Sales Tax Reference Guide
Service Provider Tax
A 5% service provider tax applies to the following services:
Extended cable and extended satellite television service;
Rental of video media and video equipment;
Rental of furniture, audio media and audio equipment pursuant to a rental-purchase agreement as defined in Title 9-A, section 11-105.
The installation, maintenance or repair of telecommunications equipment;
Private non-medical institution services
Community support services
Day habilitation services
Personal support services
Residential training services
Value is measured by the sale price. The liability for, or the incidence of, the tax imposed by this section is declared to be a levy on the seller. If a seller includes this tax on a customer's bill, it must be shown as a separate line item and identified as a service provider tax. §2552(2)
Unlike the sales tax, the service provider tax is imposed on the provider. The provider can pass this cost on to the purchaser, and if this happens, the provider must disclose the tax as a “service provider tax”.
“Sale price” means the total amount of consideration, including cash, credit, property and services, for which personal property or services are sold, leased or rented, valued in money, whether received in money or otherwise, without any deduction for the cost of materials used, labor or service cost, interest, losses and any other expense of the seller. ”Sale price” includes any services that are a part of a sale. “Sale price” does not include:
A. Discounts allowed and taken on sales;
B. Allowances in cash or by credit made upon the return of services pursuant to warranty;
C. The price of services rejected by customers when the full sale price is refunded either in cash or by credit;
D. The amount of any tax imposed by the United States or the State on or with respect to the sale of a service, whether imposed upon the seller or the consumer; or
E. The cost of transportation from the service provider’s place of business or other point from which shipment is made directly to the purchaser, as long as those charges are -separately stated and the transportation occurs by means of common carrier, contract carrier or the United States Postal Service. §2551(15)
- Telecommunications service; § 2552(E)
- The installation, maintenance or repair of telecommunications equipment; §2552(F)
Telecommunications services and telecommunications equipment are broadly defined as:
"Telecommunications services" means all telecommunications services as described in this subsection.
A. "Telecommunications services" includes:
(1) The provision of 2-way interactive communications through the use of telecommunications equipment, exclusive of mobile telecommunications services; and
- Two-way interactive mobile telecommunications services provided by a home service provider to a customer whose place of primary use is within this State, to the extent those services are associated with transmissions that originate and terminate within this State or within any other state. For purposes of this paragraph, the term "state" includes the District of Columbia and any territory or possession of the United States.
B. "Telecommunications services" does not include:
(1) Except as otherwise provided by this subsection, service originating or terminating outside this State;
(2) Access services;
(3) Directory advertising services;
(4) The sale of unbundled network elements for use in the provision of telecommunications services;
(5) The lease of telecommunications equipment;
(6) Prepaid calling service; or
(7) Mobile telecommunications services provided by a home service provider to a customer whose place of primary use is not within this State. § 2551, sub-§20
“ Telecommunications equipment" means any 2-way interactive communications device, system or process for transmitting or receiving signals and capable of exchanging audio, video, data or textual information. “Telecommunications equipment” includes all transmission media that are used or capable of being used in the provision of 2-way interactive communications, including, without limitation, copper wire, coaxial cable and optical fiber, except those transmission media designed and primarily used to transmit electricity. "Telecommunications equipment" does not include computers, except those components of a computer used primarily and directly as a 2-way interactive Communications device capable of exchanging audio, video, data or textual information. §2551, sub-§19
Telecommunications service includes calls made within Maine which also terminate in Maine. Thus the monthly charge for line service is taxable as well as long distance calls within Maine. The definition, however, excludes those calls that originate or terminate outside of Maine. Thus long distance calls made in Maine to Florida, for instance, is not subject to tax. Telecommunications service is not restricted to entities that provide telephone line service. It includes voice over internet protocol (VOIP) and any person who installs, repairs or leases telecommunications equipment. "Telecommunications equipment" not only includes the familiar telephone, but also cellular telephones, TDD's, two-way radios, modems, fax machines, telephone switching equipment and telephone wiring, including copper wire, coaxial cable and optical fiber. Generally, installation and repair services are exempt from sales tax through their exclusion from the definition of "sales price". However, since the definition is inclusive of all services relating to telecommunications and explicitly includes "installation, maintenance or repair of telecommunications equipment", the general exclusion does not apply. Charges for installation or repair of telecommunications equipment are subject to tax as sales of telecommunications service.
When telecommunications equipment is a component of another piece of equipment (a fax as part of a copier or a modem as part of a computer), repair charges allocable only to the telecommunications equipment is subject to tax.
“Mobile telecommunications services” means commercial mobile radio service as defined in 47 Code of Federal Regulations, Section 20.3 as in effect on June 1, 1999. For purposes of sourcing, “mobile telecommunications services” does not include air-ground radiotelephone service as defined in 47 Code of Federal Regulations, Section 22.99 as in effect on June 1, 1999. §2551(6)
The definition of telecommunications service in Maine’s law is in conformity with federal statute with regards to the sourcing of mobile telephone services. In summary, Maine can only apply its statute on calls associated with a customer whose place of primary use is in Maine. “Place of primary use” is defined as:
… the street address representative of where a customer's use of mobile telecommunications services primarily occurs, which must be either the residential street address or the primary business street address of the customer and must also be located within the licensed service area of
the home service provider. For purposes of determining the place of primary use, "customer" means the person or entity that contracts with the home service provider for mobile telecommunications services, or, if the end user of such services is not the contracting party, the person that is the end user of such services. The term "customer" does not include a reseller of mobile telecommunications services, or a serving carrier under an agreement to serve the customer outside the home service provider's licensed service area. §2551, sub-§8
Special rules addressing the responsibilities of a home service provider have also been enacted as follows:
1. Sourcing rule; identifying place of primary use. Mobile telecommunications services provided to a customer whose place of primary use is located in this State, the charges for which are billed by or for the customer's home service provider, are deemed to be provided at the customer's place of primary use. A home service provider is responsible for obtaining and maintaining a record of a customer's place of primary use. Subject to subsection 2 and if the home service provider's reliance on the information provided by its customer is in good faith, the home service provider:
A. May rely on the applicable residential or business street address supplied by the home service provider's customer; and
B. May not be held liable for any additional taxes under this Part based on a different determination of the place of primary use.
2. Correction of place of primary use; determination by assessor. If the assessor determines that the address used by a home service provider as a customer's place of primary use does not meet the definition provided by section 2551, subsection 8, the assessor shall notify the customer in writing of that determination and provide the customer an opportunity to demonstrate that that address is the customer's place of primary use. If the customer fails to demonstrate to the assessor's satisfaction within 30 days from the time it receives notice from the assessor, or within another time period as the assessor may allow, that the address in question is the customer's place of primary use, the assessor shall provide the home service provider with the proper address to be used as the customer's place of primary use. The home service provider shall begin using the address provided by the assessor as the customer's place of primary use within 30 days from the date it receives notice of the assessor's determination.
3. Hold harmless provision; use of electronic database or enhanced zip code. A home service provider is entitled to the hold harmless protections provided by the federal Mobile Telecommunications Sourcing Act, Public Law 106-252, Section 1, 114 Stat. 2, 2000.
4. Bundled services. Notwithstanding any other provision of this Part, otherwise nontaxable charges that are aggregated with and not separately stated from taxable mobile telecommunications charges are subject to taxation unless the home service provider can, to the satisfaction of the assessor, reasonably identify such charges from books and records kept in the regular course of its business. A customer may not rely upon the nontaxability of bundled services unless the customer's home service provider separately states the otherwise nontaxable services or the home service provider elects, after receiving written notice from the customer in the form required by the provider, to provide verifiable data based upon the home service provider's books and records that are kept in the regular course of business and that reasonably identify the nontaxable charges.
5. Certain preexisting contracts. Subject to subsection 2, a home service provider may treat the address used by it for purposes of the tax imposed by this chapter for any customer under a service contract or agreement in effect on July 28, 2002 as that customer's place of primary use for the remaining term of the service contract or agreement, excluding any extension or renewal period. §2556
Additional questions and answers on the topic of Mobile Telecommunications can be found in a special notice issued by MRS on July 1, 2002. (See Sample Document section.)
- Extended cable and satellite television service ; §2552(A)
- "Extended cable and satellite television service" is defined as:
- ... all cable and satellite television service that is in addition to the minimum service which can be purchased from a cable and satellite television supplier including the use of associated equipment for which a charge is made. It does not include installation of the associated equipment for which a separate charge is levied. § 2551, sub-§2
- Cable and satellite television service is therefore taxed only on programming that the subscriber may elect to receive over and above the basic service. For instance, if a cable company offers a basic package of 18 channels, the charge for this "basic" service is exempt. If the subscriber elects to purchase anything more than this, those charges would be taxable. Examples of taxable charges are: 1) the purchase of an extended package of additional channels, 2) movie or sports channels, 3) connections to additional sets, 4) pay-per-view programs or 5) use of special equipment like remote controls or converter boxes. Installation charges are not subject to tax, whether for basic or extended service, provided the charge is separately stated.
- Since the definition of "retail sale" does not include "the sale, to a person “engaged in the business of providing cable or satellite television services, of associated equipment for rental or lease to subscribers in conjunction with a sale of extended cable or extended satellite television services; ", the purchase of converter boxes by the
- cable or satellite company is exempt from tax since the rental of the box is taxable as "extended cable and satellite television service".
Fabrication services; § 2552(B)
"Fabrication services" as defined below are subject to sales and use tax as a taxable service.
"Fabrication services" means the production of tangible personal property for a consideration for a person who furnishes, either directly or indirectly, the materials used in that production. "Fabrication services" does not include the production of tangible personal property if a sale to the consumer of the tangible personal property so produced would be exempt or otherwise not subject to tax under Part 3. §2551, sub-§3
"Fabrication services" are those that change materials provided to a fabricator into a different form, character or composition. Fabrication is very similar to manufacturing except that the materials are already owned by the end user. The end user contracts with the fabricator to convert the materials into something different. For instance, Mr. X has some antique floor boards and contracts with a carpenter to make a table. The labor charge by the carpenter is a "fabrication service" that is subject to tax.
"Fabrication services" do not include the charge for attaching, affixing or applying a completed item of tangible personal property to other tangible personal property, or to real property. For example, having a painting mounted into a frame is not fabrication.
As the definition states, if the product being fabricated is an exempt item or the services are being performed for an exempt organization, the services are likewise exempt. For more information on “fabrication services”, please refer to Instructional Bulletin #46.
