Marketplace facilitators must collect Maine sales tax starting October 1, 2019

Update 10.4.2019: Maine Revenue Services has published FAQs for marketplace facilitators and marketplace sellers.

Marketplace facilitators are required to collect and remit the tax due on all sales made through the marketplace in Maine starting October 1, 2019.

Under current law, individual sellers (including marketplace sellers) are responsible for the tax due on their sales if they have nexus with Maine — a connection significant enough to trigger a sales tax collection obligation. Having a physical presence in Maine establishes nexus.

Newly enacted HP 1064 clarifies that the following activities do not establish physical presence nexus:

• Attending conventions, seminars, or trade shows in Maine
• Holding a meeting of a corporate board of directors or shareholders, or holding a company retreat or recreational event in Maine
• Maintaining a bank account or banking relationship in Maine
• Soliciting business in Maine (e.g., through catalogs, electronic media, flyers, or telephone) when delivery of ordered goods is effected by the United States mail or by an interstate third-party common carrier
• Using a vendor in Maine for printing

As of July 1, 2018, remote sellers can also establish nexus with Maine solely through economic activity in the state (economic nexus).

A remote seller establishes economic nexus if, in the current or previous calendar year, it has:

• At least 200 separate transactions of tangible personal property, electronically transferred products, or taxable services for delivery into Maine; or
• More than $100,000 in gross revenue from Maine sales of tangible personal property, electronically transferred products, or taxable services.

Starting October 1, 2019, the same $100,000 sales/200 transactions threshold applies to remote marketplace facilitators. When calculating the threshold, a marketplace facilitator should include sales facilitated on behalf of marketplace sellers as well as any sales it makes directly. 

Remote sellers that make direct sales in Maine as well as sales through a collecting marketplace must register to collect sales tax if their direct sales exceed the economic nexus threshold. Remote sellers that only sell through a collecting marketplace may not need to register.

Effective October 1, 2019, a marketplace facilitator with economic nexus is responsible for collecting and remitting the tax due on all sales made through the platform in Maine, its own and third-party sales.

A marketplace facilitator must provide to every marketplace seller a written statement explaining that it will collect and remit applicable sales and use taxes on all taxable sales it facilitates for the marketplace seller.  

A marketplace seller that receives such a statement from a marketplace facilitator should exclude sales made through that marketplace when calculating its economic nexus threshold. Additionally, it should exclude those sales from its sales and use tax returns.

Specific rules apply to marketplace sellers with in-state affiliates. Contact the Maine Department of Revenue for additional information.

Marketplace facilitator sales tax laws are sweeping the nation — approximately 20 states have adopted them this year alone. If you sell through one or more marketplaces, check out Avalara’s tax compliance tools and resources for online marketplace sellers.

Finally, HP 1064 holds that individuals must report use tax on items with a sale price of $5,000 or less on their Maine individual income tax returns.

Taxpayers may either attest to the amount of their use tax liability or elect to report an amount that is 0.04 percent of their Maine adjusted gross income. The 0.04 percent rate is effective for the tax year beginning on or after January 1, 2019. Prior to that, the rate was 0.08 percent.