Maine – Guidance on Lease and Rental Transactions

SALT Report 1141 – Maine Revenue Services has updated its sales and use tax instructional bulletin for vehicle dealers to reflect recent legislative changes.

In the state of Maine every lessor engaged in the leasing of tangible personal property is responsible for the sales/use tax in connection with the leasing of that property.  The correct application of sales/use tax to any specific lease transaction depends upon the terms of the lease.

For transactions entered into on or after October 1, 2011:

  • The automobile short-term rental rate applies to pickup trucks and vans with a gross vehicle weight of up to 26,000 pounds when the rental or lease is by a person engaged primarily in the business of renting automobiles; and
  • The exemption for sales of automobiles for short-term rental applies to sales of pickup trucks and vans with a gross vehicle weight of less than 26,000 pounds.

Fees for an automobile rented for a period of less than one year to the service customer of a new vehicle dealer are exempt, effective October 1, 2011,when

  • the rental is made under a manufacturer’s or new vehicle dealer’s warranty, and
  • the rental fee is paid by that new vehicle dealer or warrantor

Effective September 28, 2011, an “automobile” includes a pickup truck or van with a registered gross vehicle weight of 10,000 pounds or less, for sales and use tax purposes.

The bulletin also discusses the exemption for aircraft and aircraft repair and replacement parts available from July 1, 2011, to June 30, 2015.

For Further Information:

Maine Revenue Services Sales and Use Tax Instructional Bulletin No. 20