Most businesses starting in Maine selling a product or offering certain services will need to register for a sales tax license. This is commonly referred to as a retailer certificate, seller’s permit, sales tax permit, sales and use tax number, or sales tax registration.
Check out the rest of this guide to determine who needs a sales tax license, what products and services are taxable, how to register for a permit, and reporting requirements.
Also See: Guide to Starting a Business in Maine
Who needs a sales tax license in Maine?
A business must register for a sales tax license in Maine when:
- A business has sales tax nexus (also called economic nexus). Nexus means having a physical presence in the state, such as having a physical location like a retail store or office or using a warehouse or fulfillment center to store inventory.
- Occasionally selling items at craft shows, fairs, seminars, conventions, etc. in Maine
- Employees (including sales representatives or agents) are working in Maine
- A business located in Maine is selling taxable services or products to Maine residents
- A remote seller meets one of the following scenarios:
- Making total sales of tangible personal property to Maine residents of $100,000 or more; or
- Shipping 200 or more transactions to Maine residents.
What products and services are taxable in Maine?
There are a few exceptions, but almost all physical products are taxable when sold at retail in Maine. Common examples include:
- General merchandise like furniture, appliances, and clothing
- Titled or registered items like vehicles
Some grocery items, prescriptions, medical equipment, and certain manufacturing equipment are tax-exempt.
Labor, in most cases, isn’t taxable in Maine, provided the sales receipt separates the cost of parts from labor. For instance, let’s say you broke the screen to your cell phone and take it to a cell phone repair shop to have it fixed. Sales tax would be added to the selling price of the new screen and any additional parts to fix the phone. The labor to replace the screen isn’t taxable. However, a business that makes furniture will indirectly have sales tax on labor. In this instance, let’s say this business is building a dining room table for a customer. Through labor, the pieces of wood are shaped, sanded, and painted to build this piece of furniture. While the labor isn’t directly taxable, sales tax is charged to the final selling price of the table.
Digital products are subject to sales tax if the non-digital physical form would be taxable. For example, the sale of digital music, books, movies, etc., are taxable since the sale of a CD, paper book, or DVD are taxable.
Most services aren’t taxable in Maine, however, there are a few exceptions, some of which include:
- Short-term lodging
- Rental of video media and video equipment
- Rental of furniture, audio media, and equipment under a rental-purchase agreement
How to register for a sales tax license in Maine
A sales tax license can be obtained by using the Sales & Use, Withholding and Service Provider Tax Registration Service through Maine Revenue Services or by mailing in the 1110910 Form.
Information needed to register includes:
- Legal business name
- Social Security Number
- Employer Identification Number (EIN) from the IRS, or owner’s Social Security Number if a sole proprietorship with no employees
- Primary mailing address, phone, email
- The physical location of the business
- Type of business entity: Sole Proprietorship, Partnership, Corporation, Limited Liability Company (LLC)
- Description of what products or services are being sold
- North American Industry Classification System (NAICS) code
- Names and addresses of owners/officers/members
- Date business activities began or will begin
- Projected monthly sales
- Projected monthly taxable sales
- Employee information
How much does a sales tax license cost in Maine?
There is no cost for a sales tax license in the state of Maine.
How long does it take to get a Maine sales tax license?
Expect 2-3 business days when filing online or up to 3 weeks to receive a sales tax number. A physical Retailer Certificate will be mailed a few weeks after registration.
Do you have to renew your Maine sales tax license?
The sales tax license is a one-time registration, and no renewals are needed. Be mindful that if any information about the business changes, such as the mailing address, additional locations, or change in ownership, those changes need to be updated with the Revenue Services.
How to get a Maine Resale Certificate
A business can purchase items to resell without paying state sales tax. The tax liability is passed from the wholesaler or distributor to the retailer, who will then charge sales tax to the end-user of the item.
Wholesalers and distributors will require a sales tax number and a copy of the buyer’s Maine Resale Certificate (also referred to as a sales tax exemption certificate). To qualify, a retailer must have an active Retailer Certificate and report gross sales of $3,000 or more per year.
Sales tax reporting
How is sales tax collected?
When a business sells a taxable product or service, the business charges the appropriate sales tax rate to the customer. This tax is collected by the business who then sends it to the Maine Revenue Services.
How much sales tax is charged?
The sales tax rate that is charged varies depending on the address of the business if the purchase is made or shipped from a business located in the state or where the transaction took place, such as a fair or tradeshow.
In addition to the statewide tax, there are additional sales taxes that may be added by cities and municipalities. To find the sales tax for your location, see the sales tax rate table from Maine Revenue Services.
When are Maine sales tax returns due?
Maine Revenue Services will determine a filing frequency based on the expected annual sales volume, monthly, quarterly, semiannually, or annually. Generally, a business collecting over $600 monthly in sales taxes file monthly.
Filings are due the 15th day of the month following the reporting period, unless the 15th falls on a weekend or federal holiday, which would move to the next business day.
Even if the business had no sales during the reporting period, a filing is still required indicating no sales.
In addition to registering for a sales tax permit, there may be other business licenses needed before starting a business in Maine. Learn what business licenses are needed in Maine.
If you have questions about the sales tax license, Maine Revenue Services has a guide to sales taxes in Maine or can be contacted by calling 207-624-9693 option 4.