiday, of course ;). 

 

 

How do I file a Maine sales tax return?

Paper: Complete form ST-7 (PDF) and mail to the address on the form.

Electronic: File form ST-7 online and submit payment via EFT.

  

 

How do I correct a Maine sales tax return?

Correct the return via the Maine SalesTax site or by filling out the same form form ST-7 (PDF) and make sure to select Amended return. In either case, simply fill out the amended return as though it was the only one you’re submitting. 

 

 

What happens if I don’t collect sales tax?

If you were required to collect sales taxes and failed to do so for whatever reason, that’s a big no-no! Ultimately the business will be held liable for the due tax. Always be sure to collect sales tax at the point of sale. Attempting to collect after the fact will be time consuming and most likely unsuccessful. 

 

Protip: You are still responsible for remitting sales taxes even if you failed to collect them. 

 

What happens if I file or pay my sales tax return late?

Maine Revenue Services has two different types penalty rates that can be applied to taxes that are due. Whichever is the highest penalty is the one which will apply, of course:

 

  1. Failure to file a return on time -- 10% or $25 
  2. Failure to pay the due tax on time -- 1% to a max of 25% of tax owed

 

 

Do I need to file a return if I don’t collect any sales tax in Maine?

Yes, Maine requires businesses file a “Zero-Tax” return even when they have no sales during a taxing period.

 

 

If I close my business, do I need to file a final sales tax return?

Yes, Maine requires businesses to file a “Final sales tax” return when closing their doors.

 

Does the Maine Revenue Services offer a discount for filing on time?

No! For dessert, you get more broccoli 🥦, and be grateful! ;p 

 

*****

 

Now that we covered all our bases for filing and paying sales taxes in the state of Maine, you should feel more at ease about the process.

 

Some things to remember:

  • Due dates are important. If anything, file and pay your taxes early.
  • There are three payment plans for filing and paying your sales taxes depending on how much you collect in sales tax on average in a month.
  • You can file and pay your taxes electronically or by mail
  • If you need to amend a return, you may do so electronically or by paper.
  • If you don’t collect sales tax and you were supposed to, you (not the buyer) is liable to pay the sales tax to the state of Maine.
  • You will have to pay late fees if you fail to file your tax return on time and/or if you fail to make your tax payment on time.
  • Even if you collect no sales tax, you still need to file a return.
  • You need to file a “Final sales tax report” when you close your business.

 

Now, you are ready to file and pay your sales tax in Maine. If you have any more questions, feel free to contact us.

  

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Please note: This blog is for informational purposes only and the information is accurate as of 7/15/2019. If you want legal advice on sales tax law for your business, please contact a Sales Tax professional. Keep in mind that sales tax regulations and laws are subject to change at any time. While we strive to keep our blog current, this blog possibly may be out of date by the time you review it. 

Tags: Sales Tax, Maine