Last week, the Maine Legislature’s Joint Standing Committee on Taxation held a meeting at which Maine Revenue Services (“MRS”) presented its interpretation of various provisions found in Maine’s recently enacted tax reform package.  MRS representatives briefed Committee members on how they are planning to implement the many changes that have been made to the sales and income tax laws.  During the course of the meeting, MRS also identified several portions of the tax reform legislation that are open to more than one interpretation, and sought guidance from the Committee as to which approach it should take.  For instance, the tax reform legislation amends the definition of “sales price” (i.e., the amount subject to sales tax) so that it no longer excludes the cost of services performed in connection with the installation or repair of the property sold.  At the same time, the legislation defines taxable installation and repair services as only those performed on certain items such as jewelry, cameras and electronic equipment.  This has caused confusion as to whether the Legislature intended to tax installation and repair services performed in connection with the sale of any taxable item, or only those performed in connection with the sale of items specifically identified in the taxable services provision.  Currently, MRS has posited that sales tax should be imposed on installation or repair services performed in connection with the sale of any taxable item (regardless of whether installation of that item is listed a taxable service), although both the agency and the Committee may revisit this issue in the future. 

Maine Revenue Services has also produced a memorandum that raises questions for the Legislature about the taxability of certain items, attempts to define various activities as taxable or non-taxable, and draws tentative conclusions on some open issues.  If you would like a copy of Maine Revenue’s memorandum, please contact us. 

The Committee’s next meeting is scheduled for early October.  Please contact us if you have questions or concerns about how MRS is interpreting the tax reform legislation or if you think that there is something the Committee should consider while reviewing the agency’s plans. 

For more information, please contact:

Jonathan A. Block
207-791-1173
jblock@pierceatwood.com

Sarah H. Beard
207-791-1378
sbeard@pierceatwood.com

Robert A. Creamer
207-791-1322
rcreamer@pierceatwood.com