An Act To Provide Tax Fairness to Small Businesses in the State
Emergency preamble. Whereas, acts and resolves of the Legislature do not become effective until 90 days after adjournment unless enacted as emergencies; and
Whereas, Maine law requires a retailer of goods or services to collect sales and use tax on the purchase of those goods or services; and
Whereas, a retailer located in another state who makes sales to persons in this State does not collect and remit Maine sales and use tax even when that retailer has a nexus with the State; and
Whereas, the loss of revenue to the State from this failure to collect and remit sales and use tax has been estimated at over $60,000,000 annually; and
Whereas, aside from the loss of revenue, businesses located in the State that comply with the requirement to collect and remit Maine sales and use tax are put at a competitive disadvantage with businesses that fail to collect and remit Maine sales and use tax; and
Whereas, in the judgment of the Legislature, these facts create an emergency within the meaning of the Constitution of Maine and require the following legislation as immediately necessary for the preservation of the public peace, health and safety; now, therefore,
PART A
Sec. A-1. 36 MRSA §1752, sub-§10, as repealed and replaced by PL 1997, c. 393, Pt. A, §41, is amended to read:
Sec. A-2. 36 MRSA §1754-B, sub-§1, ¶D, as amended by PL 2005, c. 218, §18, is further amended to read:
(1) Solicitation of business in this State through catalogs, flyers, telephone or electronic media when delivery of ordered goods is effected by the United States mail or by an interstate 3rd-party common carrier;
(2) Attending trade shows, seminars or conventions in this State;
(3) Holding a meeting of a corporate board of directors or shareholders or holding a company retreat or recreational event in this State;
(4) Maintaining a bank account or banking relationship in this State; or
(5) Using a vendor in this State for printing;
Sec. A-3. 36 MRSA §1754-B, sub-§1, ¶E, as enacted by PL 1995, c. 640, §3, is amended to read:
Sec. A-4. 36 MRSA §1754-B, sub-§1, ¶G, as amended by PL 2007, c. 328, §5, is further amended to read:
(1) Solicitation of business in this State through catalogs, flyers, telephone or electronic media when delivery of ordered goods is effected by the United States mail or by an interstate 3rd-party common carrier;
(2) Attending trade shows, seminars or conventions in this State;
(3) Holding a meeting of a corporate board of directors or shareholders or holding a company retreat or recreational event in this State;
(4) Maintaining a bank account or banking relationship in this State; or
(5) Using a vendor in this State for printing, drop shipping or telemarketing services;
Sec. A-5. 36 MRSA §1754-B, sub-§1, ¶H, as amended by PL 2009, c. 373, §5, is repealed.
Sec. A-6. 36 MRSA §1754-B, sub-§1-A is enacted to read:
(1) "Affiliated person" means a person that is a member of the same controlled group of corporations as the seller or any other entity that, notwithstanding its form of organization, bears the same ownership relationship to the seller as a corporation that is a member of the same controlled group of corporations. For purposes of this subparagraph, “controlled group of corporations” has the same meaning as in the Code, Section 1563(a).
(2) "Person" means an individual or entity that qualifies as a person under the Code, Section 7701(a)(1).
(3) "Seller" means a person that sells, other than in a casual sale, tangible personal property or taxable services.
(1) 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;
(2) Maintains an office, distribution facility, warehouse or storage place or similar place of business in the State to facilitate the delivery of property or services sold by the seller to the seller's customers;
(3) Uses trademarks, service marks or trade names in the State that are the same or substantially similar to those used by the seller;
(4) Delivers, installs, assembles or performs maintenance services for the seller's customers within the State;
(5) Facilitates the seller's delivery of property to customers in the State by allowing the seller's customers to pick up property sold by the seller at an office, distribution facility, warehouse, storage place or similar place of business maintained by the person in the State; or
(6) Conducts any activities in the State that are significantly associated with the seller's ability to establish and maintain a market in the State for the seller's sales.