Rental of video media and video equipment; and §2552(C)
The statute defines "video media and video equipment" as follows:
"Video media" means prerecorded magnetic tapes used for noncommercial playback of images and sound on video equipment, and other electronic audio and video media that provide for noncommercial interactive utilization by a person or persons, including digital video discs. "Video equipment" means equipment used to play video media, equipment used for recording images and sound for subsequent noncommercial playback and equipment used for noncommercial interactive utilization of electronic audio and video media. §2551, sub-§21
Rentals of video media and video games, as well as the equipment used to record or playback video media and games are subject to tax. Late charges and movie passes, since they represent payment for rentals, are also taxable. Fees charged for rewinding tapes is considered a service charge and is not taxable.
The inclusion of the term "noncommercial" was intentional in order to not subject rentals of movies by theaters to a tax. The typical daily rental of video media and video games, such as Nintendo and Sega, along with the related equipment are the items targeted for taxation.
As mentioned in the definition of "retail sale", a retail sale does not include "the sale, to a person engaged in the business of renting audio or video media and audio or video equipment, of audio or video media or audio or video equipment for rental". Purchases of these items are not subject to a tax since the subsequent rentals are taxed.
- Rentals of furniture, audio media and audio equipment are taxable only in those establishments that enter into rental-purchase agreements as defined in M.R.S.A., Title 9-A, §11-105, sub-§7.
- Rental of furniture, audio media and audio equipment pursuant to a rental-purchase agreement as defined in Title 9-A, section 11-105 .
- Furniture is defined as:
- ...the following movable items that are intended to make a room or establishment useful for human habitation.
- A. "Furniture" includes:
- (1) Living room furniture, including, but not limited to, sofas, love seats, loungers, recliners, chairs, end tables, coffee tables, curio cabinets, home entertainment centers, book shelves and floor and table lamps;
- (2) Bedroom furniture, including, but not limited to, headboards, footboards, bed frames, mattresses, box springs, dressers, chests of drawers, mirrors, armoires, nightstands, bunk beds, roll-away beds and chests;
- (3) Baby furniture, including, but not limited to, cribs, dressers and changing tables;
- (4) Dining room furniture, including, but not limited to, tables, chairs, dinette sets, hutches and dry sinks;
- (5) Patio and outdoor furniture, including, but not limited to, tables, chairs, umbrellas, porch swings and gliders;
- (6) Office furniture including, but not limited to, desks, chairs, tables, workstations, movable partitions, shelving, file cabinets, coat racks and couches; and
- (7) Home electronic devices including home appliances, home computers, televisions, stereos and radios.
- B. "Furniture" does not include:
- (1) Items that are affixed to real property such as sinks, toilets, built-in cabinets or light fixtures; or
- (2) Furnishings such as carpeting, artwork, draperies or blinds .
- §2551, sub-§4
Rent-to-own establishments are required to collect sales tax on rental payments as they occur. As provided in the definition of “retail sale”, a retail sale does not include “the sale, to a person engaged in the business of renting furniture, or audio media and audio equipment, of furniture, audio media or audio equipment for rental pursuant to a rental-purchase agreement as defined in Title 9-A, section 11-105.”. Purchases of the items listed in the definition of “furniture” as well as audio and audio equipment are not subject to tax since the subsequent rentals are taxed.
The following five services only pertain to those persons providing these services under contract with the Department of Health and Human Services (“DHHS”). Reimbursements from DHHS include the service provider tax. Maine Revenue Services has limited information regarding these services outside of the definitions listed below which are found in Title 36. Specific questions regarding what are included in these services should be directed to DHHS.
"Private nonmedical institution services" means services, including food, shelter and treatment, that are provided by a private nonmedical institution. §2551(11)
"Private nonmedical institution" means a person licensed by the Department of Human Services or the Department of Behavioral and Developmental Services to provide private nonmedical institution services to 4 or more MaineCare-eligible and other residents in single or multiple facilities under a written agreement with the Department of Human Services or the Department of Behavioral and Developmental Services. "Private nonmedical institution" does not include a health insurance organization, hospital, nursing home or community health care center. §2551(10)
“Community support services” means rehabilitative services provided to adults at least 18 years of age or to emancipated children that are provided in the context of a supportive relationship pursuant to an individual support plan that promotes a person’s recovery and integration of the person into the community and that sustain the person in that person’s current living situation or another living situation of that person’s choice. “Community support services” include only those services provided by a designated community support services provider licensed by and operating under a contract with the Department of Health and Human Services for such services, whether the provider is reimbursed through participation in the MaineCare program or with state grant funds. §2551(1-A)
DAY HABILITATION SERVICES
- “Day habilitation services” means services:
- A. That are provided by community-based agencies to children or adults with mental retardation and include assistance with the acquisition, retention or improvement of self-help, socialization and adaptive living skills; and
- B. That take place in a nonresidential setting separate from the home or facility in which the child or adult resides, except when a physician has ordered that such services be provided in the child’s or adult’s home, and focus on enabling the child or adult to attain or maintain maximum functional levels.
- “Day habilitation services” includes only those services provided by designated agencies under a contract with the Department of Health and Human Services. §2551(1-B)
- “Personal support services” means services provided to children or adults with mental retardation, including direct assistance with eating, bathing, dressing, personal hygiene and other activities of daily living. These services include only those services provided by designated agencies under a contract with the Department of Health and Human Services and:
- A. May include assistance with instrumental activities of daily living such as assistance with the preparation of meals, but does not include the cost of the meals themselves;
- B. If specified in the child’s or adult’s care plan, may include such housekeeping chores as bed making, dusting and vacuuming that are incidental to the care furnished, or are essential to the health and welfare of the child or the adult; and
- C. May be provided by a provider unrelated to the child or the adult or by an adult relative other than an adult recipient’s spouse, but may not be provided in the same setting where residential training is provided. §2551(7-B)
- “Residential training services” means services provided to children or adults with mental retardation to assist with the acquisition, retention or improvement of skills related to activities of daily living, such as personal grooming and cleanliness, household chores, eating and food preparation, and the social and adaptive skills necessary to enable the child or adult to live in a noninstitutional setting. Residential training services include only those services provided by designated agencies under a contract with the Department of Health and Human Services. §2551(13-A)
In addition to many exclusions found in the definitions already mentioned, the sales and use tax law also provides numerous exemptions. In fact they could be grouped in the following categories:
- Exempt goods
- Exempt services
- Nonprofit organizations
- Certain establishments
This section has been categorized into sub groups for easier reference. These groups are food items, medical items, printed items, donated merchandise, building materials, commerce items, agriculture and animals, vehicles, fuels and manufacturing.
Grocery staples. "'Grocery staples' means food products ordinarily consumed for human nourishment.
'Grocery staples' does not include spirituous, malt or vinous liquors; soft drinks, iced tea, sodas or beverages such as are ordinarily dispensed at bars or soda fountains or in connection with bars or soda fountains; medicines, tonics, vitamins and preparations in liquid, powdered, granular, tablet, capsule, lozenge or pill form, sold as dietary supplements or adjuncts, except when sold on the prescription of a physician; water, including mineral bottled and carbonated waters and ice; dietary substitutes; candy and confections; and prepared food. §1752(3-B)
Reference should be made to Instructional Bulletin #12 which provides a detailed list of taxable and nontaxable items commonly sold in a grocery store.
Specific items that remain taxable regardless of where sold are: candy and confections, including any bars covered in chocolate or primarily containing candy, such as Twix â bars and Kudo â bars or any “jelly-like” substance primarily containing sugar or corn syrup, such as Gummie Bears â and jelly beans; candied and glazed fruit; chewing gum; breath mints; iced tea; soft drinks and other carbonated drinks.
Another important exclusion to the definition of “grocery staples” is “prepared food” which is defined as follows:
"’Prepared food’ means:
A. Meals served on or off the premises of the retailer;
B. Food and drinks that are prepared by the retailer and ready for consumption without further preparation; and
C. All food and drinks sold from an establishment whose sales of food and drinks that are prepared by the retailer account for more than 75% of the establishment's gross receipts.
‘Prepared food’ does not include bulk sales of grocery staples.”
§ 1752, sub-§8-A
All “prepared food” is taxable at the rate of 7% regardless of where sold. The following explains the different terms found in the definition of “prepared food”.
Meals served on or off the premises of the retailer
This category includes any meal sold by any retailer whether served at the retailer’s place of business or off site. It includes all food or drink prepared for consumption at tables, chairs or counters or from trays, glasses, dishes or other tableware provided by the retailer. Common retailers included in this category are restaurants, fast food chains, cafeterias, caterers and other eateries providing sit down service.
Sandwiches requiring no further preparation and food heated by the retailer are considered “meals”, whether prepared by the retailer or a third party, and regardless of the type of retailer making the sale.
This category includes all food and drink that is prepared by any retailer and that is ready to eat. “Prepared by the retailer” means:
Food prepared for sale in a heated state regardless of cooling which may have occurred prior to the sale. Some examples are hot dogs, hamburgers, hot sandwiches, pizza, chicken pieces and rotisserie chicken.
Mixing or combining two or more food ingredients for sale as a single item, such as bakery items, sandwiches, deli platters, salads and desserts.
Food or drink prepared from syrups or mixes, such as soda fountain drinks, slush-type drinks, soft-serve ice cream and milk shakes.
Food or drink sold with eating utensils provided by the retailer, including plates, knives, forks, spoons, glasses, cups, napkins or straws.
Food that is prepared for sale in self-serve areas, such as salad bars and self-serve food carts.
Example 1: A snack bar prepares hot dogs, hamburgers, sandwiches, fountain drinks, slush-type drinks and soft serve ice cream. All these products are taxable at the rate of 7%.
Example 2: A grocery store prepares sandwiches, hot chicken, cole slaw, potato salad and also prepares food for a salad bar where customers can create their own salads. All these items are taxable at the rate of 7%, except those excluded as “bulk sales of grocery staples” as explained below.
Example 3: A convenience store sells hot dogs, pizza slices, sandwiches, hot coffee, fountain drinks, and slush-type drinks. All these items are taxable at 7%.
Example 4: A bakery prepares and sells bread and bread products, doughnuts, muffins, pastries, cakes, pies and hot coffee. All these items are “prepared by the retailer” and taxable at 7%, except those excluded as “bulk sales of grocery staples” as explained below.
