Maine Gov. Paul Lepage signed H.P. 251 into law on June 5. The legislation amends existing sales and use tax nexus rules, adds affiliate nexus and click-through nexus provisions to the sales and use tax laws, and requires the preparation of a report concerning the Streamlined Sales and Use Tax Agreement (SST). Under the legislation, every agent, representative, salesperson, solicitor, or distributor that has a substantial physical presence in Maine sufficient to satisfy the requirements of the Due Process and Commerce Clauses of the U.S. Constitution is required to register as a seller in Maine. Activities that constitute a substantial physical presence in Maine include soliciting business through catalogs and flyers when the goods are delivered by U.S. mail or a third-party common carrier, attendance of trade shows and other activities. Drop shipping and telemarketing services performed by a Maine vendor are removed from the list of activities not considered to constitute a substantial physical presence.
The enacted legislation creates a rebuttable presumption that a seller is engaged in business in Maine if an affiliated person has a substantial physical presence in Maine. A seller is also presumed to be engaged in business in Maine if any person (other than a person acting in its capacity as a common carrier) has a substantial physical presence in-state and: sells a similar line of products as the seller and does so under a business name that is the same or similar to that of the seller; maintains an office, distribution facility, warehouse, or storage place or similar place of business in Maine to facilitate the delivery of property or services sold by the seller; uses trademarks, service marks, or trade names in Maine that are the same or substantially similar to those used by the seller; facilitates the seller’s delivery of property to customers in Maine by allowing the customers to pick up the property at an office, distribution facility, warehouse, storage place, or similar place of business maintained by the person in Maine; or conducts any activities in Maine that are significantly associated with the seller’s ability to establish and maintain a market in Maine. The presumption can be rebutted by demonstrating that the person’s activities in Maine are not significantly associated with the seller’s ability to establish or maintain a market in Maine. An “affiliated person” is a person that is a member of the same “controlled group of corporations” as the seller or any other entity, regardless of its form of organization, which bears the same ownership relationship to the seller as a corporation that is a member of the same “controlled group of corporations.”
The legislation also creates a rebuttable presumption under which a seller is presumed to be engaged in business in Maine if the seller enters into an agreement with a person, under which the person, while in Maine, directly or indirectly refers potential customers to the seller in exchange for a commission or other consideration. The referral may be by a link on a website, telemarketing, an in-person presentation, or otherwise. The presumption applies only if the cumulative gross receipts from retail sales by the seller to customers in Maine referred by all persons with this type of an agreement are in excess of $10,000 during the preceding 12 months. The presumption can be rebutted by submitting proof that the person with whom the seller has an agreement did not engage in any activity within Maine that was significantly associated with the seller’s ability to establish or maintain the seller’s market in Maine during the preceding 12 months. The provisions for website link referral agreements apply to sales made, uses occurring and services rendered on or after the effective date of this legislation, regardless of the date on which the agreement was entered. When calculating whether the 12-month threshold is met, the 12-month period begins one year immediately preceding the seller’s registering as a retailer in Maine. Sellers who meet the affiliate nexus or click-through requirements must register with the State Tax Assessor and collect and remit taxes. However, a seller who enters into an agreement under which customers are referred by a link on a website is not required to register or collect taxes solely due to the agreement’s existence. (L.D. 346 (H.P. 251), Laws 2013, effective 90 days after adjournment of the 2013 Maine Legislature)