An Act to Change the Taxation of Rental Tangible Personal Property to Make It Consistent with the Predominant Method in Other States' Rental Industry Laws for Sales and Use Tax
Maine Legislature, Session 131, LD 2000
Committee: Taxation
Sponsors: TERRY, FARRIN, GATTINE, HASENFUS, MILLETT, STEWART
Amends: 36 MRSA §1752, 36 MRSA §1754-B, 36 MRSA §1758, 36 MRSA §1819, 36 MRSA §2022

Legislative Document
No. 2000
H.P. 1278
House of Representatives, May 23, 2023
An Act to Change the Taxation of Rental Tangible Personal 
Property to Make It Consistent with the Predominant Method in 
Other States' Rental Industry Laws for Sales and Use Tax
Reference to the Committee on Taxation suggested and ordered printed.
ROBERT B. HUNT
Clerk
Presented by Representative TERRY of Gorham.
Cosponsored by Senator FARRIN of Somerset and
Representatives: GATTINE of Westbrook, HASENFUS of Readfield, MILLETT of Waterford, 
Senator: STEWART of Aroostook.
Be it enacted by the People of the State of Maine as follows:
Sec. 1.  36 MRSA §1752, sub-§5-D is enacted to read:
5-D.  Lessor.  "Lessor" means a person who leases or rents tangible personal property 
located in this State to another person.
Sec. 2.  36 MRSA §1752, sub-§10, as amended by PL 2019, c. 401, Pt. B, §3, is 
further amended to read:
10.  Retailer.  "Retailer" means a person who makes retail sales or who is required to 
register by section 1754‑B or who is registered under section 1756.  "Retailer" includes a 
lessor.
Sec. 3.  36 MRSA §1752, sub-§10-A is enacted to read:
10-A.  Retail lease or rental.  "Retail lease or rental" means any transfer of possession 
or control by lease or rental of tangible personal property for a fixed or indeterminate term 
for consideration by a lessor in the ordinary course of business and includes a sublease.
"Retail lease or rental" does not include:
A.  Provision, through a lease, rental or otherwise, of tangible personal property along 
with an operator for a fixed or indeterminate period of time, when that operator is 
necessary for the equipment to perform as designed and the operator does more than 
maintain, inspect or set up the tangible personal property;
B.  The lease or rental of property that is subject to the provisions of the service provider 
tax imposed pursuant to chapter 358;
C.  The rental for a period of less than one year of:
(1)  An automobile;
(2)  A truck or van with a gross vehicle weight of less than 26,000 pounds rented 
from a person primarily engaged in the business of renting automobiles; or
(3)  A loaner vehicle that is provided other than to a motor vehicle dealer's service 
customers pursuant to a manufacturer's or dealer's warranty;
D.  Any taxable service;
E.  The lease of computer software that is not a custom computer software program; or
F.  The lease or rental of trucks or truck tractors from a person primarily engaged in 
the business of leasing or renting trucks and truck tractors.
Sec. 4.  36 MRSA §1752, sub-§11, as amended by PL 2021, c. 578, §1, is further 
amended to read:
11.  Retail sale.  "Retail sale" means any sale of tangible personal property or a taxable 
service in the ordinary course of business.  "Retail sale" includes the retail lease or rental 
of tangible personal property to another person.
A.  "Retail sale" includes:
(1)  Conditional sales, installment lease sales and any other transfer of tangible 
personal property when the title is retained as security for the payment of the 
purchase price and is intended to be transferred later;
(2)  Sale of products for internal human consumption to a person for resale through 
vending machines when sold to a person more than 50% of whose gross receipts 
from the retail sale of tangible personal property are derived from sales through 
vending machines.  The tax must be paid by the retailer to the State;
(3)  A sale in the ordinary course of business by a retailer to a purchaser who is not 
engaged in selling that kind of tangible personal property or taxable service in the 
ordinary course of repeated and successive transactions of like character; and
(4)  The sale or liquidation of a business or the sale of substantially all of the assets 
of a business, to the extent that the seller purchased the assets of the business for 
resale, lease or rental in the ordinary course of business, except when:
(a)  The sale is to an affiliated entity and the transferee, or ultimate transferee 
in a series of transactions among affiliated entities, purchases the assets for 
resale, lease or rental in the ordinary course of business; or
(b)  The sale is to a person that purchases the assets for resale, lease or rental 
in the ordinary course of business or that purchases the assets for transfer to an 
affiliate, directly or through a series of transactions among affiliated entities, 
for resale, lease or rental by the affiliate in the ordinary course of business.