Food and drink sold from an establishment that is predominately in the business of selling prepared food for immediate consumption (75% rule)
This category attempts to identify those retailers who are similar in nature to a restaurant rather than a grocery store. A retailer who falls under this category is required to charge 7% tax on all of its sales of food and drinks requiring no further preparation, whether prepared by the retailer or not. The two factors to compare are 1) sales of food prepared by the retailer and 2) total sales. If dividing (1) by (2) generates a percentage of more than 75%, the retailer is affected by this category.
“Sales of food prepared by the retailer” include all food that the retailer prepares, including hot food, hot drinks, sandwiches, bakery items, soda fountain drinks, slush-type drinks, ice cream served in a cup, cone or dish, and milkshakes. “Total sales” include all receipts by the retailer, including grocery staples, prepared food, cigarettes, beer, wine, soda, candy, gasoline, and periodicals; rental income from the rental of space at the retailer’s site, such as space for vendors, room rentals and campsite rentals; and revenue generated at the retailer’s site from other sources, such as admittance fees and equipment rentals.
A retailer who meets the 75% rule must collect 7% tax on all sales of food or drink requiring no further preparation, not just on food prepared by that retailer. (See exception below for bulk sales of grocery staples.) Sales of individually packaged pastries, chips, cookies, etc. and drinks including soda, water, juice, milk, etc. and candy would all be taxed at 7% along with the food prepared by the retailer.
A retailer who does not meet the 75% rule must collect 7% tax on only those sales of food prepared by the retailer as mentioned in the prior section. Sales of otherwise taxable items, such as soda, beer, wine, candy, ice, cigarettes, etc. would continue to be taxed at 5%. Sales of grocery staples, including snack items, milk, juice, etc. would all be exempt.
Example 1: A convenience store prepares and sells sandwiches, pizzas, and soda fountain drinks. In addition it sells convenience foods, a small line of grocery staples, candy, beer, wine, cigarettes and gasoline. Its total sales for the year are $500,000. Sales of “prepared food” (sandwiches, pizzas and soda fountain drinks) for the year are $125,000. Because only 25% of its total sales are prepared food, this store would charge 7% tax only on its prepared food.
Example 2: A sandwich shop prepares and sells sandwiches, pizzas, pasta dishes, hot dogs, hamburgers, and soda fountain drinks. In addition it sells chips, pastries, candy, soda, water, beer, juices and milk. Its total sales for the year are $300,000. Sales of “prepared food” (sandwiches, pizzas, pasta dishes, hot dogs, hamburgers, and soda fountain drinks) for the year are $240,000. Since more than 75% of its total sales are prepared food (80%), this retailer would charge 7% tax on all its sales of food and drink that do not require further preparation (chips, pastries, candy, soda, water, beer, juices and milk).
Exclusion for bulk sales of grocery staples
T he definition of “prepared food” does provide one exclusion. “Bulk sales of grocery staples” are exempt regardless of the location from which they are sold. Some examples of food prepared by the retailer that qualify as bulk sales of grocery staples are:
- pies, cakes, desserts and bread and bread products, except those packaged as a single serving
- donuts, muffins, pastries, cookies, etc. sold in quantities of 6 or more
- products sold in the “deli case”, such as salads, luncheon meats and cheese, except sandwiches and food prepared for sale in a heated state regardless of cooling which may have occurred prior to the sale
- ice cream packaged in quart or larger containers, maple syrup, jam, jellies, pickles, honey, and spaghetti sauce
For retailers who meet the 75% rule, “bulk sales of grocery staples” also include: a bag of coffee
- salad dressing
- drinks, including milk and juice, in quart or larger containers
- potato chips, corn chips and similar items packaged in 6 ounce or larger containers
packages of cookies, crackers, etc. except those packaged as a single serving
Liquor sold in establishments that are licensed for on-premises consumption of liquor is subject to a 7% sales tax. "Liquor" includes spirits, wine and malt liquor.
Sales of meals:
A. Served by public or private schools, school districts, student organizations and parent-teacher associations to the students or teachers of a school;
B. To patients of hospitals licensed by the State for the care of human beings and other institutions licensed by the State for the hospitalization or nursing care of human beings, or institutions, agencies, hospitals, boarding homes and boarding houses licensed by the Department of Human Services under Title 22, Subtitle 6 and Title 22, section 1781;
C. By hospitals, schools, long-term care facilities, food contractors and restaurants to incorporated nonprofit area agencies on aging for the purpose of providing meals to the elderly;
D. To residents of incorporated nonprofit church-affiliated congregate housing facilities for the elderly in which at least 75% of the units are available for leasing to eligible lower-income residents; and
E. Served by colleges to employees of the college when the meals are purchased with debit cards issued by the colleges. § 1760(6)
School meals. Sales of meals made in the school lunchroom during the normal school day, or by a school or student organization at a school event where it is evident that those in attendance are mainly students and teachers, will be considered exempt. If, however, meals are served to students or teachers by a caterer or other person not associated with the school, such sales are taxable.
Sales of meals and related items and services by a nonprofit auxiliary organization of the American Legion in connection with a fund-raising event sponsored by the auxiliary organization if the meals and related items and services are provided in a room that is separate from the lounge facilities, if any, of the American Legion and patrons are prohibited from taking alcoholic beverages from the lounge facilities to the separate room where the meals and related items and services are provided. §1760(84)
Food stamp purchases
Sales of items purchased with federal food stamps or Women, Infants and Children, WIC, Special Supplemental Food Program food instruments distributed by the Department of Human Services. § 1760(54)
Sales through vending machines
Sales through vending machines. Sales of products for internal human consumption when sold through vending machines by a person more than 50% of whose gross receipts from the retail sale of tangible personal property are derived from sales through vending machines.
The status of products sold through vending machines depends upon the product being sold and the type of business activity of the retailer. "Vending machines" do not include "snack boxes" that require purchasers to be on their honor in paying for the selected item.
This exemption only applies to products for internal human consumption by a person who primarily is a vending company. Although the exemption exists for the sale, the items are subject to tax based on the seller's cost.
"Products for internal human consumption" means:
"edible products sold for human nutrition or refreshment and containers or instruments provided simultaneously for the consumption of these products. It does not include spirituous, malt or vinous liquors, medicines, tonics, vitamins, dietary supplements or cigarettes." § 1752(5-A)
Items that come within the scope of this definition are sandwiches, chips, ice cream, candy, soft drinks and other food items. Also included within this definition are the paper plates, cups, utensils and packaging materials for these items. Chewing gum is not for "internal human consumption."
Items, other than those mentioned above, when sold through vending machines are retail sales and subject to tax on the selling price. Examples of such items are cigarettes, toys, gum, health and beauty aids, and other goods not for "internal human consumption." The retailer would purchase these items free of tax by presenting the supplier with a resale certificate.
A retailer may sell a combination of the items mentioned above. Or the retailer may be engaged in other activities besides vending machines such as a lunch counter or a cafeteria. The following discusses the two categories that a vending machine operator would fall into and the tax consequences of each.
When More Than 50% of Retail Sales Are Through Vending Machines.
For retailers in this situation only, vending machine sales of products for internal human consumption are not taxed on the selling price. However the products are taxed at the retailer's cost. The Law allows the purchase of these items free of tax for resale if the supplier is provided a resale certificate. Purchases are then reported as "taxable purchases" on the sales tax return. This exemption applies only to items for internal human consumption. Other items sold through vending machines are taxed on their selling price.
When 50% or Less of Retail Sales are Through Vending Machines.
Vending machine operators who receive 50% or less of their gross receipts from retail sales through vending machines do not qualify for this exemption. Such retailers must report their entire vending machine sales based on the selling price.
Rate of tax on vending sales
The rate of tax on items sold through vending machines is generally 5%. However, the rate of 7% applies to prepared food as previously discussed including those sold through a vending machine.
Residential water. Sales of water purchased for use in homes, mobile homes, boarding homes and apartment houses and other buildings designed for both human habitation and sleeping, with the exception of hotels and motels. § 1760(39)
Similar to coal, oil and wood, this exemption applies to all buildings designed for human habitation and sleeping, but it specifically excludes hotels and motels. All other commercial uses are taxable. Sales of bottled water delivered by the seller is governed by who the purchaser is.
This exemption does not apply to sales of bottled water in retail stores, such as grocery stores, c-stores, department stores and the like. These sales are taxable since they are governed by the definition of “grocery staple” which specifically excludes water.
Certain meals and lodging
Meals or lodging provided to employees at their place of employment when the value of those meals or that lodging is allowed as a credit toward the wages of those employees. § 1760(75)
See also “Transient Rentals”.
Sales of medicines for human beings sold on doctor's prescription. § 1760(5)
"Medicines" means antibiotics, analgesics, antipyretics, stimulants, sedatives, antitoxins, anesthetics, antipruritics, hormones, antihistamines, oxygen, vaccines and other medications and drugs used in the prevention, diagnosis or treatment of disease or injury. "Sold on doctor's prescription" means that the medicine is dispensed or administered by a medical professional authorized by law to prescribe medicines for human beings or sold by a licensed pharmacist in accordance with a prescription issued by a medical professional authorized to prescribe medicines for human beings.
Bandages, dressings, sutures, swabs, hypodermics, instruments and similar items that may be used in the diagnosis and treatment of injury or disease, but which are not medicines, are subject to tax whether sold to an individual or to a medical professional for use in the medical practice. Sales to individuals of "over-the-counter" drugs without a written prescription are also taxable, even if the drug is purchased on the advice or recommendation of a physician. However, there is no tax on nonprescription medicines purchased by a doctor for use in the doctor's medical practice.Sales of medicines originally prescribed by a doctor on a refillable prescription are exempt when the prescription is refilled.
- Sale of prosthetic aids, hearing aids or eyeglasses and artificial devices designed for the use of a particular individual to correct or alleviate physical incapacity; § 1760(5-A)
"Prosthetic aids" means devices surgically implanted in or worn by the patient as a substitute for a functioning part of the human body. Artificial limbs and artificial eyes; mammary prostheses and brassieres specifically designed to accommodate mammary prostheses; ostomy appliances; enteral feeding devices; dentures, crowns, caps and materials actually used in the repair or replacement of teeth such as dental amalgam and cement; and cardiac pacemakers are examples of items that qualify for exemption as prosthetic aids. Repair parts for items that meet the definition of "prosthetic aids" are also exempt.
Items ordinarily worn for cosmetic purposes, such as wigs, false eyelashes and makeup, are taxable whether or not the need for them results from a medical condition.
