Maine – Determining the Taxable Sales Price

SALT Report 3080 – Maine Revenue Services updated a sales and use tax bulletin that explains what must be included in the sales price on which sales or use tax liabilities are based.  Updates to the bulletin include a section regarding the computation of sales tax, and a section on sales made through vending machines.

Computation of Sales Tax

This section provides that, under section 1812 sales tax must be added to the total sales price “and when added, the tax shall constitute a part of the price, shall be a debt of the purchaser to the retailer until paid, and shall be recoverable at law in the same manner as the purchase price.”

To determine the tax on sales of multiple items, retailers should calculate the tax based on the total sales price of all items. For example, if the sale includes six 15 cent items, tax should be computed on the 90 cent sale, not on each individual 15 cent item.

Also, retailers should compute their monthly sales tax liabilities by multiplying the total sale price of all taxable sales by the tax rate in effect. In some cases, the retailer may find that due to rounding, the tax due on their sales tax return is less than the actual amount collected from their customers. The extra tax is called breakage and may be kept by the retailer as compensation for collecting the tax.

Sales Made Through Vending Machines

The taxability of products sold through vending machines is determined by the retailer’s business activities, as well as the products sold. Therefore, the tax should be applied as follows:

Vending machine operators who receive 50% or less of their gross receipts from retail sales through vending machines must report the entire amount of their vending machine sales based on the sales price. The retailer may sell products in vending machines with the sales tax included in the stated sales price. The retailer must display a sign that notifies the customer that the price of the product includes sales tax.

Products sold through vending machines for human consumption are exempt from sales tax if the retailer’s gross receipts from vending machine sales are more than 50% of the total gross receipts from all sales of tangible personal property.  However, in this situation, these products will be subject to use tax if the retailer does not pay sales tax at the time of purchase.  Purchases of items for human consumption sold in vending machines should be reported as “taxable purchases” on the retailer’s sales tax return.

Alternatively, items not intended for human consumption are considered taxable retail sales and should be included in the “gross sales” on the retailer’s sales tax return. The retailer may purchase these items tax-free so long as they provide their supplier with a resale certificate. The retailer may then sell these products in their vending machines with the sales tax included in the stated sales price. The retailer must display a sign that notifies the customer that the price of the product includes sales tax.

Lastly, the bulletin discusses how to apply these methods to federal manufacturers’ or importers’ excise taxes that are imposed on automobiles, tires, firearms, tobacco, liquor, and sporting goods; trade-ins, core charges, and installment sales; cash discounts, coupons, and rebates; service charges, assembly charges, and delivery charges; and charges that are specifically excluded from the sales price.

For Further Information

Maine Revenue Services – Sales and Use Tax Instructional Bulletin No. 39