Maine Tax Law Blog

MAINE REVENUE SUSPENDS SOFT DRINK & SYRUP TAX

By Jonathan A. Block, Esq.

Maine Revenue Services has announced the temporary suspension of the soft drink and syrup tax that had been scheduled to go into effect on August 1st.  The suspension is due to the submission of signatures to the Maine Secretary of State by proponents of a People's Veto effort.  Registrations for soft drink tax collection are not being processed at this time.  If the People's Veto signatures are invalidated, the tax will go into effect the following day, according to Maine Revenue.  If a sufficient number of People's Veto signatures are validated, the veto question will go on the November ballot.  http://www.state.me.us/revenue/othertaxes/softtax/statusupdate.htm

For questions or comments, please contact jblock@pierceatwood.com or rcreamer@pierceatwood.com

State Tax Assessor Expresses Support For Sales and Use Tax Exemption For Instrumentalities of Interstate Commerce

Posted by Rob Creamer

Until recently, certain instrumentalities of interstate commerce, such as buses and trucks that transport cargo and passengers to and from Maine, were able to rely on a provision of Maine’s tax statutes, 36 M.R.S.A. § 1760(41), as exempting them from the State’s sales and use taxes.  According to the plain language of § 1760(41), the purchase and use of certain vehicles, when placed in use as instrumentalities of interstate or foreign commerce within 30 days of their purchase, and used as such not less than 80% of the time for following two years, are exempt from Maine’s sales and use tax. 

In John T.Cyr & Sons v. State Tax Assessor, however, a decision issued this past January, Maine’s Superior Court ruled that the exemption contained in § 1760(41) (available at http://janus.state.me.us/legis/statutes/36/title36sec1760.html) only applies to vehicles that Maine lacks the power to tax under the Commerce Clause of the United States Constitution.  2008 Me. Super. LEXIS 56.  Under this ruling, Maine may tax the sale or use of almost any vehicle entering the State, even if used as an instrumentality of interstate commerce and even if it remains in Maine for only a short period of time.  Download superior_court_decision_and_order_w1093616.PDF

The Cyr decision is currently on appeal to Maine’s Supreme Court, and the State Tax Assessor initially supported the Superior Court’s holding that the exemption found in 36 M.R.S.A. § 1760(41) was limited to those vehicles the State was constitutionally unable to tax.  Download state_tax_assessors_brief_on_stipulated_record_w1093172.PDF

However, in response to an amicus curiae brief filed on behalf of the Maine Motor Transport Association, Inc. by Pierce Atwood, LLP, the Assessor has reversed his position on this point.     Download brief_of_amicus_curiae_w1060345.PDF   In his reply to the amicus curiae brief, the Assessor now states that § 1760(41) should not be so narrowly construed and that the exemption should remain available for vehicles that satisfy the 80% test found in the statutory language.  Download appellees_reply_brief_to_amicus_curiae_w1093143.PDF

It remains to be seen whether the Supreme Court will agree with the Assessor or uphold the Superior Court’s ruling on this issue. 

For more information, please email me at RCreamer@pierceatwood.com.

Maine Revenue May Not Send Correspondence to Taxpayer Representatives

Posted by Rob Creamer

The failure of a revenue agency to send important, time-sensitive notices to a taxpayer’s duly authorized representative is obviously a source of concern for both taxpayers and their representatives.  Unfortunately, Maine Revenue Services (“MRS”) has neglected to send notices to taxpayer representatives, even though the Power of Attorney form (“POA”) completed by the taxpayers directs MRS to do so.  According to MRS, this is due to the inability of their computer system to accommodate sending notices to taxpayer representatives. 

MRS’s response to this issue has been to revise the POA (Form 2848-ME, available at http://mainegov-images.informe.org/revenue/forms/general/Form2848ME_RevApr2008.pdf) to state that although a taxpayer completing the form authorizes MRS to send notices and other communications to the taxpayer’s representative:

This authorization does not require Maine Revenue Services to send notices to the representative; in many circumstances, especially computer generated notices, only the taxpayer may be sent the written communication, not the representative. 

The fact that MRS will not send all notices and communications to taxpayer representatives will obviously make it much more difficult for tax professionals to effectively represent their clients and could cause important deadlines to be missed.  To avoid missing any deadlines or remaining unaware of MRS decisions, tax professionals should warn their clients to forward to them copies of any correspondence they receive from MRS, and routinely check with their clients to make sure that this is happening. 

We expect this troubling issue to lead to discussions among tax professionals and MRS, and possibly to legislation addressing the issue. 

For more information, please email me at RCreamer@pierceatwood.com.