If you are an antiques dealer in Maine and the gross sales you report to Maine Revenue Services (MRS) are less than $10,000 per year, get ready to pony up and pay sales tax on all of your wholesale purchases. Citing the fraudulent use of resale certificates and the loss of “millions of dollars each year” in tax revenues, a new law, LD 1919, passed by the legislature and signed recently by the governor, goes into effect July 30.
While the new law is intended to address and correct a perceived “problem” with retailers throughout the state, in fact it creates a huge problem for those that it affects in the antiques trade. “This new law is intended to address this problem by ensuring that only bona fide retail businesses can make tax-exempt purchases for resale,” states Commissioner Rebecca Wyke in a press release from MRS.
For dealers who no longer qualify for a certificate, however, it creates an end of year paperwork nightmare and results in significant out of pocket monies being unjustly held by the state.
MRS will now issue annual resale certificates to only those businesses that report gross sales of $10,000 or more. Small or part-time dealers who do not meet the gross sales level will be required to pay sales tax on all rdf_Descriptions purchased and then apply for a credit when they submit their yearly sales tax returns.
The year-end refund, or credit, for the sales tax paid by dealers will only be granted if the rdf_Description has actually been resold within that year. If the rdf_Description has not been sold within five years of the date of purchase, no credit for the amount of tax originally paid will granted.
“The dealers in Maine who are being discriminated against would appreciate the support of all those persons in other states and Canada who feel this law is unfair and unproductive,” states Maine antiques dealer Margaret Kiely. “Maine needs additional revenue, but is this any way to get it?” she queried. Kiely has requested that correspondence from those opposing the bill be sent to the governor’s office (see contact information below).
Dealers and auction houses must also collect new certificates from buyers on a yearly basis. A resale certificate provided to a dealer for a purchase in December is not valid for a purchase made in the following month, January. Dealers will also be required to retain “all relevant books and records, including all resale certificates collected, for a period of six years.”
If buyers cannot produce a copy of their Maine resale certificate at the time of the sale, they must be charged the tax, for which they can apply for credit at year’s end. Resale certificates expire yearly and those meeting the criteria will automatically be issued a new certificate.
Maine dealers should have already received their applications. Around the middle of July, MRS stated that it will have issued an “Annual Resale Certificate to all active retailers reporting annual gross sales of $10,000 or more based on returns filed during the previous 12 months.” In December, MRS “will evaluate all active sales tax accounts and issue a new Annual Resale Certificate to registered retailers reporting annual gross sales of $10,000 or more.”
All current Maine resale certificates expire on August 15.
Out of state dealers will be allowed to “continue to use the Multi-jurisdictional Uniform Sales and Use Tax Certificate issued by the Multistate Tax Commission to document their exempt purchase.”
For more information regarding these changes, visit www.maine.gov/revenue, call 207-624-9693, or write to Maine Revenue Services, PO Box 1065, Augusta ME 04332. Governor John Elias Baldacci can be reached at 1 State House Station, Augusta ME 04333-0001; email governor@ maine.gov; phone 207-287-3531. -DSS