For purposes of this subparagraph, "affiliate" or "affiliated" includes both direct 
and indirect affiliates.
B.  "Retail sale" does not include:
(1)  Any casual sale;
(2)  Any sale by a personal representative in the settlement of an estate unless the 
sale is made through a retailer or the sale is made in the continuation or operation 
of a business;
(3)  The sale, to a person engaged in the business of renting automobiles, of 
automobiles, integral parts of automobiles or accessories to automobiles, for rental 
or for use in an automobile rented for a period of less than one year;
(3-A)  The sale, to a person primarily engaged in the business of renting 
automobiles, of trucks or vans with a gross vehicle weight of less than 26,000 
pounds, integral parts of such vehicles or accessories for such vehicles, for rental 
or for use in such a vehicle rented for a period of less than one year;
(4)  The sale, to a person engaged in the business of renting video media and video 
equipment, of video media or video equipment for rental;
(5)  The sale, to a person engaged in the business of renting or leasing automobiles, 
of automobiles for rental or lease for one year or more;
(6)  The sale, to a person engaged in the business of providing cable or satellite 
television services or satellite radio services, of associated equipment for rental or 
lease to subscribers in conjunction with a sale of cable or satellite television 
services or satellite radio services;
(7)  The sale, to a person engaged in the business of renting furniture or audio 
media and audio equipment, of furniture, audio media or audio equipment for rental 
pursuant to a rental-purchase agreement as defined in Title 9‑A, section 11‑105;
(8)  The sale of loaner vehicles to a new vehicle dealer licensed as such pursuant 
to Title 29‑A, section 953;
(9)  The sale of automobile repair parts used in the performance of repair services 
on an automobile pursuant to an extended service contract sold on or after 
September 20, 2007 that entitles the purchaser to specific benefits in the service of 
the automobile for a specific duration;
(10)  The sale, lease or rental to a retailer that has been issued a resale certificate 
pursuant to section 1754‑B, subsection 2‑B or 2‑C, of tangible personal property 
for resale in the form of tangible personal property, except resale as a casual sale;
(11)  The sale, to a retailer that has been issued a resale certificate pursuant to 
section 1754‑B, subsection 2‑B or 2‑C, of a taxable service for resale, except resale 
as a casual sale;
(12)  The sale, to a retailer that is not required to register under section 1754‑B, of 
tangible personal property for resale outside the State in the form of tangible 
personal property, except resale as a casual sale;
(13)  The sale, to a retailer that is not required to register under section 1754‑B, of 
a taxable service for resale outside the State, except resale as a casual sale;
(14)  The sale of repair parts used in the performance of repair services on 
telecommunications equipment as defined in section 2551, subsection 19 pursuant 
to an extended service contract that entitles the purchaser to specific benefits in the 
service of the telecommunications equipment for a specific duration;
(15)  The sale of positive airway pressure equipment and supplies and oxygen 
delivery equipment for rental for personal use to a person engaged in the business 
of renting positive airway pressure equipment and oxygen delivery equipment;
(16)  The sale, to a person engaged in the business of renting or leasing motor 
homes, as defined in Title 29‑A, section 101, subsection 40, or camper trailers, of 
motor homes or camper trailers for rental as tangible personal property but not as 
the rental of living quarters; or
(17)  The sale of truck repair parts used in the performance of repair services on a 
truck pursuant to an extended service contract that entitles the purchaser to specific 
benefits in the service of the truck for a specific duration.; or
(18)  The sale, lease or rental to a lessor who has been issued a resale certificate 
pursuant to section 1754-B, subsection 2-B or 2-C of tangible personal property 
for retail lease or rental.
Sec. 5.  36 MRSA §1752, sub-§13, as amended by PL 1981, c. 706, §20, is further 
amended to read:
13.  Sale.  "Sale" means any transfer, exchange or barter, in any manner or by any 
means whatsoever, for a consideration and includes retail leases and contracts payable by 
rental or license fees for the right of possession and use, but only when such leases and 
contracts are deemed by the State Tax Assessor to be in lieu of purchase or rentals, 
conditional sale contracts and any contract under which possession of the property is given 
to the purchaser but title is retained by the vendor as security for the payment of the 
purchase price.
