An Act To Provide Tax Fairness to Small Businesses in the State
Maine Legislature, Session 126, LD 0319
Committee: Taxation
Sponsors: BERRY, ALFOND, BECK, EVES, KNIGHT
Amends: 36 MRSA §1752, 36 MRSA §1754-B

Legislative Document 
No. 319 
H.P. 228 
House of Representatives, February 7, 2013 
An Act To Provide Tax Fairness to Small Businesses in the State 
(EMERGENCY) 
Reference to the Committee on Taxation suggested and ordered printed. 
MILLICENT M. MacFARLAND 
Clerk 
Presented by Representative BERRY of Bowdoinham. 
Cosponsored by President ALFOND of Cumberland and 
Representatives: BECK of Waterville, Speaker EVES of North Berwick, KNIGHT of 
Livermore Falls, McCABE of Skowhegan. 
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, 
Be it enacted by the People of the State of Maine as follows: 
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 A-1.  36 MRSA §1752, sub-§10, as repealed and replaced by PL 1997, c. 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: 
10.  Retailer. "Retailer" means a person who makes retail sales or and who is 
required to register by section 1754-A or 1754-B or who is registered under section 
1756.: 
A.  Required to register by section 1754-A or 1754-B; or 
B.  Registered under section 1756. 
Sec. A-2.  36 MRSA §1754-B, sub-§1, ¶D, as amended by PL 2005, c. 218, §18, 
is further amended to read: 
D.  Every person that has a substantial physical presence in this State sufficient to 
satisfy the requirements of the due process and commerce clauses of the United 
States Constitution and that makes retail sales in this State of tangible personal 
property or taxable services on behalf of a principal that is outside of this State if the 
principal is not the holder of a valid registration certificate;. For purposes of this 
paragraph, paragraph E and paragraph G, the following activities do not constitute a 
substantial physical presence in this State sufficient to satisfy the requirements of the 
due process and commerce clauses of the United States Constitution: 
(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: 
E.  Every agent, representative, salesperson, solicitor or distributor that has a 
substantial physical presence in this State sufficient to satisfy the requirements of the 
due process and commerce clauses of the United States Constitution and that receives 
compensation by reason of sales of tangible personal property or taxable services 
made outside this State by a principal for use, storage or other consumption in this 
State; 
Sec. A-4.  36 MRSA §1754-B, sub-§1, ¶G, as amended by PL 2007, c. 328, §5, 
is further amended to read: 
G.  Every seller of tangible personal property or taxable services that has a substantial 
physical presence in this State sufficient to satisfy the requirements of the due process 
and commerce clauses of the United States Constitution.  The following activities do 
not constitute a substantial physical presence for the purpose of this paragraph: 
(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-A.  Persons presumptively required to register.  This subsection creates a 
rebuttable presumption that a seller not subject to subsection 1 is engaged in the business 
of selling taxable personal property or services for use in this State and is required to 
register as a retailer with the assessor. 
A.  As used in this subsection, unless the context otherwise indicates, the following 
terms have the following meanings. 
(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. 
B.  A seller is presumed to be engaged in the business of selling taxable personal 
property or services for use in this State if an affiliated person has a substantial 
physical presence in this State or if any person, other than a person acting in its 
capacity as a common carrier, that has a substantial physical presence in this State: 
(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. 
C.  A seller that does not otherwise meet the requirements of paragraph B is 
presumed to be engaged in the business of selling tangible personal property or 
taxable services for use in this State if the seller enters into an agreement with a 
person under which the person, for a commission or other consideration, while within 
this State: 
(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: 
4.  Agreement requiring legislative approval.  Any ruling, agreement or contract, 
whether written or oral, express or implied, between a seller and the Governor or a state 
agency or department stating, agreeing or ruling that a seller, as defined in subsection 
1-A, paragraph A, that meets the requirements of subsection 1-A, paragraph B or C is not 
required to collect sales and use tax in this State is null and void unless it is specifically 
approved by a majority vote of both Houses of the Legislature. 
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.