A seller who meets the requirements of this paragraph shall register with the assessor and collect and remit taxes in accordance with the provisions of this Part. A seller may rebut the presumption created in this paragraph by demonstrating that the person's activities in the State are not significantly associated with the seller's ability to establish or maintain a market in this State for the seller's sales.
(1) Directly or indirectly refers potential customers, whether by a link on an Internet website, by telemarketing, by an in-person presentation or otherwise, to the seller; and
(2) The cumulative gross receipts from retail sales by the seller to customers in the State who are referred to the seller by all persons with this type of an agreement with the seller are in excess of $10,000 during the preceding 12 months.
A seller who meets the requirements of this paragraph shall register with the assessor and collect and remit taxes in accordance with the provisions of this Part.
A seller may rebut the presumption created in this paragraph by submitting proof that the person with whom the seller has an agreement did not engage in any activity within the State that was significantly associated with the seller's ability to establish or maintain the seller's market in the State during the preceding 12 months. Such proof may consist of sworn, written statements from all of the persons within this State with whom the seller has an agreement stating that they did not engage in any solicitation in the State on behalf of the seller during the preceding 12 months; these statements must be provided and obtained in good faith.
Sec. A-7. 36 MRSA §1754-B, sub-§4 is enacted to read:
Sec. A-8. Application. The provisions of the Maine Revised Statutes, Title 36, section 1754-B, subsection 1-A, paragraph C apply to sales made, uses occurring and services rendered on or after the effective date of this Act regardless of the date on which the seller and the person entered into the agreement described in that paragraph; except that, when calculating the 12-month period for purposes of determining whether the threshold amount specified in Title 36, section 1754-B, subsection 1-A, paragraph C, subparagraph (2) has been met, the 12-month period begins one year immediately preceding the seller's registering as a retailer pursuant to this Act.
PART B
Sec. B-1. Report and legislation regarding the "Streamlined Sales and Use Tax Agreement." The Department of Administrative and Financial Services, Bureau of Revenue Services shall prepare a report concerning the "Streamlined Sales and Use Tax Agreement," referred to in this section as "the agreement," which is an effort of state governments, with input from local governments and the private sector, to simplify and modernize sales and use tax collection and administration. The report must:
1. Identify any changes to the Maine Revised Statutes that are needed to conform the State's laws to the agreement and the options available to provide conformity;
2. Identify the impact of each option identified pursuant to subsection 1; and
3. Identify and explain any fiscal and policy issues associated with conformity with the agreement.
The bureau shall submit its report, along with different proposals for legislation to conform the State's sales and use tax laws with the agreement, to the Joint Standing Committee on Taxation no later than January 15, 2014. The Joint Standing Committee on Taxation may submit a bill relating to the subject matter of the report to the Second Regular Session of the 126th Legislature.
Emergency clause. In view of the emergency cited in the preamble, this legislation takes effect when approved.
SUMMARY
Part A of this bill creates a presumption that a seller of goods or services is engaged in business in this State and therefore required to register with the State Tax Assessor as a retailer and collect and remit sales and use tax on purchases made by persons in the State, if a person affiliated with the seller has a substantial presence in the State or a person who has a substantial presence in the State engages in certain activities, such as selling a line of products similar to that of the seller or maintaining an office or distribution center in the State to facilitate the delivery of the seller's products. Alternatively, a seller is presumed to be required to register with the State and collect and remit sales and use tax if the seller has an agreement with a person to refer potential customers to the seller and the seller generates more than $10,000 in sales in the State annually. Both presumptions may be rebutted. Part A also requires any agreement or ruling by the Governor or an executive branch department or agency that allows a seller to avoid registering as a seller to be approved by both Houses of the Legislature.
Part B directs the Department of Administrative and Financial Services, Bureau of Revenue Services to identify changes in the sales and use tax laws necessary to conform them to the national effort known as the "Streamlined Sales and Use Tax Agreement" and to submit its report and proposed legislation to the Joint Standing Committee on Taxation by January 15, 2014.