The State of Maine’s sales tax laws are generally in line with those of other 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’s sales tax rate is 5.50%. This tax is collected at the state level with no local 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 7% on many prepared food items, as well as 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.
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:
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.
There are several goods and services that are considered exempt from sales tax in the State of Maine. These include:
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 7% prepared foods 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 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 business name or location should be filed with the state.
You will pay Maine sales and use tax by:
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:
Most businesses 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 businesses with liability less than $50 per year, you will file annually by January 16.
All businesses with tax collected must file on time based on their frequency assigned by the state. Those who do not file 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 sales tax for a period are not required to file for it, despite lack of activity.
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, 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.