The sales tax percentage in Maine depends on the item or service sold. The state also has a service provider tax, which is levied on certain industries but by law may be passed on to the consumer if separately stated on the bill. The Maine Department of Administrative and Financial Services oversees sales tax collection in the state.
As of May 2011, the sales tax percentage for general items and services is 5 percent. Prepared foods and lodging accommodations are subject to a 7 percent sales tax, while a 10 percent tax is levied on short-term motor vehicle rental. Sellers shipping merchandise out of the state do not have to charge sales tax, but any sales within the state are subject to tax.
Taxable and Tax-Exempt Items
Most tangible personal property sold in the state is subject to sales tax, as are most services. Most labor is not taxed if stated separately on an invoice. However, if the labor component is not stated separately, the entire sale amount is subject to tax. Labor relating to fabrication services or the repair, installation or maintenance of telecommunications equipment is subject to tax. Transportation charges must meet three requirements to avoid taxation. These are direct shipment to the buyer, separate transportation charges on the invoice, and transportation by U.S. mail, contract carriers, or common carriers.
Sales to various organizations in Maine do not incur sales or use tax. These include educational institutions, religious entities, hospitals, libraries and government agencies, whether local, state or federal. Many nonprofit 501(c)3 organizations also qualify for the sales tax exemption, but the exemption is not automatic. Every organization must apply to the state for an exemption certificate. For organizations receiving tax exemptions, not paying the sales and use tax applies only to purchase of those items or services serving the purposes for which the organization was formed, and such items cannot be resold.
Use taxes are charged at the same rate as sales taxes. The use tax applies to items purchased out of state for use, storage or consumption in Maine, for which Maine sales tax was not paid. Internet and mail-order sales are subject to use tax. Unlike the retail sales tax, the purchaser must submit the use tax to the state department of revenue.