Orthopedic or therapeutic devices and appliances that do not replace a functioning part of the human body are not prosthetic aids. Articles of this type are taxable unless they constitute "artificial devices designed for the use of a particular individual to correct or alleviate physical incapacity". In order to be exempt under this provision, a device must be actually designed, constructed or altered for the use of a particular individual. Sales of standardized or stock devices such as trusses, supports, neck or back braces, orthopedic shoes, athletic supporters, support hosiery, arch supporters, elastic bandages and similar items are taxable unless they are designed, constructed or altered for the use of a particular individual to correct or alleviate physical incapacity.
Sales of hearing aids and sales of batteries and repair parts for hearing aids are exempt from tax as are sales of prescription eyeglasses and contact lenses, repair or replacement parts and lenses for prescription eyeglasses.
Nonprescription sunglasses, opera glasses, magnifying glasses, platform magnifiers and similar items are taxable. Cleaning solutions and supplies for contact lenses and eyeglasses are taxable.
All equipment and supplies, whether medical or otherwise, used in the diagnosis or treatment of diabetes; § 1760(33)
Sales of insulin, antidiabetic drugs, testing supplies such as Clinitest, Clinistix and Tes-Tape, and other items used only in the treatment of diabetes are exempt from tax. Sales of hypodermic syringes and needles to diabetic patients are exempt.
Sales of items that are not used only in the diagnosis or treatment of diabetes, and which are not prescription medicines, should be regarded as taxable unless the purchaser has provided evidence such as a statement from a doctor that the patient has been diagnosed as diabetic, and unless the purchaser states that the items being purchased are to be used in the treatment of diabetes.
Crutches and wheelchairs
Crutches and wheelchairs for the use of invalids and crippled persons and not for rental. § 1760(5-A)
Crutches, canes, walkers and wheelchairs sold for the use of sick, injured or disabled persons are exempt. Sales of crutches, canes, walkers and wheelchairs for rental use are taxable.
There is no exemption in the Sales and Use Tax Law for items other than crutches, canes, walkers and wheelchairs purchased to alleviate or compensate for impaired mobility. Some examples of items that are subject to tax are wheelchair lifts, modifications to motor vehicles to make them operable by handicapped persons and motor vehicles that have been so modified, and materials used in the construction of wheelchair ramps or other alterations to real property to make it accessible to handicapped persons.
Sales of any publication regularly issued at average intervals not exceeding 3 months. § 1760(14)
Generally, this exemption applies to newspapers and magazines issued at least on a quarterly basis.
Self-help literature on alcoholism
Sales of self-help literature relating to alcoholism to alcoholics anonymous groups. § 1760(57)
Advertising and Promotional material
Sales of advertising or promotional materials printed on paper and purchased for the purpose of subsequently transporting such materials outside the State for use by the purchaser thereafter solely outside the State. § 1760 (80)
If a retailer purchases printed advertising or promotional materials, like flyers, pamphlets or brochures, for the purpose of mailing them directly out-of-state or for inclusion as “stuffers” in goods being delivered out-of-state, the purchase is exempt from tax. If the materials purchased are partially taxable and partially exempt (mailed in-state and out-of-state), the retailer should pay tax on the entire purchase and apply to the bureau for a refund on the exempt portion.
Donations to non-profit organizations
No use tax may be imposed on the donation of merchandise by a retailer to an organization exempt from taxation under the United State Internal Revenue Code, Section 501(c)(3), as amended, when the merchandise has been returned to the retailer by the purchaser and the retailer then gives to the purchaser an allowance in cash or by credit pursuant to warranty or when the full price of the merchandie returned is refunded, either in cash or by credit, to the purchaser. §1863
A use tax is not imposed on the donation of merchandise by a retailer from inventory to an organization if sales to that organization are exempt from sales tax under section 1760.
Mobile and modular homes
A. Used manufactured housing; and
B. New manufactured housing to the extent of all costs, other than materials, included in the sale price, but the exemption may not exceed 50% of the sale price. § 1760(40)
"Manufactured housing" has the same meaning as defined in Title 10, section 9002, subsection 7. § 1752(6-C)
This exemption does have a limitation however. When new manufactured housing is sold, the sales tax applies to either the portion of the sale price that represents the cost of materials or 50% of the sale price, whichever is greater. No sales tax applies to sales of manufactured housing that has been permanently incorporated into real property by the seller, although the seller would be subject to a tax on its purchase of the home. Sales of used manufactured housing are exempt.
The tax imposed by this Part on the sale or use of manufactured housing, except when the dealer has collected the tax in full, must be paid by the purchaser to the State Tax Assessor. The assessor shall provide a tax receipt to the purchaser. Upon request by the municipal officials or the Maine Land Use Regulation Commission, the receipt must be made available by the purchaser to certify that the tax has been paid, pursuant to Title 30-A, section 4358, subsection 4 or Title 30-A, section 7060, subsection 1, paragraph C.
A valid bill of sale from a dealer showing that the tax has been collected in full serves to certify that the tax has been paid, pursuant to Title 30-A, section 4358, subsection 4, or Title 30-A, section 7060, subsection 1, paragraph C, in lieu of a tax receipt provided by the assessor. § 1952-B
The above section is used in conjunction with municipalities issuing building permits. In effect a purchaser of manufactured housing must show proof that tax has been paid as a prerequisite to obtaining a building permit.
Sales of tangible personal property to be physically incorporated in and become a part of portable classrooms for lease to schools entitled to exemption under subsection 16. If the portable classrooms are used for an otherwise taxable use within 2 years from the date of the first use, the lessor shall become liable for the use tax based on the original sale price. § 1760(58)
Construction contracts with exempt organizations
Sales to a construction contractor, that is to be physically incorporated in, and become a permanent part of, real property for sale to any organization or government agency provided exemption under this section, except as otherwise provided. § 1760(61)
This exemption only applies to property that will become physically attached to the realty of the exempt organization. It does not apply to supplies used by the contractor nor to any machinery or equipment purchased by the contractor, even though the equipment is being purchased specifically for the exempt job. For purposes of this exemption, contractors also include sub-contractors.
If a contractor has an inventory of property on which tax has been paid and subsequently uses the property on an exempt job, the contractor would be eligible for refund provided the property meets the requirements stated above.
Railroad track materials purchased and installed on railroad lines located within the boundaries of the State. The track materials shall include rail, ties, ballast, joint bars and associated materials, such as bolts, nuts, tie plates, spikes, culverts, steel, concrete or stone, switch stands, switch points, frogs, switch ties, bridge ties and bridge steel. § 1760(52)
Sale of cabin, deck, engine supplies and bunkering oil to ships engaged in transporting cargo or passengers for hire in interstate or foreign commerce. § 1760(4)
Bunkering oil in this exemption refers to any fuel used to propel the vessel as opposed to used in the operation of any equipment, such as cranes, hoists and generators.
Sales of containers, boxes, crates, bags, cores, twines, tapes, bindings, wrappings, labels and other packing, packaging and shipping materials to:
A. Persons engaged in the business of packing, packaging, shipping and transporting tangible personal property; or
- Persons for use in packing, packaging or shipping tangible personal property sold by them or on which they have performed the service of cleaning, pressing, dyeing, washing, repairing or reconditioning in their regular course of business that are transferred to the possession of the purchaser of that tangible personal property; § 1760(12-A)
This exemption includes materials that are used to insure the delivery of the contents in physically good condition. Examples include, but are not limited to, the following items:
There is no distinction between non-returnable and returnable packaging materials. The exemption applies to both. In addition the exemption does not apply unless the materials pass into the possession of the customer of the shipper.
This exemption only applies when the purchaser uses the packaging materials to package and ships goods being transported by the purchaser, to package or ship goods that are being sold by the purchaser or on which a service of cleaning, pressing, dyeing, washing, repairing or reconditioning has been performed by the purchaser. For example, an individual contracts with a moving company to transport their household items to another town. Or a gift shop sells a product to a customer and agrees to ship the product to the customer's home. The box, stuffing, labels and tape used to package the item for shipment are exempt from tax. Likewise, a dry cleaning business is exempt from paying tax on hangers, plastic, twine and wrapping paper used to package the garments that have been cleaned for a customer.
Packaging items used by a business to store goods are subject to tax.Delivery out of state
Sales of tangible personal property when the seller delivers the property to a location outside this State or to the United States Postal Service, a common carrier or a contract carrier hired by the seller for delivery to a location outside this State, regardless of whether the property is purchased F.O.B. shipping point or other point in this State and regardless of whether passage of title occurs in this State. §1760 (82)
When a retailer makes a sale and delivers the product to the purchaser, the sale is complete upon delivery. If the retailer delivers the product to a point outside Maine, the sale is exempt from Maine sales tax. The delivery must be made with the retailer's own vehicle or the retailer must contract with a common or contract carrier to make the delivery.
If the purchaser takes delivery within Maine, it is a taxable sale, even though the purchaser immediately removes the property from the state. However, there are exceptions (explained below) for certain vehicles, watercraft, all-terrain vehicles and snowmobiles purchased by nonresidents.
Catalog Sales and Internet Sales
A retailer that solicits sales through a catalog or internet web site must collect tax on sales made to customers in Maine if the retailer has "nexus" (a substantial physical presence) in Maine. Retailers registered in Maine selling goods to Maine residents must collect Maine sales tax since the retailer has a presence in Maine and the sale occurs in Maine. This is true regardless if the sale occurred in the retailer's store, if the goods are ordered over the telephone or if the goods are ordered through the retailer's homepage.
If the retailer receives orders through mail-order or the internet from non-residents and the goods are shipped out-of-state, the sale is not taxable in Maine. If the retailer is not required to register in Maine, the sales are not subject to Maine's sales tax but the purchaser is subject to Maine's use tax on such a purchase.
AGRICULTURE AND ANIMALS
Commercial Agricultural Crop production
Sales of seed, fertilizers, defoliants and pesticides, including, but not limited to, rodenticides, insecticides, fungicides and weed killers, for use in the commercial production of an agricultural crop. § 1760(7-B)
Animal Agricultural production
Sales of breeding stock, semen, embryos, feed, hormones, antibiotics, medicine, pesticides and litter for use in animal agricultural production. Animal agricultural production includes the raising and keeping of equines. § 1760(7-C)
Sales of organic bedding materials for farm animals and hay. § 1760(78)
It is important to note that these exemptions differ based on the use of the products. For instance, with regards to the production of an agricultural crop, the products listed in §1760(7-B) are only exempt if sold to a person engaged in a commercial activity, whereas the products used in aquacultural production and animal agricultural production are not restricted to commercial use only. As a result, vegetable seeds, seedlings and fertilizer used in home gardens are taxable. This exemption does not apply to activities such as fertilizing lawns and golf courses, use of insecticides by a woods operation and defoliating under power lines or telephone lines since an agricultural crop is not being commercially produced.
