SALES TAX TUESDAY 2018: Maine

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It maybe way the heck up there in the most north and most east part of the USA, but in Maine you can just about ‘do it all’, from exploring historical landmarks, lighthouses and museums to simply enjoying the scenic coast where you can take in a spectacular early morning sunrise, and where better than at Portland Head Light Station in Cape Elizabeth.  This historic lighthouse was completed in 1791 at the whopping sum of $1500; that’s what I said just 15-hundred dollars.

Even though Maine is the 39th largest state at only 35,385 square miles, it has a very long 230 miles of coastline that includes lovely lighthouses like this one, as well as jagged rock cliffs, beaches and quaint fishing villages which specialize in the ‘number one’ coastal resident…‘lobsters.’

Did you know that 90% of the world’s lobsters come from the cold coastal waters of Maine?

In fact, lobsters were once so plentiful in Maine that the state’s prisoners revolted over the fact that they were fed lobster every day during their incarceration. Must have been a really rough life to have to eat lobster every day?

Buy these crustaceans live from a seaside boat and you won't pay any sales tax, but buy them steamed, boiled, grilled, baked, stewed, or any other way at a local dining establishment and you will pay 8% sales tax.

The abundance of coastline means that Maine has a lot of small islands that are perfect for sightseeing and relaxation. For example, the Casco Bay Islands, sometimes called the ‘Calendar Islands’ (because there are so many you could explore one each day of the year) offer a relaxing, care-free state of mind along with salty air all while seeing the beauty of sandy beaches and abundant wildlife. You might want to rent a bike to explore some of the islands or consider a kayak to circle the shore of others.

Just don’t get so relaxed as to forget about the ferry schedule for a return to the ‘Maine-land’ (aka: mainland).

Another great place to experience the grandeur is at Acadia National Park which is about as diverse as you can find, from the rocky cliffs like this at Otter Bay…

to tree-covered mountain cliffs (with the Atlantic Ocean in the distance)…

to another spectacular sunrise from atop one of the summits within the park.

Simply put, Acadia National Park has the scenic views to 'take your breath away.'

Of course, if you are in doubt about what to do while visiting Maine, then by all means feel free to "eat lobster, any and every way you can find it," here are just a few...

Lobster Rolls (I could pig myself out on about 6 of these for lunch), or...

grilled lobster, served clambake style (I can't even begin to tell you how wonderful this is), or...

Lobster Thermidor (it's 'to die for') or let me count the (numerous other) ways. Unfortunately, we will be paying 8% prepared-food ‘sales tax’ on all of these delightful dining experiences. 

Of course, you would expect any state with lobster as one of its biggest economic mainstays to have an annual festival to celebrate the crustacean. Since 1947 the event is one of Maine’s largest summer events even though for 67 years they failed to collect the mandatory sales tax due from the State…ouch. The festival operators obviously weren’t using Avalara for sales tax compliance. But they learned their lesson after being forced to pay thousands in back taxes because today they collect and remit the 8% prepared-food sales tax on all the lobster served at the festival.

And speaking of Avalara, I have to remind you that Sales Tax Tuesday 2018 is a joint venture between Insightful Accountant and Avalara, the Sales Tax people. So, this article is just one in our series designed to cover not only sales and use tax requirements on a state-by-state basis as an update to our 2015 series, but to also give you some of the latest news concerning sales tax compliance, exemptions and legislative or judicial actions that could impact your sales tax situation no matter where you do business.

Believe it or not, Maine has some of the most complicated sales tax rates of any of the states we have seen thus far. While their state sales tax rate is 5.5%, they have a different sales tax rate for liquor which is 7%, and a different sales tax rate for prepare foods which is 8%, and a different rate for lodging that is 9%, and still a different sales tax rate for short-term automobile rentals that is 10%. 

Even though food (not prepared for on-site consumption) items such as groceries are exempt from sales taxes, you could talk yourself blue trying to get out of paying the special blueberry tax which commercial sellers of blueberries must pay to the state at the rate of 1.5-cents per pound for one of the most prolific crops produced in Maine.

Note that this is not a % of sales, but a specific rate per pound…just try to put that in your accounting system standard tax set-up.  You might think that it’s a relatively small sum that might go unnoticed by state tax collectors, but when you consider that 25% of all the blueberries in North America used for all your muffins, pancakes, pies, fruit cups, yogurt and soft-serve toppings and fruit-in-your-cereal come from Maine, there is no way that tax is being ignored, it’s a lot of bucks.

And when it comes to sales tax bucks, here are some of the Maine facts that produce the income the state relies upon for one of its primary revenue sources.

Sales Tax Facts:

  • Maine’s state sales tax rate is 5.5% on the sales of tangible personal property, products transferred electronically, and taxable services sold at retail.  (The state definitions specifically state, “sales and use tax applies to anything that can be seen, felt and touched.”)
  • A service provider tax of 6% is imposed on certain services including cable and satellite television, radio, fabrication, rental of video media/equipment, rental of furniture, telecommunications services and a variety of others. For more details, see the official Maine Business Guide PDF available for download.
  • Maine imposes a 7% sales tax on liquor, an 8% sales tax on prepared foods for on-site consumption, a 9% sales tax on lodging (short-term rentals of hotel rooms, boarding houses including bed-n-breakfasts, or trailer/camp-site facilities) and a 10% sales tax on short-term auto rentals.
  • While food and prescription drugs are among the exemptions from sale tax, many other exemptions exist. For clarity we recommend that you see Maine’s Reference Guide to Sales and Use Tax law.  
  • Maine is a destination sourcing state, meaning that sales tax is based on the location of the buyer (not the seller).
  • Maine is NOT a member of Streamlined Sales Tax (SST).
  • Maine Revenue Services, responsible for sales and use tax administration, is a division of the state’s Department of Administrative and Financial Services.

But as we wrap-up our time in Maine I have one more essential stop to make on this RV trip because it just wouldn’t be a trip to Maine without going by the Freeport, Maine Headquarters store of LL Bean.  Here I can shop till I drop for outdoor gear and apparel like some new ‘Muck boots’ and a heavy winter parka. I can also buy some summer fishing wear, and some much needed ‘finger-tip free’ neoprene fishing gloves.

I haven’t even started looking at fishing rods, tackle, snake boots, hand warmers, electric socks, thermal underwear or Cordura-faced khaki pants. Next come some half-zip sweaters and a Bennie for those cold winter mornings. It’s likely to be a hefty tab I owe by the end of my shopping spree, especially with all that Maine sales tax to be paid but let's face it folks, "Murph doesn't get to Maine every day of the week."

And while we are back on the subject of sales tax, just realize that with as complicated a tax set-up as Maine uses with all the different rates and product definitions it’s easy to get lured into a false sense of compliance. That’s why you need Avalara to prevent the errors associated with manual sales tax methods. Their automated AvaTax significantly reduces the time you will spend on tax calculation, exemption certificate tracking, return process and reporting.  Then you will rest easy knowing that you are fully compliant if the tax man comes knocking.