Sec. 6.  36 MRSA §1752, sub-§14, ¶A, as amended by PL 2021, c. 578, §2, is 
further amended by amending subparagraph (4) to read:
(4)  In the case of the lease or rental for a period of less than one year of an 
automobile or of a truck or van with a gross vehicle weight of less than 26,000 
pounds rented from a person primarily engaged in the business of renting 
automobiles, the value is the total rental charged to the lessee and includes, but is 
not limited to, maintenance and service contracts, drop-off or pick-up fees, airport 
surcharges, mileage fees and any separately itemized charges on the rental 
agreement to recover the owner's estimated costs of the charges imposed by 
government authority for title fees, inspection fees, local excise tax and agent fees 
on all vehicles in its rental fleet registered in the State.  All fees must be disclosed 
when an estimated quote is provided to the lessee; and
Sec. 7.  36 MRSA §1752, sub-§14, ¶A, as amended by PL 2021, c. 578, §2, is 
further amended by amending subparagraph (5) to read:
(5)  In the case of the lease or rental of an automobile for one year or more, the 
value is the total monthly lease payment multiplied by the number of payments in 
the lease or rental, the amount of equity involved in any trade-in and the value of 
any cash down payment.  Collection and remittance of the tax is the responsibility 
of the person that negotiates the lease transaction with the lessee.; and
Sec. 8.  36 MRSA §1752, sub-§14, ¶A, as amended by PL 2021, c. 578, §2, is 
further amended by enacting a new subparagraph (6) to read:
(6)  For retail lease or rental payments, the value is measured by the full amount of 
each payment.
Sec. 9.  36 MRSA §1752, sub-§14, ¶B, as repealed and replaced by PL 2019, c. 
501, §28, is amended by amending subparagraph (12) to read:
(12)  Federal universal service support funds that are paid directly to the seller 
pursuant to 47 Code of Federal Regulations, Part 54; or
Sec. 10.  36 MRSA §1752, sub-§14, ¶B, as repealed and replaced by PL 2019, c. 
501, §28, is amended by amending subparagraph (13) to read:
(13)  A paint stewardship assessment imposed pursuant to Title 38, section 2144.; 
or
Sec. 11.  36 MRSA §1752, sub-§14, ¶B, as repealed and replaced by PL 2019, c. 
501, §28, is amended by enacting a new subparagraph (14) to read:
(14)  For retail lease or rental payments, separately stated charges for delivery and 
pick-up; fuel or refueling services; damage waivers; standing time; cleaning fees; 
assembly, setup or installation; loading or unloading; dismantling or take-down; or 
repair, maintenance or service contracts associated with the rental or lease of 
tangible personal property.
Sec. 12.  36 MRSA §1754-B, sub-§1-B, ¶A, as repealed and replaced by PL 2021, 
c. 181, Pt. B, §5, is amended by amending subparagraph (3) to read:
(3)  Every lessor engaged in the leasing of tangible personal property located in 
this State that does not maintain a place of business in this State but makes retail 
sales to purchasers from in this State;
Sec. 13.  36 MRSA §1758, as repealed and replaced by PL 1999, c. 708, §24, is 
repealed.
Sec. 14.  36 MRSA §1819, sub-§2, as amended by PL 2021, c. 181, Pt. B, §6, is 
further amended to read:
2.  Sourcing for sales sale, but not retail lease or rental, of tangible personal 
property and taxable services.  The Except as provided in subsection 3, the sale of 
tangible personal property or a taxable service is sourced in this State pursuant to this 
subsection.
A.  When the tangible personal property or taxable service is received by the purchaser 
at a business location of the seller, the sale is sourced to that business location.
B.  When the tangible personal property or taxable service is not received by the 
purchaser at a business location of the seller, the sale is sourced to the location where 
receipt by the purchaser or the purchaser's donee occurs, including the location 
indicated by instructions for delivery to the purchaser or donee known to the seller.
C.  For a sale when paragraphs A and B do not apply, the sale is sourced to the location 
indicated by an address for the purchaser that is available from the business records of 
the seller that are maintained in the ordinary course of the seller's business when use of 
this address does not constitute bad faith.
D.  For a sale when paragraphs A to C do not apply, the sale is sourced to the location 
indicated by an address for the purchaser obtained during the consummation of the 
sale, including the address of a purchaser's payment instrument, if no other address is 
available, when use of this address does not constitute bad faith.
E.  When paragraphs A to D do not apply, including the circumstance in which the 
seller is without sufficient information to apply paragraphs A to D, the location is 
determined by the address from which tangible personal property was shipped, from 
which the tangible personal property or taxable service transferred electronically was 
first available for transmission by the seller or from which the service was provided, 
disregarding for these purposes any location that merely provided the digital transfer 
of the tangible personal property or taxable service sold.
