An Act To Amend the Sales and Use Tax Law Regarding the Food Service and Lodging Industries
Maine Legislature, Session 122, LD 0370
Committee: Taxation
Sponsors: COWGER, MOODY, MAYO, BISHOP, BROWNE, FISHER, JODREY, KOFFMAN, RECTOR, SCHATZ
Amends: 36 MRSA §1752, 36 MRSA §1760

Legislative Document 
No. 370 
S.P. 117 
In Senate, January 25, 2005 
An Act To Amend the Sales and Use Tax Law Regarding the Food 
Service and Lodging Industries 
Reference to the Committee on Taxation suggested and ordered printed. 
Presented by Senator COWGER of Kennebec. 
Cosponsored by Representative MOODY of Manchester and 
JOY J. O'BRIEN 
Secretary of the Senate 
Senator: MAYO of Sagadahoc, Representatives: BISHOP of Boothbay, BROWNE of 
Vassalboro, FISHER of Brewer, JODREY of Bethel, KOFFMAN of Bar Harbor, RECTOR of 
Thomaston, SCHATZ of Blue Hill. 
Printed on recycled paper 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1. 36 MRSA §1752, sub-§9-B, as amended by PL 1997, c. 
557, Pt. D, §1 and affected §4 and Pt. G, §1, is further amended 
to read: 
9-B. 
Production. 
"Production" 
means 
an 
operation 
or 
integrated series of operations engaged in as 
a 
business or 
segment 
of 
a 
business 
that 
transforms 
or 
converts 
personal 
property by physical, chemical or other means into a different 
form, composition or character from that in which it originally 
existed. 
"Production" includes manufacturing, processing, assembling and 
fabricating operations that meet the definitional requisites, 
including biological processes that are part of an integrated 
process 
of 
manufacturing 
organisms 
or 
microorganic 
materials 
through 
the 
application 
of 
biotechnology. 
"Production" 
also 
includes 
the 
production 
of 
prepared 
foods, 
as 
defined 
in 
subsection 8-A. 
"Production" 
does 
not include biological processes 
except 
as 
otherwise 
provided 
by 
this 
subsection, 
wood 
harvesting 
operationsT or the severance of sand, gravel, oil, gas or other 
natural resources produced or severed from the soil or waterT-9F 
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eHaffi~±es-~~-~~~~~~~-~Ra~-~~-~--iBe±HQeQ-~~~~-~~-~eFm 
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Sec. 2. 36 MRSA §1760. sub-§31, ,A. as amended by PL 2003, c. 
20, Pt. Z, §1, is further amended to read: 
A. 
For use by the purchaser directly and primarily in the 
production of tangible personal property intended to be sold 
or leased ultimately for final use or consumption or in the 
production of 
tangible 
personal 
property pursuant 
to 
a 
contract with the United States Government or any agency 
~ReFee~T of the United States Government; 
for use by the 
purchaser in the operation of a hotel or rooming house; or, 
in the case of sales occurring after June 30, 2005, for use 
in the generation of radio and television broadcast signals 
by broadcast stations regulated under 47 
Code of Federal 
Regulations, Part 73. 
This exemption applies even if the 
purchaser sells the machinery or equipment and leases it 
back in a sale and leaseback transaction. 
This exemption 
also applies whether the purchaser agrees before or after 
the purchase of the machinery or equipment to enter into the 
sale and leaseback transaction and whether the purchaser's 
use of the machinery or equipment in production commences 
before or after the sale and leaseback transaction occurs; 
and 
Sec. 3. 36 MRSA §1760. sub-§74, as enacted by PL 1989, c. 871, 
§15, is amended to read: 
74. 
Property 
used 
in 
production. 
Sales 
of 
tangible 
personal property, other than fuel or electricity, that· becomes 
an ingredient or 
component part of, 
or that is 
consumed or 
destroyed or loses its identity directly and primarily in either 
the production of tangible personal property for later sale or 
lease, other than lease for use in this State, or the production 
of tangible personal property pursuant to a contract with the 
United States Government or 
any 
agency of the United States 
Government. 
Tangible 
personal 
property 
is 
"consumed 
or 
destroyed" or "loses its identity" in that production if it has a 
normal physical life expectancy of less than one year as a usable 
item in the use 
to which it is applied. 
Sales of tangible 
personal property used in the production of prepared food or used 
in the operation of a hotel or rooming house are also exempt 
under this subsection. 
SUMMARY 
Under current law, 
the sale of items to be used in the 
production of certain tangible personal property is not subject 
to the sales tax. 
This bill extends that treatment to the food 
service industry and lodging industry. 
This bill exempts from 
the sales tax sales of tangible personal property used in the 
production of prepared food or used in the operation of a hotel 
or rooming house. 
It also exempts from the sales tax sales of 
machinery and equipment used in the production of prepared food 
or used in the operation of a hotel or rooming house. 
These 
exemptions parallel existing exemptions 
for property used 
in 
production and machinery and equipment, respectively.