10/11/2012

State & Local Tax News: Maine Use Tax Amnesty Program

Earlier this year, Maine adopted a new use tax amnesty program.  Last week, Maine Revenue Services sent out the “Special Use Tax Return” to be used by taxpayers who wish to participate in the program.

Maine use tax is a substitute for Maine sales tax for transactions in which Maine’s 5% sales tax has not been collected, e.g., purchases made over the internet, by catalogue or out-of-state, or when a business withdraws goods from inventory for its own use.  Use tax applies to businesses and individuals and is imposed at the same rate as sales tax.  In general, the same exemptions that apply to sales tax also apply to use tax.  Maine provides a credit against use tax for sales taxes paid in another state. 

If a taxpayer fails to timely pay use tax, Maine Revenue may impose civil penalties and interest, and the Attorney General may criminally prosecute under certain circumstances. 

Under the new amnesty program, a taxpayer will be absolved from use tax liability, civil penalties, and criminal prosecution with respect to use tax incurred before January 1, 2012, if the taxpayer:

  • Files a proper and accurate Special Use Tax Return before November 30, 2012.
  • Fully and accurately reports the taxpayer’s proper use tax liability for the years 2006 through 2011.
  • Pays the use tax liability for the three years between 2006 and 2011 in which the use tax liability is highest.  The use tax liability for the three years between 2006 and 2011 in which use tax is lowest, as well as years before 2006, need not be paid. 

The tax liability for the three highest years must be paid before November 30, 2012.  However, the assessor is authorized to enter into an installment arrangement as long as the tax is fully paid by May 31, 2013. 

The Special Use Tax Return can be found here, and the legislation authorizing the program can be found here. 

Please contact any member of Pierce Atwood’s State and Local Tax Group if you have any questions about the use tax amnesty program or other state and local tax issues.