Sec. 15.  36 MRSA §1819, sub-§3 is enacted to read:
3.  Sourcing for retail lease or rental.  The retail lease or rental of tangible personal 
property is sourced pursuant to this subsection.
A.  For a retail lease or rental that requires recurring periodic payments, the first 
periodic payment is sourced to this State when the product is received in this State. 
Periodic payments made subsequent to the first payment are sourced in this State as 
long as the primary property location for the period covered by each payment is in this 
State. For the purposes of this paragraph, "the primary property location" is an address 
for the property provided by the lessee that is available to the lessor from its records 
and maintained in the ordinary course of business, when use of this address does not 
constitute bad faith. The primary property location is not altered by intermittent use at 
different locations, such as use of business property that accompanies employees on 
business trips and service calls.
B.  For a retail lease or rental that does not require periodic recurring payments, the 
payment is sourced in this State if the product is received in this State or the product is 
present in this State for more than the lesser of 90 days during the term of the lease or 
rental and 50% of the days during the term of the lease or rental. The location of 
property in this State at any time during a day is considered presence in this State for 
that entire day.
For purposes of this subsection, leased or rented tangible personal property is received in 
this State when the lessee takes possession of the property in this State.
Sec. 16.  36 MRSA §2022 is enacted to read:
§2022.  Refund of use tax on purchases of qualifying retail lease or rental property
1.  Definitions.  For purposes of this section, unless the context otherwise indicates, 
the following terms have the following meanings.
A. "Purchase price use tax" means Maine use tax that was paid to the State upon the 
acquisition or transfer of tangible personal property in the State by a qualified lessor 
on or after January 1, 2021 and before January 1, 2024.
B.  "Qualified lessor" means a person that:
(1)  Leases or rents qualifying retail lease or rental property to another person in 
this State; and
(2)  Paid purchase price use tax to the State on qualifying retail lease or rental 
property on or after January 1, 2021 and before January 1, 2024.
C.  "Qualifying retail lease or rental property" means tangible personal property:
(1)  That was part of a taxable retail lease or rental transaction on or after January 
1, 2024 for which Maine sales tax was remitted to the State; and
(2)  Upon which purchase price use tax was paid during the qualifying retail lease 
or rental property on or after January 1, 2021 and before January 1, 2024.
2.  Refund authorized.  The assessor shall refund the use tax imposed pursuant to this 
Part and paid by a qualified lessor that purchased qualifying retail lease or rental property 
on or after January 1, 2021 and before January 1, 2024. The amount of the refund for each 
item of qualifying retail lease or rental property is limited to the total sales tax collected on 
that item of qualifying retail lease or rental property and remitted to the State on or after 
January 1, 2024 and before January 1, 2027.
3.  Procedure and limitation.  A qualified lessor may submit a claim for 
reimbursement on a form prescribed by the assessor filed after July 31, 2024. A qualified 
lessor may file only one claim per year and may not file a claim after March 1, 2027.
4.  Audit.  The assessor may audit a claim for reimbursement filed under this section. 
If the assessor determines that the amount of reimbursement is incorrect, the assessor may 
issue an assessment within 3 years from the date the claim was filed or at any time if a 
fraudulent claim was filed. The claimant may seek reconsideration of the assessment 
pursuant to section 151.
5.  Payment of claims.  The assessor shall pay the reimbursement amount to a qualified 
lessor under this section within 90 days after receipt of a properly completed claim. Interest 
is not allowed on any payment made to a claimant pursuant to this section.
Sec. 17.  Application. This Act applies to retail leases or rental contracts entered into 
on or after January 1, 2024.
SUMMARY
In the current system of taxation for the rental or lease of tangible personal property, 
the rental or leasing company property is taxed at acquisition or when brought into Maine 
from out of state, but rental and lease receipts are exempt from sales and use tax.  This bill 
amends Maine sales and use tax law to make it more consistent with the predominant 
method of taxation in other states by allowing rental and leasing companies to purchase 
exempt from taxation all rental fleet and tangible personal property for resale and requiring 
the rental and leasing companies to collect sales tax from the customer. The bill includes a 
limited refund opportunity for use tax paid on the purchase of rental fleet and tangible 
personal property by rental and leasing companies prior to January 1, 2024.  The bill does 
not affect the lease or rental of trucks and truck tractors from a person primarily engaged 
in the business of leasing or renting trucks and truck tractors.