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Use Tax is a substitute for sales
tax. All states which have a sales tax also impose a use tax. Use taxes are
imposed to minimize unfair competition between sales made in-state and those
made out-of-state. The use tax rate is the same as the sales tax rate.
Use tax applies when sales tax has
not been charged. Purchases made over the internet and out-of-state are the
most common type of transactions subject to a use tax. For instance, if you
purchased goods from a supplier located in Massachusetts, whether by mail order
or by taking delivery in Massachusetts, use tax applies if the goods are brought
to Maine for use here. A Maine resident or business does not escape sales tax
by purchasing out-of-state or over the internet. Use tax is based on the purchase
price of the item.
Common taxable items for businesses
are office supplies and equipment, computer hardware, software and supplies,
janitorial supplies, fax machines and supplies, photocopiers and supplies and
books. For individuals common taxable purchases are computers, books, downloaded
music & cd's, clothing, and auctionhouse purchases.
The same exemptions that apply to
sales tax apply to use tax. Common exempt goods are food products, magazines
and newspapers published at least quarterly and goods purchased for resale.
If you are registered to collect and report sales tax, the sales tax return contains a line to report taxable purchases. If you do not sell goods, you must register with the Bureau to report use tax only. Once registered you will receive returns automatically.
For purchases of single items that cost $5,000 or less, individuals have 2 options to report use tax:
A. You may choose to report any use tax due on your 1040 ME, Maine personal income tax return, at the end of the tax year. There is a line on the 1040 ME form on which you can list the use tax due. If you choose this method of reporting and you do not know the exact amount of your taxable purchases you have the option of using a calculated formula that is outlined in the 1040 ME instructional booklet. This formula may only be used for purchases of individual items costing less than $1,000.
B. The second option is to file an Individual Use Tax return directly with Maine Revenue Services by the 15th of the month following the month of your purchase.
For purchases of single items that cost more than $5,000, individuals are required by law to file an Individual Use Tax return directly with Maine Revenue Services by the 15th of the month following the month of your purchase.
Individual Use Tax returns are available
on our website at: www.maine.gov/revenue/salesuse/IUSEintrnt
or can be obtained at most municipal offices.
If you made purchases in a state which charges sales tax and your purchase was taxed, you may not owe any use tax in Maine. If the amount of tax was equal to or more than Maine's rate, no tax is due. However if you paid less than Maine's rate you owe the difference. For instance if another state's rate is 4% and Maine's rate is 5%, a Maine use tax of 1% is due.
Some out-of-state companies charge the Maine sales tax because they have a presence in Maine that requires them to register, collect and remit sales tax. Others voluntarily register. Use tax does not apply if your supplier charges you a Maine sales tax.
Sales by a person who is not in the business of selling goods are casual sales and not taxable. However, certain casual sales are specifically taxed by law. The most common are camper trailers, cars, trucks, snowmobiles, ATV's, boats and aircraft. When you buy one of these items, you will be required to pay use tax or show proof that tax was paid when you register the vehicle.
Yes. Purchases over the internet
are treated the same way as purchases made out-of-state. If the vendor is not
registered with Maine and does not charge Maine sales tax, then you would be
liable for the use tax.