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Beginning September 20, 2007, the sale of extended service contracts on automobiles is a taxable sale. Parts associated with the fulfillment of repairs under the contract will not be taxable to the servicer or the customer as the parts are seen as being included in the original price of the extended warranty. Prior to this date, optional extended warranties were not taxable, but parts used when fulfilling the obligations of the contracts were taxable. (Sales and Use Tax Instructional Bulletin No 1, Maine Revenue Services, December 4, 2007)


Maine Revenue Services has recently issued a sales tax instructional bulletin (54) on resale certificates intended to assist purchasers in determining their legal rights, duties, and privileges. Tangible personal property or taxable services purchased by retailers for resale are exempt from sales tax provided the retailer presents to the seller a valid Maine resale certificate. Retailers reporting $3,000 or more in gross sales during the previous 12 months qualify for the issuance of a resale certificate. On the other hand, retailers not receiving a valid resale certificate must pay sales tax at the time of purchase even if the goods will be resold by the retailer. (Sales Tax Instructional Bulletin 54, Maine Revenue Services)


Maine has amended a sales tax rule addressing vehicles used in interstate commerce to reflect statutory changes. The amended rule now states that “a vehicle, railroad rolling stock, aircraft or watercraft” must be placed into interstate use within 30 days of purchase and must be used 80% of the time over the two years after its purchase as an instrument of interstate commerce in order to qualify for the interstate commerce exemption. The changes are effective November 12, 2006. (Rule 318, Maine Revenue Services, Amended November 12, 2006)


Maine Revenue Services has issued an informational bulletin addressing the taxability of certain items and services associated with summer camps. The bulletin states that meals served at camps are taxable. If the price of meals is separately-stated, the charge is taxable at 7%. If not separately-stated, however, tax should be charged on a reasonable price (including indirect costs). In lieu of maintaining a separate accounting for indirect costs, the camp may elect to estimate indirect costs at 15% of food cost. Retail sales made at camp stores are taxable at 5%. Purchases made by a camp for its use are also taxable. Charges for living quarters do not fall within the definitions of a hotel, rooming house or trailer camp, so they are not subject to tax. (Sales and Use Instructional Bulletin 33, Maine Revenue Services, amended December 20, 2006)


On April 6, 2006 Maine’s Legislative Joint Taxation Committee voted “ought not to pass” on LD 2073, an initiative to come into compliance the provision of the Streamlines Sales and Use Tax Agreement. A two-thirds vote of both the Senate and the House of Representatives would activate the bill. The committee held off on the proposal to concentrate on other tax legislation. Therefore, the state will remain an Advisory State on the Project. (LD 2073)



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