Maine – Guidance on Commercial Agricultural Production

SALT Report 2683 – Maine Revenue Services has updated a sales and use tax bulletin regarding commercial agricultural production because it did not address the sales tax exemptions available for certain products used in commercial agricultural production and animal agricultural production.  Instead, the bulletin referred taxpayers to Bulletin No. 14.  The bulletin also added language regarding the proper use of exemption certificates.

Burden of Proof

The section that discusses exemption certificates is revised to reflect that the burden of proving that a sale was made to a person that has been issued an exemption certificate is on the person making the sale.

To meet the burden of proof, the seller should obtain from the purchaser a signed affidavit and a copy of a valid exemption certificate that was issued to the purchaser by MRS. The seller is required to retain the affidavit and a copy of the exemption certificate for each person to whom exempt sales are made, however they do need not to obtain a separate affidavit or copy of the card for each individual sale.

Additionally, all invoices must be clearly marked to indicate that they are exempt sales. If the purchaser’s exemption number and the words “Maine Sales Tax Exempt are on the invoice, the Department will consider that this requirement has been met.

Finally, the bulletin now states that if non-exempt items are purchased with an exemption certificate, the purchaser will be subject to a use tax assessment.

Exemption Certificates

This section has been amended to reflect that the following items have been added to the list of items that typically qualify for the exemption, such as: seeding machines, grow lights, herd management, transplant machines, tree spaces, and water system injections.  The exemption also applies to repair and replacement parts for exempt machinery and equipment, including batteries, filters, tires, starters, alternators, and belts.

Tax Refunds

This section as been amended to reflect that a refund may be available for certain items that cannot be purchased with an exemption certificate, that are used directly and primarily in a qualifying activity.  Additionally, the bulletin notes that certain multi-use items may qualify for a refund, but documentation that can verify the use will be required.

For Further Information

Maine Revenue Services – Sales and Use Tax Instructional Bulletin No. 45