Since animal agriculture production is not restricted to commercial activities, the products listed in §1760(7-C) above are exempt if used for any agricultural animal, such as cows, pigs, chickens, goats, llamas, alpaca, sheep. Animal agricultural production also includes the raising and keeping of equines. Thus hay, bedding material and medicines for horses, whether used as a pet or for commercial purposes, are exempt. For more information on this topic, please refer to Instructional Bulletin #14.
Seedlings for commercial forestry use.
Sales of tree seedlings for use in commercial forestry. § 1760(73)
Seeing eye dogs
Seeing eye dogs. Sales of tangible personal property and taxable services essential for the care and maintenance of seeing eye dogs used to aid any blind person. § 1760(35)
Commercial Farming, Fishing and Aquaculture
See the end of this section for a comprehensive discussion of the exemptions and refunds available to those engaged in commercial agricultural production, commercial fishing and commercial aquacultural production.
In determining eligibility for exemption under section 1760, references to residents or nonresidents refer to individuals. § 1752-A
Automobiles to amputee veterans
Sales of automobiles to veterans who are granted free registration of such vehicles by the Secretary of State under Title 29-A, section 523, subsection 1. § 1760(22)
Certain vehicles purchased by nonresidents
Sales or leases of the following vehicles to a person that is not a resident of this State, if the vehicle is intended to be driven or transported outside the State immediately upon delivery:
A. Motor vehicles, except
(1) Automobiles rented for a period of less than one year; and
(2) All-terrain vehicles and snowmobiles as defined in Title 12, section 13001;
C. Aircraft; and
E. Camper trailers, including truck campers.
If the vehicles are registered for use in the State within 12 months of the date of purchase, the person seeking registration is liable for use tax on the basis of the original purchase price. §1760(23-C)
The use of a loaner vehicle provided by a new vehicle dealer, as defined in Title 29-A, section 851, subsection 9, to a service customer pursuant to a manufacturer’s or dealer’s warranty. For purposes of this subsection, “loaner vehicle” has the same meaning as in section 1752, subsection 11, paragraph B, subparagraph (8). §1760(21-A)
The sale or lease of a motor vehicle, except an automobile rented for a period of less than one year or an all-terrain vehicle or snowmobile as defined in Title 12, section 13001, to a qualifying resident business if the vehicle is intended to be driven or transported outside the State immediately upon delivery and intended to be used exclusively in the qualifying resident business’s out-of-state business activities.
For purposes of this subsection, “qualifying resident business” includes any individual, association, society, club, general partnership, limited partnership, limited liability company, trust, estate, corporation or any other legal entity that:
A. Is organized under the laws of this State or has its principal place of business in this State; and
B. Conducts business activities from a fixed location or locations outside the State.If the vehicle is not used exclusively in the qualifying resident business’s out-of-state business activities or is registered for use in the State within 12 months of the date of purchase, the person seeking registration is liable for use tax on the basis of the original purchase price. §1760(23-D)
Sales of watercraft to a nonresident, when the watercraft is intended to be sailed or transported outside the State immediately upon delivery by the seller; sales to a nonresident, under contracts for the construction of a watercraft intended to be sailed or transported outside the State immediately upon delivery by the seller of materials to be incorporated in the watercraft; and sales to a nonresident for the repair, alteration, refitting, reconstruction, overhaul or restoration of a watercraft to be intended to be sailed or transported outside the State immediately upon delivery by the seller, of materials to be incorporated in the watercraft. Unless the watercraft is present in the State, for a purpose other than temporary storage, for more than 30 days during the 12-month period following its date of purchase or is registered in Maine without also being registered in another state or documented with a location in this State, within 12 months of the date of purchase, the purchaser is exempt from the use tax. Notwithstanding section 1752-A, for purposes of this subsection, the term “nonresident” may include an individual, an association, a society, a club, a general partnership, a limited partnership, a domestic or foreign limited liability company, a trust, an estate, a domestic or foreign corporation and any other legal entity. § 1760(25)
All-terrain vehicles, as defined in Title 12, section 13001, purchased by a person who is not a resident of this State; §1760(25-A)
Snowmobiles purchased by a nonresident
A snowmobile, as that term is defined in Title 12, section 7821, subsection 5, purchased by a person who is not a resident of this State; § 1760(25-B)
Unlike certain vehicles and watercraft mentioned above, all-terrain vehicles and snowmobiles sold to nonresidents do not need to be immediately removed from the state in order to qualify for exemption.
Automobiles used in driver education programs
Sales to automobile dealers, registered under section 1754-B, of automobiles for the purpose of equipping the same with dual controls and loaning or leasing the same to public or private secondary schools without consideration or for a consideration of not more than $1 a year, and used exclusively by such schools in driver education programs. §1760(21)
(Effective January 1, 2007) Sales or leases of aircraft that weigh over 6,000 pounds, that are propelled by one or more turbine engines or that are in use by a Federal Aviation Administration classified 135 operator. §1760(88)
Certain vehicles used in interstate or foreign commerce
Certain instrumentalities of interstate or foreign commerce. The sale of a vehicle, railroad rolling stock, aircraft or watercraft that is placed in use by the purchaser as an instrumentality of interstate or foreign commerce within 30 days after that sale and that is used by the purchaser not less than 80% of the time for the next 2 years as an instrumentality of interstate or foreign commerce. The State Tax Assessor may for good cause extend for not more than 60 days the time for placing the instrumentality in use in interstate or foreign commerce. For purposes of this subsection, property is “placed in use as an instrumentality of interstate or foreign commerce” by its carrying of, or providing the motive power for the carrying of, a bona fide payload in interstate or foreign commerce, or by being dispatched to a specific location at which it will be loaded upon arrival with, or will be used as motive power for the carrying of, a payload in interstate or foreign commerce. For purposes of this subsection, “bona fide payload” means a cargo of persons or property transported by a contract or common carrier for compensation that exceeds the direct cost of carrying that cargo or pursuant to a legal obligation to provide service as a public utility or a cargo of property transported in the reasonable conduct of the purchaser's own nontransportation business in interstate commerce. § 1760(41)
In order to qualify for this exemption, three criteria must be met. The vehicle must be:
- placed in use by the purchaserused within 30 days of purchase in interstate or foreign commerce
- used in interstate or foreign commerce more than 80% of the time within the next 2 years after purchase
A vehicle that is leased and used in interstate or foreign commerce is considered to be used by the lessee, not the purchaser, as an instrumentality of interstate or foreign commerce. Consequently, leased vehicles, including leased vehicles that are operated by the lessor, do not qualify for this exemption.Use of a vehicle in intrastate and local operations is not use as an instrumentality of interstate or foreign commerce. Vehicles are considered to be used in intrastate or local operations when they are carrying cargo that both originates and terminates within the State of Maine.Time means a day or portion of a day during which the vehicle is actually being used to carry cargo or dispatched to a specific location for the purpose of being loaded with cargo. For example, if a vehicle carried cargo or was on route to be loaded with cargo during 500 days in the 2-year period following the date of purchase, it has met the 80% use requirement if during 400 of those days the cargo was in interstate or foreign commerce.The State Tax Assessor may for good cause extend by up to 60 days the time for placing the vehicle in use as an instrumentality of interstate or foreign commerce.It is not necessary that the purchaser apply for the extension, but good cause must be documented in the records of the purchaser. Good cause does not exist when the extension is required because of the taxpayer's negligence or failure to make a good faith effort to place the vehicle in use in interstate or foreign commerce within 30 days from the date of purchase.This exemption applies only to vehicles, railroad rolling stock, aircraft, and watercraft. Repair parts, operating supplies and accessories are not exempt. Accessories purchased as part of a vehicle are exempt from Maine sales or use tax if the vehicle qualifies for exemption. Accessories purchased separately from the vehicle are taxable.
So-called glider kits are considered repair parts rather than vehicles. The purchase of a glider kit is subject to tax whether or not the vehicle on which it will be mounted is used by the purchaser as an instrumentality of interstate or foreign commerce.
Certain property purchased out-of-state
Sales of property purchased and used by the present owner outside the State:
A. If the property is an automobile, as defined in Title 29-A, section 101, subsection 7, and if the owner was, at the time of purchase, a resident of the other state and either employed or registered to vote there;A-1. If the property is a watercraft or all-terrain vehicle that is registered outside the State by an owner who at the time of purchase was a resident of another state and the watercraft or all-terrain vehicle is present in the State not more than 30 days during the 12 months following its purchase for a purpose other than temporary storage; or
A-1. If the property is a watercraft that is registered outside the State by an owner who at the time of purchase was a resident of another state and the watercraft is present in the State not more than 30 days during the 12 months following its purchase for a purpose other than temporary storage;
A-2. If the property is a snowmobile or all-terrain vehicle as defined in Title 12, section 13001 and the purchaser is not a resident of the State; or
(Effective January 1, 2007) A-3. If the property is an aircraft not exempted under subsection 88 and the owner at the time of purchase was a resident of another state or tax jurisdiction and the aircraft is present in this State not more than 20 days during the 12 months following its purchase, exclusive of days during which the aircraft is in this State for the purpose of undergoing "major alterations," "major repairs" or "preventive maintenance" as those terms are described in 14 Code of Federal Regulations, Appendix A to Part 43, as in effect on January 1, 2005. For the purposes of this paragraph, the location of an aircraft on the ground in the State at any time during a day is considered presence in the State for that entire day; or
B. For more than 12 months in all other cases.
Property, other than automobiles, watercraft, all-terrain vehicles and aircraft, that is required to be registered for use in this State does not qualify for exemption unless it was registered by its present owner outside this State more than 12 months prior to its registration in this State. If property required to be registered for use in this State was not required to be registered for use outside this State, the owner must be able to document actual use of the property outside this State for more than 12 months prior to its registration in this State. For purposes of this subsection, “use” does not include storage but means actual use of the property for a purpose consistent with its design. § 1760(45)
(Effective January 1, 2007) Notwithstanding section 1752-A, "resident" may include an individual, an association, a society, a club, a general partnership, a limited partnership, a limited liability company, a trust, an estate, a corporation and any other legal entity.
