Maine Use Tax Compliance Program

Merrill Barter, Managing Director, Tax Practice
May 24, 2012

The supplemental budget bill signed by Governor LePage on May 16 established the 2012 Maine Use Tax Compliance Program.  This is an amnesty program for those who owe use tax, and will run from October 1 through November 30, 2012.  Some key components of the program are as follows:

  • The program applies to unknown (not yet assessed) use tax liabilities for periods prior to January 1, 2012.
  • The look-back period will be January 1, 2006 through December 31, 2011.  The taxpayer must pay the use tax owed for the 3 highest years during the look-back period.
  • The taxpayer must come forward during the program period, and fully and accurately report his or her use tax liability for the look-back years.
  • If the tax is paid in full by the end of the program, no interest or penalties will be imposed.  If a payment plan is utilized, interest will be charged.
  • A special use tax return must be prepared to report the use taxes owed – this form will be available later this summer.
  • Participating taxpayers will be absolved from further liability for use taxes incurred prior to January 1, 2012.
  • Some examples of situations that could result in a use tax liability are:
  • A taxpayer purchases items for use in Maine, such as computers, software or clothing, from internet retailers who do not charge Maine sales tax.
  • A taxpayer purchases a new television from a New Hampshire retailer for use in Maine.
  • A Maine business buys equipment from an out-of-state vendor that doesn’t charge Maine sales tax.
  • A Maine business buys inventory tax free (for resale), and the owner then removes some items for personal use.

Failure to report and remit use taxes can result in the imposition of interest and penalties.  This program offers an excellent opportunity for individual and business taxpayers with unreported use tax liabilities to come forward under favorable terms.

Please contact Merrill Barter if you have any questions.

Disclaimer of Liability: This publication is intended to provide general information to our clients and friends. It does not constitute accounting, tax, or legal advice; nor is it intended to convey a thorough treatment of the subject matter.

IRS CIRCULAR 230 DISCLOSURE:
Pursuant to requirements imposed by the Internal Revenue Service, any tax advice contained in this communication (including any attachments) is not intended to be used, and cannot be used, for purposes of avoiding penalties imposed under the United States Internal Revenue Code or promoting, marketing or recommending to another person any tax-related matter.  Please contact us if you wish to have formal written advice on this matter.