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Maine Sales Tax 2022 for Businesses: A Complete Guide

“The sales tax for businesses in Maine is 5.5%”

What Does Maine Sales Tax for Businesses Mean?

With Maine’s 1 municipal tax authority, Maine’s sales tax is still lower than the national average. Maine has a 5.5 percent statewide sales tax that has been in existence since 1951.

Municipal governments in Maine can additionally levy a local-option sales tax, which can range from 0% to 0% across the state, with an average local tax of N/A. (for a total of 5.5 percent when combined with the state sales tax).

How Much is the Maine Sales Tax for Businesses?

Maine’s state sales tax rate is 5.5%, with no local sales tax rates. So, whether you live in Maine or not, but have a connection there and sell to a Maine consumer, you would charge them the 5.5 percent sales tax rate on most transactions.

 

 

 

 

Alan Chen

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By the end of this Strategy Session, you will have a clear understanding of the next steps you can take for your business to take advantage of the tax deductions you are missing out on.

Maine Sales Tax for Businesses

Threshold Limit

5.5%

$100,000 economic sales threshold limit

Do You Need to Collect Maine Sales Tax for Your Ecommerce Store?

If you sell tangible goods or certain services, you may need to collect and remit sales tax to the Maine Department of Revenue. The department collects the sales tax at the moment of sale and varies by area, county, and city in which you are working.

Food, pharmaceuticals, clothing, and gas are not taxed in most states because they are necessities. Therefore, if you are selling any of the mentioned items, then you need to collect Maine sales tax in 2022. Check out the section below for details:

What Types of Goods & Services Are Taxable Under Maine Sales Tax?

The first step in sales tax compliance is determining if the products or services your company sells are taxable in Maine.

  • Traditional Goods or Services

Physical items, such as furniture, home appliances, and automobiles, are all subject to sales tax in Maine. Gasoline, prescription drugs, and groceries are all tax-free. Additionally, in Maine, several services are subject to sales tax as well.

  • Digital Goods or Services

Anything that is available electronically, such as an album downloaded from iTunes or a video purchased from Amazon, refers to a digital good or service. Maine, however, is an exception to this rule. On pre-written computer software that is available online for sale, businesses must collect sales tax.

  • Taxable Services

Services are not normally taxable in the state of Maine. There are a few exceptions to the rule that most services are exempt. For example, a service that involves developing or manufacturing a product is very certainly taxable, and you will almost certainly need to pay sales tax on the service.

Therefore, these goods and services are taxable under the Maine sales tax 2022. Now, let’s move on to explore the tax collection and tax filing criteria under this tax. The below table shows the taxability of various goods and services in Maine.

Goods and Services

Exemption Status

Purchases from Amazon

Taxable

Clothing

Taxable

Catering

Taxable

Grocery Food

Exempt

Motor Vehicles

Taxable

Tangible Media Property

Taxable

Medical Devices

Taxable

Medical Services

Taxable

Medicines

Exempt

Janitorial Services

Exempt

Transportation Services

Exempt

Merchandise

Taxable

Read More: Michigan Sales Tax 2022 for Businesses: A Complete Guide

Maine Sales Tax Collection

Thankfully, collecting sales tax in Maine is quite straightforward. Maine’s state sales tax rate is 5.5 percent, with no local sales tax rates. So, whether you live in Maine or not, but have a connection there and sell to a Maine consumer, you would charge them the 5.5 percent sales tax rate on most transactions.

However, certain commodities, such as prepared food, are chargeable differently. Prepared foods are taxable at an 8% rate in Maine.

You’ll need to figure out how much sales tax to charge different clients after you receive your seller’s permit and start your business. It is critical for business owners to collect the correct rate of sales tax in order to prevent fines and the possibility of costly audits.

  • In-State Sales- It’s simple to figure out the sales tax on goods sold in Maine. Simply apply a fixed sales tax rate of 5.500 percent to all things, whether you’re selling at a store or shipping across the state. 
  • Out-of-State Sales-  Businesses in Maine are only required to pay sales tax on sales made outside of the state if they have nexus in other states. The term “nexus” refers to a company’s physical presence in another state.

Maine Sales Tax Filing

You’re ready to file your sales tax return now that you know everything about Maine sales tax for businesses. You avoid penalties and fines, make sure to meet all filing dates. The filing of a Maine sales tax return consists of two steps: submitting the appropriate sales data (filing a return) and remitting the collected tax dollars (if any) to Maine Revenue Services (MRS). You must identify your total sales in the state, the amount of sales tax collected, and the location of each sale as part of the filing procedure.

There is no requirement for paper returns, but it is preferable to file online through the Maine Sales, Use, and Service Provider Tax System.

How often do you need to file the Maine sales tax?

The total amount of sales tax your company collects determines the filing frequency.

  • Annual filing- If your company collects less than $4.16 in sales tax every month, you should choose to file returns once a year.
  • Semi-annual filing- if your company receives between $4.16 and $100 in sales tax per month, you should choose to file returns every two years.
  • Quarterly filing- If your firm receives between $100 and $599.99 in sales tax per month, you should choose to file quarterly returns.
  • Monthly filing- If your company collects more than $600 in sales tax every month, you must file returns on a monthly basis.
  • Seasonal filing- You can register as a seasonal filer if your business is closed for one or more calendar months on a regular basis. You must specify which months the business will be open and pay monthly taxes for those months.

Every taxpayer worries about the late filing penalties and interest. So, are there any penalties chargeable on the late filing of Maine sales tax returns? Let’s see.

What If You Fail to File the Tax Return Before the Due Date?

Unless it’s a weekend or federal holiday, all Maine sales tax returns are due on the 20th of the month. On weekends or federal holidays, the deadline extends to the next working day. In case, you did not file the return on time there will be penalties chargeable to you.

Penalties

Maine imposes a late filing penalty of either $25 or 10% of the tax owed, whichever is higher.

Maine additionally imposes a late payment penalty of 1% every month or partial month, up to a maximum of 25% of the unpaid tax.

For any unpaid tax or penalty, the state charges a compounding interest rate of 7.0 percent per year, or 0.58 percent every month or half month.

Need Assistance With Maine Sales Tax?

We at Freecashflow.io are here to help internet business owners with tax and accounting issues. Warner Brothers, EY, and Paramount Pictures are just a few of the multibillion-dollar corporations that our team has worked for. You may count on us for tax and accounting help. Get in touch with us right away if you need help.

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