[author: Javier Siervo]
Maine is attempting to join other states in broadening the definition of a taxable retailer for sales and use tax purposes. The Maine House of Representatives has introduced two bills (H.P. 228 and H.P. 251) that establish affiliate and click-through nexus rules.
Both bills create a rebuttable presumption that an out-of-state retailer with Maine customers is engaged in the business of selling tangible personal property or taxable services in the state if an affiliated person has a substantial physical presence in Maine. An “affiliated person” is a member of the same controlled group of corporations as the retailer or any other entity that, notwithstanding its form of organization, bears the same ownership relationship to the retailer as a corporation that is a member of the same controlled group of corporations. A “controlled group of corporations” has the same meaning as in the Internal Revenue Code.
A retailer is also presumed to be engaged in the business of selling tangible personal property or taxable services in Maine if any person, other than a common carrier, has a substantial physical presence in Maine and any of the following:
(1) Sells a similar line of products as the retailer, and does so under a business name that is the same or similar to that of the retailer
(2) Maintains an office, distribution facility, warehouse, or storage place or similar place of business in Maine to facilitate the delivery of property or services sold by the retailer to the retailer’s customers
(3) Uses trademarks, service marks, or trade names in Maine that are the same or substantially similar to those used by the retailer.
(4) Delivers, installs, assembles, or performs maintenance services for the retailer’s customers within Maine
(5) Facilitates the retailer’s delivery of property to customers in Maine by allowing the retailer’s customers to pick up property sold by the retailer at an office, distribution facility, warehouse, storage place, or similar place of business maintained by the person in Maine
(6) Conducts any activities in Maine that are significantly associated with the retailer’s ability to establish and maintain a market in Maine for the retailer’s sales
Both bills create a rebuttable presumption that an out-of-state retailer with Maine customers is engaged in the business of selling tangible personal property or taxable services in Maine if the retailer enters into an agreement with a person under which the person, for a commission or other consideration, while within Maine:
(1) Directly or indirectly refers potential customers to the retailer, whether by a link on an Internet website, telemarketing, in-person presentation, or otherwise; and
(2) The cumulative gross receipts during the preceding 12 months from retail sales by the retailer to customers in Maine who are referred to the retailer by all persons with this type of agreement with the retailer are in excess of $10,000.
This type of provision is commonly referred to as an “Amazon law.” It puts the focus on the level of presence established by the person or entity contracted by the retailer to facilitate sales to Maine customers.
If one or both bills are enacted, retailers selling to Maine customers will need to determine if their affiliates or the depth of their relationships with their contractors results in a filing, collection, and remittance responsibility.
If you have any questions regarding this ruling or any other issues, please contact Javier Siervo at JSiervo@brg-expert.com or 202.480.2735.
The views expressed in this article are those of the authors and do not necessarily reflect the position or policy of Berkeley Research Group, LLC.
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