Effective October 1 – Dealers From Outside the State of Maine Are Liable to Collect/Remit Maine Sales Tax


Effective October 1 and as per the June 21, 2017 vote that overrode Gov. Paul LePage’s veto, Maine Legislation 1405 will establish a new economic sales tax, up to 2%. LD 1405 requires remote sellers (meaning dealers who sell to customers from Maine) to collect and remit sales tax on the sale of tangible personal property, services delivered within the state and on products that are delivered electronically. This tax is not retroactive and agriculture (as defined by the state of Maine) and other exemptions still apply. Specifically, dealers are exempt from this new requirement if they either:

  1. Have gross revenue attributable to delivery of tangible personal property, products delivered electronically or services that are taxable by Maine of $100,000 or less in the previous or current calendar year or;
  2. Less than 200 total separate transactions of either sales of tangible personal property, products transferred electronically or services taxable by Maine for delivery into the state for the previous or current calendar year.

It is of interest to note that the Maine legislature has already considered the possibility that these new rules will be challenged. The legislation states that remote sellers who fail to comply with this law will be subject to a declaratory judgement against them by the state without an audit or other collection procedure if the state believes that the seller meets the thresholds established obligating them to pay tax within Maine. When an action is filed arguing against the constitutionality of this law, the court must enjoin the state from implementing this law during the period while the action is still pending. (This provision will not apply if there is a prior judgement establishing the validity of this tax.) These provisions were added as a way for the state to alleviate the "complicated position" Maine has placed remote sellers in under this new law. While the state intends to clarify the obligations imposed under this law, including its overall constitutionality, until that time if and when an action has been filed, the obligations a remote seller has under this law would be stayed until a final judgement or declaration has been made. It should also be noted that if during pending action a remote seller’s obligations under this law have been enjoined, once that injunction has been lifted, the application of this tax would only be applied prospectively unless the taxpayer has voluntarily agreed to collect and remit this tax during the pending challenge.

About the Author
Shane is a member of Hill, Barth & King's (HBK) Tax Advisory Group. He has nearly a decade of experience with State and Local Tax (SALT) consulting, controversy and compliance services. Shane is one the most experienced SALT consultants in the Northeastern United States having worked at Big 4 accounting firms and performed services to Fortune 500 companies in the Greater New York City, Philadelphia and Pittsburgh areas. As a member of HBK's Tax Advisory Group, he frequently teaches tax related training courses both internally for the firm and externally for clients and the public. Shane is an avid supporter of the United States Military and veteran-related charities in the Greater Philadelphia area. Industries served include the following: Agribusiness, Construction, Dealerships, Energy, Financial Services, Healthcare, High-Net-Worth Individuals, Hospitality & Gaming, Insurance, Investment Banking, Manufacturing, Not-for-Profit Organizations, Pharmaceuticals, Professional Services, Real Estate, Retail & Grocery and Technology.