Sales to incorporated nonprofit snowmobile clubs of snowmobiles and snowmobile trail grooming equipment used directly and exclusively for the grooming of snowmobile trails. §1760(90)
Certain motor fuels
A. Motor fuels upon which a tax at the maximum rate for highway use has been paid pursuant to Part 5 or a comparable tax of any other state or province;
B. Internal combustion engine fuel, as defined in section 2902, bought and used for the purpose of propelling jet or turbojet engine aircraft; § 1760(8)
Fuel for burning blueberry lands
Sales of all fuels used in burning blueberry fields. § 1760(9-A)
Coal, oil and wood
Coal, oil, wood and all other fuels, except gas and electricity, when bought for cooking and heating in homes, mobile homes, hotels and apartment houses, and other buildings designed both for human habitation and sleeping. § 1760(9)
“Other buildings designed both for human habitation and sleeping” include motels, boarding homes, nursing homes, overnight cabins, orphanages, homes for the aged and convalescent homes. Any other commercial use would be taxable.
Sale and delivery of the first 750 kilowatt hours of residential electricity per month. For the purpose of this subsection, “residential electricity” means electricity furnished to homes, mobile homes, boarding homes and apartment houses, with the exception of hotels and motels. Where residential electricity is furnished through one meter to more than one residential unit and where the transmission and distribution utility applies its tariff on a per unit basis, the furnishing of electricity is considered a separate sale for each unit to which the tariff applies. For purposes of this subsection, “delivery” means transmission and distribution. § 1760(9-B)
Unlike coal, oil and wood, this exemption only applies to the first 750 kWh sold to homes, mobile homes, boarding homes and apartment houses. All commercial uses are taxable, including hotels, motels and nursing homes.
Net energy billing customers
Sale or delivery of kilowatt hours of electricity to net energy billing customers as defined by the Public Utilities Commission for which no money is paid to the electricity provider or to the transmission and distribution utility. § 1760(80)
Sales of gas when bought for cooking and heating in residences. For the purpose of this subsection, “residences” shall mean homes, mobile homes, boarding homes and apartment houses, with the exception of hotels and motels. § 1760(9-C)
Once again, this exemption is limited to those “residences” mentioned. All commercial uses are taxable.
Fuel oil or coal
Fuel oil or coal, the by-products from the burning of which become an ingredient or component part of tangible personal property for later sale. § 1760(9-G)
Fuel and electricity used at a manufacturing facility
Ninety-five percent of the sale price of all fuel and electricity purchased for use at a manufacturing facility. § 1760(9-D)
See also the “Manufacturing” section on this issue.
MANUFACTURING Certain items used in manufacturing
Production machinery and equipment, machinery and equipment used in research, ingredients and items consumed and destroyed in the manufacturing process. § 1760(31), (32) and (74)
See also the “Manufacturing” section on this issue.
Beginning July 1, 2005, sales of tangible personal property to a qualified Pine Tree Development Zone business, as defined in Title 30-A, section 5250-I, subsection 17, for use directly and primarily in one or more qualified business activities, as defined in Title 30-A, section 5250-I, subsection 16. The exemption provided by this subsection is limited for each qualified Pine Tree Development Zone business to sales occurring within a period of 10 years from the date the business is certified pursuant to Title 30-A, section 5250-O or until December 31, 2018, whichever occurs first. As used in this subsection, "primarily" means more than 50% of the time during the period that begins on the date on which the property is first placed in service by the purchaser and ends 2 years from that date or at the time the property is sold, scrapped, destroyed or otherwise permanently removed from service by the purchaser, whichever occurs first. §1760(87)
The PTDZ tax credits and benefits are available to certified businesses engaged in qualified activity for tax years beginning on or after January 1, 2004. The sales tax exemption began on July 1, 2005. To obtain certification, the business must apply to the Department of Economic and Community Development (“DECD”) and meet the requirements for qualified business activity. In general, in order to be certified, a business must be engaged in a targeted business sector (manufacturing, financial services, selected technologies); must intend to expand the base level of employment with qualified employees; and the qualified employees must be new fulltime employees who are hired by a Pine Tree Development Zone business for work directly in one or more qualified business activities. Instructional Bulletin #52 has been created to fully explain this program. Also refer to the “Refunds and Credits” portion of this guide for refunds available to those constructing realty for a Qualified PTDZ business.
Sales of tangible personal property to qualified community wind power generators
Beginning October 1, 2006, sales of tangible personal property to a qualified community wind power generator, as defined in section 5219-AA, for use directly and primarily in the generation of electricity by that community wind power generator. The exemption provided by this subsection is limited for each qualified community wind power generator to sales occurring on or before December 31, 2011. §1760(89)
Beginning October 1, 2006, tax credits and benefits are available to certified businesses engaged as a qualified community wind power generator. To obtain certification, the entity must apply to the Public Utilities Commission and meet certain requirements. In general, in order to be certified, the entity must construct a community wind power generator with a capacity of not more than 10 megawatts that is powered entirely by wind energy and the entity will own title or controlling interest in that generator. The entity must also demonstrate that construction of this generator would not be possible but for the tax credits and benefits available under this program. Also refer to the “Refunds and Credits” portion of this guide for refunds available to those constructing realty for a certified community wind power business.
In addition to true services, there are limited exemptions provided in the statute that deal with services in general and “taxable services”. Most of them deal with rentals of living quarters as previously discussed under “Transient Rentals”.
Sales of funeral services. § 1760(24)
“Sales of funeral services” means sales of tangible personal property by a funeral director insofar as such sales are a necessary part of the preparation of a human body for burial, or a necessary part of the ceremony conducted by the funeral director prior to or in connection with the burial of a human body. Sales by funeral directors of caskets, vaults, boxes, clothing, crematory urns, or other similar items generally referred to as “funeral furnishings”, are exempt from tax whereas items sold as an accommodation rather than as an integral part of the funeral service (or preparation therefore), such as sale of flowers, or items of a similar character, are taxable.
Camps. Rental charged for living quarters, sleeping or housekeeping accommodations at camps entitled to exemption from property tax under section 652, subsection 1. § 1760(17)
Certain institutions. Rental charged for living or sleeping quarters in an institution licensed by the State for the hospitalization or nursing care of human beings. § 1760(18)
Schools. Rental charged for living quarters, sleeping or housekeeping accommodations to any student necessitated by attendance at a school. § 1760(19)
Continuous residence; refunds and credits. Rental charged to any person who resides continuously for 28 days at any one hotel, rooming house, tourist or trailer camp if:
A. The person does not maintain a primary residence at some other location; or
B. The person is residing away from that person's primary residence in connection with employment or education.
Tax paid by such person to the retailer under section 1812 during the initial 28-day period must be refunded by the retailer. Such tax reported and paid to the State by the retailer may be taken as a credit by the retailer on the report filed by the retailer covering the month in which refund was made to such tenant. § 1760(20)
See also “Transient Rentals”.
The tax exemptions provided by section 1760 to a person based upon its charitable, nonprofit or other public purposes apply only if the property or service purchased is intended to be used by the person primarily in the activity identified by the particular exemption. The tax exemptions provided by section 1760 to a person based upon its charitable, nonprofit or other public purposes do not apply where title is held or taken by the person as security for any financing arrangement. Exemption certificates issued by the State Tax Assessor pursuant to section 1760 must identify the exempt activity and must state that the certificate may be used by the holder only when purchasing property or services intended to be used by the holder primarily in the exempt activity. When an otherwise qualifying person is engaged in both exempt and nonexempt activities, an exemption certificate may be issued to the person only if the person has established to the satisfaction of the assessor that the applicant has adequate accounting controls to limit the use of the certificate to exempt purchases. §1760-C
Maine does not provide a blanket sales and use tax exemption for nonprofit organizations who have been granted a federal tax exemption, known as 501(c) organizations. Every organization who seeks relief from sales and use tax must approach the Legislature with their proposal and seek the support of the Legislature. As a result a wide array of nonprofit organizations exist in the statute. Each of the following exemptions are preceded with the language “incorporated nonprofit” and have been paraphrased. Referring to the statute for the full exemption is recommended.
Nursing homes licensed by the Department of Human Services §1760(16)
Residential care facilities licensed by the Department of Human Services § 1760(16)
Home health care agencies certified under the United States Social Security Act of 1965, Title XVIII, as amended § 1760(16)
Rural community health centers engaged in, or providing facilities for, the delivery of comprehensive primary health care § 1760(16)
Dental health centers § 1760(16)
Institutions incorporated for the sole purpose of conducting medical research or for the purpose of establishing and maintaining laboratories for scientific study and investigation in the field of biology or ecology § 1760(16)
Institutions operating educational television or radio stations § 1760(16)
Organizations or their affiliates whose purpose is to provide literacy assistance or free clinical assistance to children with dyslexia § 1760(16)
Private residential child caring institutions which are licensed by the Department of Human Services as child caring institutions. § 1760(18-A)
Fire departments and ambulance services § 1760(26)
Memorial foundations that primarily provide cultural programs free to the public §1760(42)
Historical societies and museums § 1760(42)
Licensed nursery schools and day-care centers § 1760(43)
Sales to incorporated nonprofit organizations providing:
A. Temporary residential accommodations to pediatric patients suffering from critical illness or disease, such as cancer, or who are accident victims, to adult patients with cancer, or to the families of the patients;or
B. Temporary residential accommodations, or food, or both, to hospital patients or to the familites of hospital patients. § 1760(46)
Organizations that provide free temporary emergency shelter or food for underprivileged individuals in this State § 1760(47)
Child abuse and neglect councils § 1760(49)
Veterans' Memorial Cemetery Associations; § 1760(51)
Volunteer search and rescue organizations; §1760(53)
Hospice organizations which provide a program or care for the physical and emotional needs of terminally ill patients; § 1760(55)
Councils and local units of national scouting organizations; § 1760(56)
Educational organizations which are receiving, or have received, funding from the Department of Education, and which provide educational programs specifically designed for teaching young people how to make decisions about drugs, alcohol and interpersonal relationships at a residential camp setting § 1760(59)
Animal shelters (purchasing) tangible personal property used in the operation and maintenance of those shelters or in the maintenance and care of any animal, including wildlife, housed in those shelters § 1760(60)
Local branches of international charitable organizations which provide, on a loan basis and free of charge, medical supplies and equipment to persons. § 1760(62)
Organizations whose sole purpose is to fulfill the wishes of children with life-threatening diseases when their family or guardian is unable to otherwise financially fulfill those wishes § 1760(63)
Monasteries and convents ... in their operation and maintenance. For the purpose of this subsection, “monasteries” and “convents” means the dwelling places of communities of religious persons; § 1760(65)
Organizations engaged primarily in providing support systems for single-parent families for the development of psychological and economic self-sufficiency §1760(66)
Local branches of organizations whose purpose is to construct low-cost housing for low-income people; § 1760(67)
Organizations whose sole purpose is to create, maintain and update a registry of Vietnam veterans; § 1760(69)
Organizations whose primary purposes are to promote public understanding of hearing impairment and to assist hearing-impaired persons through the dissemination of information about hearing impairment to the general public and referral to and coordination of community resources available to hearing-impaired persons. § 1760(70)
Some of the organizations need only be incorporated or nonprofit.
Incorporated hospitals; § 1760(16)
Church affiliated nonprofit organization which operates, under a charter granted by the Legislature, a residential home for adults; § 1760(44)
Nonprofit free public lending library which is funded in part or wholly by the State or any political subdivision or the federal government; § 1760(50)
Nonprofit youth organizations whose primary purpose is to provide athletic instruction in a nonresidential setting; § 1760(56)
Nonprofit organizations whose primary purpose is to develop housing for low-income people; § 1760(72)
Nonprofit organizations whose primary purpose is to obtain, medically evaluate and distribute eyes for use in corneal transplantation, research and education. §1760(77)
Other entities also enjoy exemption from sales and use tax.
Sales which this State is prohibited from taxing under the Constitution or laws of the United States or under the Constitution of this State. § 1760(1)
The State or any political subdivision of the State, or to the Federal Government, or to any unincorporated agency or instrumentality of either of them or to any incorporated agency or instrumentality of them wholly owned by them. This exemption does not apply to corporations organized under Title IV, Part E of the Farm Credit Act of 1971, 12 United States Code, Sections 2211 to 2214. § 1760(2)
In addition to the Federal Government, the State of Maine, and any county, city, town or plantation in the State of Maine, this exemption covers sales to:
- School Districts in Maine;Water, Power, Parking and other Districts in Maine established by legislative act as quasi-municipal corporations;Village Corporation;
- Maine Turnpike Authority.
In the case of the above no evidence of exemption in the case of a sale at retail will be required other than the invoice of the seller indicating sales to such exempt entity. Sales to other states or foreign countries or their subdivisions are not exempt from Maine sales tax.
Sales directly to and paid for by a sales tax exempt entity are exempt. However, sales to employees of these organizations do not always meet this criteria. If a sale to an employee of such an organization is paid for by that employee, either with cash, personal check or personal credit card, the organization's exemption does not apply, even though the employee may be reimbursed for that expense. This includes sales to state employees, county/city/town employees and any employee of an organization mentioned in this section as being exempt from sales tax.
The federal government issues credit cards for its employee purchases. The majority of the cards are direct-billed to the federal government and thus are exempt from tax. However, there are cards which are billed to the employee, for later reimbursement, which are taxable sales. The following describes these cards and their tax status:
Fleet card - states “For Official Government Fleet Use Only”
Purchases are centrally billed and exempt from sales tax
Purchase card - states “For Official US Government Purchases Only US Government Tax Exempt”
Purchases are centrally billed and exempt from sales tax
Travel Card - states “For Official Government Travel Only”
Purchases with cards which have a 0, 6, 7, 8 or 9 in the sixth digit are exempt.All others are taxable sales.
Integrated card - states “For Official Government Use Only”
Fleet and purchase type transactions are exempt.Travel purchases are exempt if sixth digit is a 0, 6, 7, 8 or 9.
To see what these SmartPay credit cards look like, go to: www.gsa.gov and make the following selections: Services; Charge Cards; GSA SmartPay; Business Interest; Recognizing the GSA SmartPay card
Schools – public or incorporated nonprofit primary, secondary or postsecondary educational institutions; §1760(16)
Regularly organized churches or houses of religious worship; §1760(16)
Mental health facilities or mental retardation facilities which are:
A. Contractors under or receiving support under the Federal Community Mental Health Centers Act, or its successors; or
B. Receiving support from the Department of Mental Health and Mental Retardation pursuant to Title 34-B, section 3604, 5433 or 6204; § 1760(28)
Materials for the construction, repair or maintenance of an animal waste storage facility certified by the Commissioner of Agriculture; § 1760(81)
Water pollution control facility, certified as such by the Commissioner of Environmental Protection, and any part or accessories thereof, or any materials for the construction, repair or maintenance of a facility. § 1760(29)
See also “Manufacturing”
Air pollution control facility, certified as such by the Commissioner of Environmental Protection, and any part or accessories thereof, or any materials for the construction, repair or maintenance thereof. § 1760(30)
See also “Manufacturing”
Regional planning commissions and councils of government, which are established in accordance with Title 30-A; § 1760(37)
Statewide organizations that advocate for children and that are members of the Medicaid Advisory Committee; § 1760(49)
Community action agencies designated in accordance with Title 22, section 5324, except sales, storage or use for activities that are mainly commercial enterprises; § 1760(49)
Credit unions that are organized under the laws of this State. This subsection shall remain in effect only for the time that federally chartered credit unions are, by reason of federal law, exempt from payment of state sales tax; § 1760(71)
The next exemption has no place in the above categories. This exemption is peculiar to all others in that it exempts the sales made by an organization.
Schools and school-sponsored organizations. Sales of tangible personal property and taxable services by public and private elementary and secondary schools that otherwise qualify as schools under subsection 16, and by student organizations sponsored by those schools, including booster clubs and student or parent-teacher organizations, as long as the profits from such sales are used to benefit those schools or student organizations or are used for a charitable purpose. § 1760(64)
Public and private elementary and secondary schools making sales of candy bars, calendars, yearbooks, clothing, etc. are exempt from charging tax on such sales, provided the profits are used to benefit the school or student organization or are used for a charitable purpose.
The definition of “retail sale”, as previously mentioned, excludes “any casual sale”. Casual sales are therefore not subject to a sales or use tax. The statute defines a “casual sale” as follows:
“Casual sale” means an isolated transaction in which tangible personal property or a taxable service is sold other than in the ordinary course of repeated and successive transactions of like character by the person making the sale. “Casual sales” include transactions by a civic, religious or fraternal organization which is not a registered retailer at a bazaar, fair, rummage sale, picnic or similar event. The sale by a registered retailer of tangible personal property which that retailer has used in the course of the retailer's business is not a “casual sale” if that property is of like character to that sold in the ordinary course of repeated and successive transactions. “Casual sale” does not include any transaction in which a retailer sells tangible personal property or a taxable service on behalf of the owner of that property or the provider of that service. §1752(1-D)
The definition is actually divided into four types of situations where a casual sale exists. The first speaks to the majority of casual sales which affect all of us. These are sales made by any individual when selling property that they have owned and used. These individuals are not regularly engaged in the business of selling property and their activity of selling will only occur that one day, or at most, a few times a year.
The next situation specifically involves sales by civic, religious or fraternal organizations which are not registered retailers. Their sales at a bazaar, fair, rummage sale, picnic or similar event, are “casual sales” no matter what the duration. The Bureau also recognizes fund raising campaigns of limited duration involving the sale of such items as candy, light bulbs, novelties or other tangible personal property, as casual sales unless the organization is registered or required to be registered as a seller.
The definition of “retail sale” also states that purchases for resale are exempt, unless the resale will be at casual sale. As a result, unless the organization has a sales tax exemption for purchases they make, the organization will be required to pay sales or use tax on the purchase of goods that they will resell.The next area speaks about sales made by retailers of items that they have used in their business. Most likely, such a sale would be casual in nature and be exempt. However, if the item being sold is the same type of item regularly sold by the retailer, then the sale is taxable. For instance, if an auto dealer decides to sell some of its office furniture, the sale is exempt as a casual sale. However, if an office equipment business sells furniture that it once had in inventory, but has been using for a time period, the sale is taxable.The last area addresses the fact that casual sales do not include consignment sales. These are sales where a person has left goods with a registered retailer to sell on that person's behalf. Ultimate sales of these goods are retail sales even though the goods do not belong to the retailer.Some other examples of casual sales are:
- Sales made by a personal representative in the settlement of an estate, unless those sales continue the operation of a retail business or are made by a retailer.The sale of an entire business by the owner, with the exception of goods in inventory.Judicial sales, executions, etc., unless made by a registered retailer.
- Sales by a person engaged in a business or occupation such as manufacturing or farming, of used machinery, fixtures, equipment or similar items when the seller is not engaged in the business of selling those items.
The following are examples of transactions which, although they may appear to resemble casual sales, are deemed to be retail sales. Sales of the kinds listed below are subject to sales or use tax in the same way as other retail sales.
- Sales made in the ordinary course of business by a registered retailer on behalf of the owner, even though the owner is not in the business of making such sales. A retailer has the same duties when making sales of property belonging to another as when selling the retailer's own goods.Retail sales by a manufacturer, wholesaler, processor or jobber of the kinds of property ordinarily produced or sold by that business, even though retail sales are infrequent and comprise only a small fraction of the total sales of that business.Sales that are an integral part of a business, such as the sale of repossessed personal property by a bank or finance company, even though the sale of tangible personal property is not the primary activity of that business.
- Sales by lessors of personal property previously rented or leased.
Taxable Casual Sales
There are certain kinds of property which, by statute, are taxable even if sold at casual sale. The statute reads:
The tax imposed by chapters 211 to 225 must be levied upon all casual rentals of living quarters in a hotel, rooming house or tourist or trailer camp and upon all casual sales involving the sale of trailers, truck campers, motor vehicles, special mobile equipment except farm tractors and lumber harvesting vehicles or loaders, watercraft or aircraft except those sold for resale at retail sale or to a corporation, partnership, limited liability company or limited liability partnership when the seller is the owner of a majority of the common stock of the corporation or of the ownership interests in the partnership, limited liability company or limited liability partnership. This section does not apply to the rental of living quarters rented for a total of fewer than 15 days in the calendar year, except that a person who owns and offers for rental more than one property in the State during the calendar year is liable for collecting sales tax with respect to the rental of each unit regardless of the number of days for which it is rented. § 1764The following provides definitions for the kinds of property mentioned:
Trailer. “Trailer” means a vehicle without motive power and mounted on wheels that is designed to carry persons or property and to be drawn by a motor vehicle and not operated on tracks. “Trailer” includes a camper trailer as defined in section 1481, subsection 1-A. § 1752(19-A)
Truck camper. "Truck camper" means a slide-in camper designed to be mounted on a truck body to provide temporary living quarters for recreational, camping, travel or other use. § 1752(20-A)
Motor vehicle. "Motor vehicle" means any self-propelled vehicle designed for the conveyance of passengers or property on the public highways. "Motor vehicle" includes an all-terrain vehicle as defined in Title 12, section 7851 and a snowmobile as defined in Title 12, section 7821. § 1752(7)
Special mobile equipment. "Special mobile equipment" means any self-propelled vehicle not designed or used primarily for the transportation of persons or property that may be operated or moved only incidentally over the highways, including, but not limited to, road construction or maintenance machinery, farm tractors, lumber harvesting vehicles or loaders, ditch-digging apparatus, stone crushers, air compressors, power shovels, cranes, graders, rollers, well drillers and wood sawing equipment. §1752(14-B)
Watercraft. "Watercraft" means any type of vessel, boat, canoe or craft designed for use as a means of transportation on water, other than a seaplane, including motors, electronic and mechanical equipment and other machinery, whether permanently or temporarily attached, which are customarily used in the operations of the watercraft. § 1752(24)
Aircraft. "Aircraft" means any powered contrivance designed for navigation in the air except a rocket or missile. § 1752(1-A)
If any of these items are sold at casual sale and the seller does not report and pay tax on the transaction, payment of use tax is due from the purchaser directly to the State. The statute also makes it a prerequisite to pay the use tax before any of the above items, except aircraft, are registered:
Payment of tax on vehicles and watercraft. The tax imposed by this Part on the sale or use of any vehicle, snowmobile, all-terrain vehicle or watercraft must, except where the dealer has collected the tax in full, be paid by thepurchaser or other person seeking registration of the vehicle, snowmobile, all-terrain vehicle or watercraft at the time and place of registration. In the case of vehicles, the tax must be collected by the Secretary of State and transmitted to the Treasurer of State as provided by Title 29-A, section 409. In the case of watercraft, snowmobiles and all-terrain vehicles, the tax must be collected by the Commissioner of Inland Fisheries and Wildlife and transmitted to the
Treasurer of State as provided by Title 12, sections 7793-A to 7793-E, 7824-A to 7824-F or 7854-A to 7854-E. § 1952-A
When individuals who are not in the business of selling goods dispose of their own used household items by selling them at a yard sale or similar event, or by placing an advertisement in the classified section of a newspaper, they are making casual sales. If the property sold is a motor vehicle, aircraft, watercraft, camper trailer, livestock trailer or special mobile equipment, the purchaser is responsible for payment of the tax directly to the State as previously stated.
So-called yard sales that are operated on a continuing basis or include items produced or acquired for resale by the seller are not casual sales. Persons who operate businesses of this type are required to register as sellers under the Sales and Use Tax Law and to collect, report and remit Maine sales tax in the same way as other retailers. If used household items are intermingled with items produced or acquired for resale, all sales are subject to tax.
Commercial Farmers And Fishermen
1. Definitions. As used in this section, unless the context otherwise indicates, the following words have the following meanings.
(Effective August 23, 2006) A. “Commercial agricultural production” means commercial production of crops for human and animal consumption, including the commercial production of sod, agricultural composting operation as defined in Title 17, section 2805, the commercial production of seed to be used primarily to raise crops for nourishment of humans or animals and production of livestock.
(Effective October 1, 2006) A. "Commercial agricultural production" means commercial production of crops for human and animal consumption, including the commercial production of sod, agricultural composting operation as defined in Title 17, section 2805, the commercial production of seed to be used primarily to raise crops for nourishment of humans or animals and the production of livestock, including the removal and storage of manure from that livestock.
(1) All cultivating activities occurring at hatcheries or nurseries, from the egg, larval or spore stages to the transfer of the product to a growing site; and
(2) All cultivating activities occurring on water, from the receipt of fish, shellfish, seaweed or other marine plants from onshore facilities to the delivery of harvested products to onshore facilities for processing.
B. “Commercial fishing” means attempting to catch fish or any other marine animals or organisms with the intent of disposing of them for profit or trade in commercial channels and does not include subsistence fishing for personal use, sport fishing or charter boat fishing where the vessel is used for carrying sport anglers to available fishing grounds.C. “Depreciable machinery and equipment” means that part of the following machinery and equipment for which depreciation is allowable under the Code and repair parts for that machinery and equipment:
(1) New or used machinery and equipment for use directly and primarily in commercial agricultural production, including self-propelled vehicles, but excluding motor vehicles as defined in section 1752, subsection 7; attachments and equipment for the production of field and orchard crops; new or used machinery and equipment for use directly and primarily in production of milk, animal husbandry and production of livestock, including poultry; and new or used machinery and equipment not used directly and primarily in commercial agricultural production, but used exclusively to transport potatoes from a truck into a storage location;(2) New or used watercraft, nets, traps, cables, tackle and related equipment necessary to and used directly and primarily in the operation of a commercial fishing venture, but excluding motor vehicles as defined in section 1752, subsection 7; or
(3) New or used watercraft, machinery or equipment used directly and primarily for aquacultural production, including, but not limited to: nets; ropes; cables; anchors and anchor weights; shackles and other hardware; buoys; fish tanks; fish totes; oxygen tanks; pumping systems; generators; water-heating systems; boilers and related pumping systems; diving equipment; feeders and related equipment; power-generating equipment; tank water-level sensors; aboveground piping; water-oxygenating systems; fish-grading equipment; safety equipment; and sea cage systems, including walkways and frames, lights, netting, buoys, shackles, ropes, cables, anchors and anchor weights; but excluding motor vehicles as defined in section 1752, subsection 7.
2. Refund authorized. Any person, association of persons, firm or corporation that purchases electricity or that purchases or leases depreciable machinery or equipment for use in commercial agricultural production, commercial fishing or commercial aquacultural production must be refunded the amount of sales tax paid upon presenting to the State Tax Assessor evidence that the purchase is eligible for refund under this section.Evidence required by the assessor may include a copy or copies of that portion of the purchaser's or lessee's most recent filing under the United States Internal Revenue Code that indicates that the purchaser or lessee is engaged in commercial agricultural production, commercial fishing or commercial aquacultural production and that the purchased machinery or equipment is depreciable for those purposes or would be depreciable for those purposes if owned by the lessee.In the event that any piece of machinery or equipment is only partially depreciable under the United States Internal Revenue Code, any reimbursement of the sales tax must be prorated accordingly. In the event that electricity is used in qualifying and nonqualifying activities, any reimbursement of the sales tax must be prorated accordingly.Application for refunds must be filed with the assessor within 36 months of the date of purchase or execution of the lease.
3. Purchases made free of tax with certificate. Sales tax need not be paid on the purchase of electricity or of a single item of machinery or equipment if the purchaser has obtained a certificate from the assessor stating that the purchaser is engaged in commercial agricultural production, commercial fishing or commercial aquacultural production and authorizing the purchaser to purchase electricity or depreciable machinery and equipment without paying Maine sales tax. The seller is required to obtain a copy of the certificate together with an affidavit as prescribed by the assessor, to be maintained in the seller's records, attesting to the qualification of the purchase for exemption pursuant to this section. In order to qualify for this exemption, the electricity or depreciable machinery or equipment must be used directly in commercial agricultural production, commercial fishing or commercial aquacultural production. In order to qualify for this exemption, the electricity must be used in qualifying activities, including support operations. § 2013
The following 2 definitions are from 17 M.R.S.A., §2805(1)
D. "Agricultural composting operation" means composting that takes place on a farm. "Agricultural composting operation" does not include an operation that involves nonorganic municipal solid waste or that composts municipal sludge, septage, industrial solid waste or industrial sludge. "Agricultural composting operation" does not include an operation that composts materials with a moderate or high risk of contamination from heavy metals, volatile and semivolatile organic compounds, polychlorinated biphenyls or dioxin. Title 17, §2805(1)
E. "Composting" means the controlled aerobic decomposition of organic materials to produce a soil-like product beneficial to plant growth and suitable for agronomic use. Title 17, §2805(1)
This section only applies to farmers and fishermen (including those engaged in aquaculture) who are engaged in commercial activities. Although this is a refund provision, it does provide an exemption for purchases made after certification. Prior to certification or in cases where the exemption card cannot be used to purchase a certain item, the purchaser can seek a refund. Upon application to the Bureau, an exemption card is issued to those persons who qualify. The exemption card can then be used to purchase qualifying depreciable machinery and equipment, including repair parts for such, free of tax. See “Exempt sale documentation” for more information on what records the retailer must obtain.In order to qualify for this exemption, machinery or equipment must meet three tests. Machinery or equipment must:
- be used directly in commercial production; and be used primarily in commercial production; and
- be depreciable for Federal Income Tax purposes.
“Directly” means those activities or operations which constitute an integral and essential part of commercial agricultural production or commercial fishing as distinguished from those activities or operations which are simply incidental, convenient or remote to commercial agricultural production or commercial fishing. “Directly” does not include support operations such as construction or repair facilities, machine shops, storage activities, administration or any highway transportation. Rule 323
“Primarily” means more than 50% of the time. Rule 323
Some of the more common items that would qualify for exemption are:
|Batteries||Hay & Forage Equipment||Seed Cutters|
|Grading Tables||Removable Stalls|
|Bait Bags||Filters||Net Floats|
|Bow Thruster||Hooks||Radar Equipment|
|Color Sounder||Life Rafts||Seine Nets|
|Depth Sounder||Life Equipment||Tags|
|Depth Finder||Lights||Trap Stock|
|aboveground piping||anchors and anchor weights|
|boilers and related pumping systems||buoys|
|feeders and related equipment||fish tanks|
|fish totes||fish grading equipment|
|oxygen tanks||power generating equipment|
|sea cage systems||safety equipment|
|tank water-level systems||shackles and other hardware|
|water-oxygenating systems||water-heating systems|
The certificate of exemption may not be used to purchase any of the following items:
- Nonqualifying machinery and equipment;
- Motor vehicles, trailers, attachments for motor vehicles such as bulk bodies, fertilizer bodies and motor vehicle repair parts, snowmobiles, and ATV's;
- Tools and Supplies, other than repair parts, such as lubricants, coolants, solvents, cleaning supplies, personal apparel;
- Items incorporated in real property such as fencing, storage buildings, silos, special purpose buildings, heating or ventilation systems and construction materials;
- Items which are not 100% depreciable equipment;
- Items which are not commonly used in commercial agricultural production, commercial fishing or commercial aquacultural production such as lawn and garden tractors, lag tractors, backhoe tractors, fork lift trucks, grain bins, computers, office equipment and scraper blades.