Maine Revenue Services (MRS) has issued an important notice regarding the proper procedure for claiming credits on sales tax returns for goods purchased for resale. This notice aims to clarify the eligibility criteria and correct usage of the “Credit for Sales Tax Paid on Goods Purchased for Resale” line on sales tax returns. Additionally, the notice emphasizes that the credit for sales tax paid on goods purchased for resale is only applicable to retailers without an active resale certificate. Active registered retailers must use their resale certificate.
Under Maine law, retailers who have not been issued a resale certificate by MRS and report less than $3,000 in gross sales annually are permitted to claim a credit for sales tax paid on goods purchased for resale. This credit must be claimed on the sales tax return corresponding to the period in which the tax was paid to the vendor. The specific line designated for this purpose is the “Credit for Sales Tax Paid on Goods Purchased for Resale.” MRS has observed an increase in active registered retailers who possess a valid resale certificate attempting to claim this credit. According to MRS Rule 301, “Sales for Resale and Sales of Packaging Materials,” retailers with an active resale certificate are prohibited from using this credit line on their sales tax returns. These retailers are expected to provide their resale certificate to vendors at the time of purchase, allowing them to acquire goods intended for resale without paying sales tax upfront. To enforce this policy, MRS has updated the Maine Tax Portal (MTP) to prevent retailers holding an active resale certificate from claiming the credit for sales tax paid on goods purchased for resale. Effective immediately, such claims will be disallowed for retailers with an active resale certificate.
If a retailer with a resale certificate is unable to utilize it at the time of purchase and consequently pays sales tax on goods intended for resale, they should not claim the credit on their sales tax return. Instead, they may request a refund by submitting a sales tax refund application through the MTP. The application process can be initiated by navigating to the “More” tab on the MTP home screen, selecting the “Payments and Returns” panel, and choosing “Refund Application.”
Required documentation for the refund application includes:
Retailers are encouraged to review their sales tax return practices to ensure compliance with these guidelines. (MRS Rule 301, Section 4.2, Maine Revenue Services, last amended October 19,2016)