Sales and Use Taxes in Maine

April 13, 2006

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The sales tax is imposed on all sales of tangible personal property and taxable services sold at retail in Maine. Maine also charges sales tax on the following services:

rental of living quarters in any hotel, rooming house, tourist, or trailer camp
rental or lease of an automobile
telephone or telegraph service
extended cable television service
rental of video tapes and video equipment
fabrication services

Sales and use tax rate. The state of Maine has several sales and use tax rates. The general rate that applies to most sales of tangible personal property and services is 5 percent.

In addition, the following rates are applicable to Maine:

10 percent on rentals of automobiles for less than one year
7 percent on all food prepared by a retailer
7 percent on liquor and prepared food in liquor establishments
7 percent on rentals of rooms or shelter
7 percent gross receipts tax is imposed on persons engaged in the business of providing nursing home patient care (the gross receipts tax is imposed in lieu of sales and use tax but is administered in the same manner as the sales and use tax)

Tax-exempt items. Maine has many specific items that are exempt from sales tax — for example, certain prescription medications are exempt from Maine sales tax. You'll want to check and see if you are exempt from the sales tax.

Responsibility for paying sales tax. In Maine the incidence of the sales tax is on the consumer and the retailer is liable to the state for payment of the tax. The retailer is required to add the amount of the tax to the sale price and may recover the amount of the tax from the consumer in an action at law.

Use tax. The use tax is imposed on the storage, use, or other consumption of tangible personal property or a service the sale of which would have been subject to the Maine sales tax.

Responsibility for collecting use tax. Every person storing, using, or otherwise consuming tangible personal property or services in Maine is liable for the use tax. You, as a consumer, are liable for the use tax until the use tax has been paid or you have received a receipt from a registered seller showing that the seller has collected the sales or use tax.

Obtaining tax permits in Maine. In Maine, applications for registration certificates may be obtained from the State Tax Assessor, Sales Tax Division. You do not have to pay a fee when you obtain your registration certificate for each place of business.

Leases. Lease and rent payments are not subject to sales and use tax when they are not considered to be purchases. True leases of tangible personal property are not considered to be purchases. In such cases, the lessor is considered the consumer of the property, and is liable for tax when purchasing the property for rental purposes. When personal property is sold under a leasing arrangement and the lessee must acquire title to the tangible personal property under the terms of the agreement, then the tax is due at the time the transaction is entered into.

The following discussions address additional sales and use tax issues that many small business owners face: