Sales Tax Obligations of Sellers in Maine

April 13, 2006

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Maine imposes various requirements on sellers doing business in the state. We recommend that you go through the items below to help you with the most frequently asked questions concerning sellers and sales and use tax issues.

Procedure for accepting resale certificates. The burden of proving that a sale of tangible personal property is for resale is upon you as the seller. You will be relieved of this burden of proof only if you obtain a resale certificate from the purchaser. You must take the certificate in good faith from a person engaged in selling the tangible personal property. You should not sell for resale, unless the purchaser specifies in the order, whether written or oral, that the goods are purchased for resale. Invoices of goods sold for resale must be marked to indicate that they are exempt purchases. The words "Maine Sales Tax Exempt, for Resale" satisfy this requirement. The certificate must contain the following information:

the seller's registration certificate number of the purchaser
the type of business in which the purchaser for resale is engaged
the name of the person selling the items to the purchaser
a description of the property to be purchased by the purchaser
the name and address of the purchaser
the date on which the resale certificate is filled out

Procedure for accepting blanket certificates. A blanket resale certificate is a resale certificate provided to you by those customers who make numerous exempt resale purchases from you. The idea is that by maintaining a blanket resale certificate, both you and your customer can avoid the hassle of having to present a certificate every time your customer makes a purchase. A blanket resale certificate should have all the information as noted above for a resale exemption certificate. In addition to the other requirements the blanket certificate should be marked "Blanket Certificate."

Sales and use tax liability for out-of-state mail order and catalogue retailers. Maine does not have a statute that specifically taxes out-of-state mail order and catalogue sellers. Ordinarily, you will be responsible for paying this tax only if you have physical presence within Maine. To determine if you have physical presence, ask yourself the following:

Do I have retail facilities, a warehouse, or any office space in Maine? Maintaining retail or warehouse facilities will give you physical presence. Also, having an office for employees, even for business activities unrelated to mail order sales, will give you physical presence.
Do my employees or I enter Maine for purposes of taking and transmitting orders from Maine? If your employee or independent contractor goes into Maine to take or transmit orders, your business may have physical presence in Maine. However, contracting with a common carrier to deliver mail order goods does not constitute physical presence.
Do my delivery vehicles frequently enter Maine for purposes of delivering property? Frequent deliveries in Maine by your trucks will give you physical presence in Maine.

Sales tax "bracket system." The bracket system may be followed by sellers in computing the sales tax. When the sale price exceeds $1, the tax is the amount for each whole dollar plus the scheduled amount for each fractional part of $1. The tax is computed on each fraction of a dollar according to the following tables:

If the Tax Rate Is 5 Percent
Amount of Sale	Tax
$0.01 to 0.10, inclusive	no tax
$0.11 to 0.20, inclusive	$0.01
$0.21 to 0.40, inclusive	0.02
$0.41 to 0.60, inclusive	0.03
$0.61 to 0.80, inclusive	0.04
$0.81 to 1.00, inclusive	0.05

If the Tax Rate Is 7 Percent
Amount of Sale	Tax
$0.01 to 0.07, inclusive	no tax
$0.08 to 0.21, inclusive	$0.01
$0.22 to 0.35, inclusive	0.02
$0.36 to 0.49, inclusive	0.03
$0.50 to 0.64, inclusive	0.04
$0.65 to 0.78, inclusive	0.05
$0.79 to 0.92, inclusive	0.06
$0.93 to 1.00, inclusive	0.07

If the Tax Rate Is 10 Percent
Amount of Sale	Tax
$0.01 to 0.10, inclusive	no tax
$0.11 to 0.20, inclusive	$0.02
$0.21 to 0.40, inclusive	0.04
$0.41 to 0.60, inclusive	0.06
$0.61 to 0.80, inclusive	0.08
$0.81 to 1.00, inclusive	0.10

Absorbing the tax — using a "no sales tax" advertising strategy to drum up business. In Maine it is against the law to refund or offer to refund all or any part of the amount collected, or to absorb the amount of sales tax required to be added to the sales price and collected from the purchaser. As a seller, it is also against the law for you to advertise directly or indirectly that you will absorb the sales tax that is required to be added to the sales price.

Claiming refund for excess tax payments. Where merchandise is returned by your customer, you may deduct the original purchase price of the item on a subsequent sales tax return, provided that the original transaction was taxable and was reported. A refund is claimed by filing with the State Tax Assessor within three years of the date of the overpayment.