Should you collect sales tax in Maine?
Sales tax is levied on retail selling tangible personal property to your customers, including leasing or renting. However, you will collect the sales tax if you determine the nexus in Maine. A nexus is a presence that may come physically or economically.
A physical nexus is typically created when your business has a store, warehouse, or office in Maine. An economic nexus is intertwined when you cross paths with threshold limits as already stipulated by the state. These thresholds are based on revenue.
Let’s explore if your business has a Physical nexus in Maine.
A physical nexus is integrated when your business is engaged in the following in Maine:
- Selling tangible personal property in Maine.
- Maintaining, occupying, or using a place of business or an office in Maine.
- Employing or retaining any contractor, including an agent, representative, or salesman, by whatever name called, engaged in activities relating to selling, delivering, installing, or taking business orders.
- You have a stock of goods in Maine.
You may also refer to the Maine Revenue Services (pg. 118) advisory to know more about business activities that may create a physical nexus within the state.
Constituting an Economic Nexus in Maine?
Suppose you are a remote seller (i.e., one who doesn’t have a physical presence in the state), and your business sales in Maine exceed $100,000 or made at least 200 transactions during the current or previous calendar year. In that case, you must comply with and register under sales tax rules.
Click here for official guidance. The state has repealed the 200 transactions threshold w.e.f. January 2022 (pg. 18).
How can you Register for Sales tax in Maine?
To get a sales tax permit in Maine, you must apply online at the Maine registration portal.
Additionally, before applying for a new tax account number, make sure you have the following information handy:
- FEIN and Social Security numbers of all officers, partners, or owners.
- Address details (physical and mailing).
- Business incorporation dates in Maine.
- Contact information.
- Nature of business.
Is your product or services liable to Sales tax in Maine?
Tangible Property: Sales tax in Maine is imposed primarily on the retail sale of tangible personal property, such as Furniture, giftware, toys, etc.
Services: In Maine, sales tax is charged on many services , such as fitness center club fees, communication services, and credit card fees. See here for detailed guidance (pg. 35).
Digital Product: Maine charges sales tax on digital products. So, you must collect the sales tax if you sell digital products such as software, streaming services, e-books, etc. Here (pg. 8) is what Maine says about digital transactions.
SAAS: SAAS is software that allows users to connect to the cloud and use it over an internet connection. It is non-taxable in Maine. Click here (pg. 7) for the guidance issued by the state.
The state provides certain exemptions from the sales tax levy, such as food for home consumption, prescription drugs, manufacturing equipment, etc. Please click here to see what exemptions are covered (pg. 71).
How should you collect and calculate state taxes in Maine?
Collecting and computing accurate sales tax to be remitted to the state may involve stratospheric efforts, especially when you are not Maine-based. The sales tax is destination-based in Maine, which means you must collect taxes on tangible property sold to buyers based in Maine.
Complexities are involved where you have a business nexus, even if not in the state. Any default may lead to severe concerns, penalties, or fines by the state. That is what TaxDo is here for you! Our specialized sales tax calculator and professional services will simplify your job and lighten your compliance burden.
Maine has a base sales tax rate of 5.5% and no local tax rates.
Below is the simple formula you can use to calculate your sales tax collection on each merchandise sold:
Sales Tax collectible = Sale value * (5.5%)
Do you need to collect sales tax on Shipping Charges?
Shipping charges can be delineated separately in the sale invoice raised to the customer or dissipated within the selling price of the items sold. If shipping charges are separately stated on the invoice, there will be no tax applicability; however, you need to collect the tax on the total sales price, including shipping charges, if not stated separately.
Additionally, if non-taxable items are sold, shipping charges associated with such a sale are not subject to sales tax. However, when the sale includes taxable and non-taxable items, shipping charges need to be apportioned relatively between the taxable and non-taxable parts of the sale. Accordingly, sales tax applies to the taxable portion of the sale. Click here for the guidance issued by the state (pg. 6).
How should you file sales tax in Maine?
E-file: You can e-file your return using the state’s online filing facility.
Payments along with returns are also to be remitted. The state accepts payments through checks, EFT, credit cards, etc.
Even if your sales tax liability is zero, you must file the return to avoid penalty or interest.
Filing frequencies and due dates
Based on your reported sales tax or estimated taxable sales, the Maine Department of Revenue assigns you a filing frequency: Monthly, Quarterly, Semi-Annual, or Yearly.
According to your filing frequency, the due date for filing the sales tax would be the 15th Day of the month following the relevant reporting period.
Note: If the due date is a holiday or weekend, the next business day will be considered the final due date. Use the Maine official website link to learn about due dates and filing frequencies.
Are there any fines or penalties for default when filing or paying sales tax?
The state levies a late filing penalty of 10% of sales tax due or $25, whichever is greater. The penalty for failure to pay the tax would be 1% of unpaid tax for each month up to a maximum of 25%. You will also be charged interest on unpaid tax at 1% p.m. Go through the comprehensive guide (pg. 150) of penalties and interest issues by the Maine Department of Revenue.
However, assigning your tax burden to TaxDo would not result in you paying any penalty or interest. We will adhere to the due dates.
Sales tax holiday in Maine
There is no sales tax holiday in Maine.