Maine Sales Tax
Maine Sales Tax At a Glance
State rate: 5.5%
Maximum combined rate: 5.5%
Tax Holidays: None
Governing Body: Maine Department of Revenue
The State of Maine’s sales tax laws are generally in line with those of other states in the United States with a flat state sales tax applying to most purchased goods, a slightly higher sales tax on select goods such as prepared foods, and several exemptions. To determine the rate you must collect, and to what it applies, there are several factors to evaluate.
Maine Sales Tax Rates
Maine’s sales tax rate is 5.50%. This tax is collected at the state level with no local or county taxes applying in Maine’s counties or municipalities. There are several additional factors to consider, however, depending on the goods being purchased and the method by which they are purchased.
The base sales tax rate applies to most tangible goods. There is a separate sales tax of 8% on many prepared food items, as well as lodging and liquor. There are also several exemptions for things like medical devices, pharmaceutical drugs, and grocery staples. The State provides a comprehensive list of all items exempt from sales tax on their Revenue Services website.
Maine Sales Tax Nexus
Before collecting sales tax for sales in or to residents of Maine, you need to determine if you have sales tax nexus in the state. Nexus applies to those who, under Maine regulations, are considered to have business operations in the state. If you are not based in Maine or if you sell products online, this is an important step.
The following constitute nexus in the state:
- Delivery vehicles owned by the company operating in the State of Maine
- An employee who operates from the State of Maine.
- Independent contractors or representatives in the state.
- Office space, property, or warehouse space located in the state.
Internet sales into the state for a company that has Nexus here will be subject to sales tax collection. For those selling through Amazon, there are no warehouses currently located in Maine and therefore no Nexus for those sales yet established.
In addition to these instances, Maine passed an economic nexus law that requires remote sellers to collect and remit sales tax if they make 200 or more transactions in Maine or earn $100,000 or more in revenue within the state.
Goods Eligible for Maine Sales Tax
There are several goods and services that are considered exempt from sales tax in the State of Maine. These include:
- Services – Maine has a separate Service Provider Tax that requires certain types of services to be taxed. These include video and audio equipment rental, furniture rental, telecommunications services, cable and satellite TV services, fabrication and ancillary services, community support services, and some private non-medical institutional services. See the full list on the Department of Revenue website.
- Grocery Staples, Medical Supplies, and Prescription Drugs – Non-prepared foods, prescription medications, and most major medical devices and recurring medications are exempt from sales tax as well. This includes ‘grocery staples’, though recent changes to the law have added a sales tax to grocery items not considered staples, such as prepared foods and meals, soft drinks, vitamins, candy, gum, and other similar items, to which a 8% tax.
Because of the recent changes made to the Maine sales tax code and the classification of different item types and how tax is collected on their sale, it is recommended you reference the Maine Revenue Services website and review Code 1752 to determine what products you sell are exempt, subject to the standard 5.5% sales tax rate and subject to the 8% prepared foods, lodging, and liquor tax rate.
If you sell tangible personal property and have nexus in the State of Maine, you must register for a sales tax license in the state to ensure sales tax compliance. To do so, you’ll need all your personal and business identification information, business entity type and tax ID number, and a detailed description of the goods your company sells.
You can register for sales tax collection on the Maine Revenue Services website using their online services portal. Registration for Sales & Use Tax, Use Tax, Income Tax withholding, and Service Provider tax are all handled through the same page and the process takes about 45 minutes to complete, so be sure to have all your information ready and time set aside to complete the application.
The application is free, though there may be other fees assessed depending on what types of registration you are completing at the same time. You will be approved rather quickly and receive your sales tax number within 1-2 business days, and the paper permit within 20 business days for display in your place of business. Renewals are not required either, though any changes to your small business name or location should be filed with the state.
You will pay Maine sales and use tax by:
- For Those in State – For Those Selling into Maine – Maine is a destination-based state with no local taxes, so collection of sales tax is relatively easy compared to some other states. If you have nexus in the state, you will collect the 5.5% sales tax on all relevant transactions. It is unlikely remote transactions will require the 8% tax rate, but be sure to check based on what you are selling.
- Shipping – Shipping and handling are typically not taxable in Maine, if it is stated separately on your bill to the customer. If the cost of shipping is included in the cost of the goods sold, however, it must be considered part of that taxable transaction and sales tax is collected.
- Filing Your Return – You can file sales tax returns with the State of Maine on the Maine Revenue Services website.
Your initial filing frequency will depend on your initial reported sales and will be updated each year after a look back of activities on your accounts. The following is used to determine your filing frequency:
- Annual – $50 or less per year
- Semi-Annual – Less than $100 per month
- Quarterly – Between $100-$599 per month
- Monthly – $600 or more per month
Most organizations will fall into the monthly filing frequency default, and those who have a smaller tax volume may qualify for the less frequent filings.
Quarterly: For those with tax liability between $100 and $599 per month, the following filing deadlines will apply.
|January – March (Q1)||April 15|
|April – June (Q2)||July 15|
|July – September (Q3)||October 15|
|October – December (Q4)||January 15|
Monthly: For those with tax liability of more than $600 per month, the following filing deadlines will apply.
Annual: For those small businesses with liability less than $50 per year, you will file annually by January 16.
Penalties and Interest for Late Payments
All businesses with tax collected must file on time based on their frequency assigned by the state. Those who do not file sales tax returns on time will be subject to a late filing penalty of 10% of tax due or $25 (whichever is greater). Those who submit their payment late will owe a penalty of 1% of tax due per month with a maximum of 25% due. There are more extreme penalties for those who are sufficiently delinquent or who have been determined to commit fraud in their filings. There is no zero filing in Maine, so those who have collected zero total sales tax for a period are not required to file for it, despite lack of activity.
Maine Tax Resources
Maine Sales Tax Software
Maine’s sales tax offers a simple destination-based collection system for those who have nexus in the state, but with variable rates on different goods, changing exemption rules, and variable filing deadlines depending on how much you collect, it’s important to have a system in place that can help you file on time and accurately each time. Our TaxTools service can help with detailed data review tools, sales tax calculator, sorting tools to ensure the proper payments are being made based on the goods sold, and integration with your existing eCommerce platform all from within the same interface. It’s a lot easier to manage your Maine Sales Tax collection through a single portal, especially if selling in multiple states. Learn more about TaxTools or sign up for a free trial today to evaluate the software for your business.
Last edited July, 2022