Maine – Governor Signs Bill to Close Sales Tax Loophole

SALT Report 2587 – On June 5th, 2013, the Governor of Maine signed into law LD 346, a Bill that will require residents to pay sales tax on all taxable internet purchases, including those purchased from out of state retailers. The bill closes a loophole that the Governor said, “allows a retailer without a heavy brick-and-mortar presence in the state to sell items without sales tax.”

This law is similar to other laws passed in Missouri, Arkansas, and New York that require companies with a brick-and-mortar store in the state and that also sell goods online to collect sales tax in those states. However, the new law in Maine provides exemptions that are not available in other states. For example, in Maine the following activities do not create nexus:

  • Soliciting business in Maine through catalogs, flyers, the telephone, or electronic media when the ordered items are shipped to Maine by the U.S. mail or by a 3rd-party common carrier,
  • Attending a trade show, seminar, or convention in the State,
  • Holding a company meeting for shareholders or company retreats in the State,
  • Maintaining a bank account or banking relationship in the State, or
  • Using a vendor for printing purposes in the State

In a statement regarding this Bill, the Governor referred to a study conducted by the Maine State Chamber of Commerce and the Retail Association of Maine which found that Maine was losing between $19 and $24 million every year because of this sales tax loophole. The Governor said that closing this loophole will help the State maintain services for its residents.

The new law also allows Maine to participate in the Streamlined Sales and Use Tax Agreement. Therefore, the Office of Fiscal and Program Review, with the help of local governments and the private sector will prepare a report to identify ways to simplify and modernize the way the State collects and administer its sales and use taxes, as required by SSTA.

For Further Information

Maine State Legislature – LD 346