Sales Tax Fundamentals
Get up to speed on the basics of sales tax
Do you need to collect sales tax in Maine?
You’ll need to collect sales tax in Maine if you have nexus there. There are two ways that sellers can be tied to a state when it comes to nexus: physical or economic. Physical nexus means having enough tangible presence or activity in a state to merit paying sales tax in that state. Economic nexus means passing a states’ economic threshold for total revenue or the number of transactions in that state.
Do you have physical nexus in Maine?
Maine considers a seller to have physical nexus if you have any of the following in the state:
- A store, office, warehouse, repair facility or other place of business
- An employee, salesperson, contractor or other representative
You can click here to read exactly what the Maine Department of Revenue (Maine’s taxing authority) has to say about what constitutes sales tax nexus in Maine.
Do you have economic nexus in Maine?
Effective July 1, 2018, Maine considers vendors who make more than $100,000 in total sales annually in the state to have economic nexus. This means the state considers these vendors obligated to collect sales tax from buyers in the state. You can read Maine’s economic nexus guidance for sellers here and you can read more about economic nexus in every state here.
Maine dropped their economic nexus transaction threshold, effective January 1, 2022.
Is what you’re selling taxable?
Services in Maine are generally not taxable. However, if the service you provide includes creating or manufacturing a product, you may have to deal with the sales tax.
Tangible personal property is taxable in Maine, with a few exceptions, including grocery staples, some prescription drugs, medicines and medical equipment as well as some items associated with commerce. For more guidance, click here for more information around Maine notices.
Is SaaS taxable in Maine?
SaaS is non-taxable in Maine. (Source)
How to get a sales tax permit in Maine
You can register online at Maine Revenue Services.
You need this information to register for a sales tax permit in Maine:
- Personal identification info (SSN, address, etc.)
- Business identification info (EIN, address, etc.)
- Business entity type
- Description of what your business sells
It’s free to apply for a Maine sales tax license, but other business registration fees may apply.
Collecting Sales Tax
Fortunately, collecting sales tax in Maine is fairly simple. The state sales tax rate is 5.5% and Maine doesn’t have local sales tax rates. So whether you live in Maine or outside Maine but have nexus and sell to a customer there, you would charge your customer the 5.5% sales tax rate on most transactions.
That said, some items – like prepared food – are taxed differently. In Maine, prepared food is taxed at an 8% rate. Find out more about these Maine sales tax exceptions here.
Should you collect sales tax on shipping charges in Maine?
Not usually. As long as you separately state the shipping charges on your bill to your customer, you do not have to charge sales tax on shipping.
But if you include shipping in the price of the product you sell the customer, then shipping is considered part of the taxable transaction and Maine declares that you must collect sales tax on shipping.
Read a full explanation of sales tax on shipping in Maine here.
When are Returns Due?
When you file and pay Maine sales tax depends on two things: your assigned filing frequency and your state’s due dates.
How often will you file sales tax returns in Maine?
States assign you a filing frequency when you register for your sales tax permit. In most states, how often you file sales tax is based on the amount of sales tax you collect from buyers in the state.
In Maine, you will be required to file and remit sales tax either monthly, quarterly, semiannually or annually.
Maine sales tax returns are almost always due the 15th day of the month following the reporting period. If the filing due date falls on a weekend or holiday, sales tax is generally due the next business day.
Filing Sales Tax
When it comes time to file sales tax in Maine you must do three things:
- Calculate how much sales tax you owe
- File a sales tax return
- Make a payment
How to Calculate How Much Sales Tax You Owe in Maine
Calculating how much sales tax you should remit to the state of Maine is easy with TaxJar’s Maine sales tax report.
All you do is connect the channels through which you sell – including Amazon, eBay, Shopify, Square and more – and we’ll calculate exactly how much sales tax you collected. All the information you need to file your Maine sales tax return will be waiting for you in TaxJar. Try a 30-day free TaxJar trial today.
How to File and Pay Sales Tax in Maine
To file and pay your Maine sales tax you have some options:
- File online at the Maine Department of Revenue with Maine I-File. You can remit your payment through their online system.
- File by mail using form ST-7
- AutoFile – Let TaxJar file your sales tax for you. We take care of the payments, too. You’ll never have to worry about spreadsheets, calculations or filling out complex sales tax returns.