Two bills to help small Maine businesses compete with online retailers


March 18th, 2013 

Senate President Justin Alfond and Majority House Leader Representative Seth Berry introduced different legislation to help Maine’s small businesses compete with online retailers. Their bills were two of several heard regarding an online sales tax.

Online sales were over $560 million in 2011. Maine loses out on $19 million to $24 million in uncollected Internet sales tax annually, according to a study commissioned by the Maine State Chamber of Commerce and the Retail Association of Maine. The two organizations support Berry’s bill. Online shoppers are currently required to itemized their online purchases and pay a use tax, but with no enforcement mechanism, compliance is extremely low.

“With so many businesses struggling to survive, it is imperative that we require online retailers to do what thousands of Maine businesses do every day: collect the sales tax,” said Alfond as he presented a measure aimed at “leveling the playing field” for Maine businesses.

Alfond sponsored, LD 435, “A Resolve, To Require the State Tax Assessor To Develop Agreements with Online Retailers for the Collection of Sales and Use Tax” would direct the State Tax Assessor to enter into negotiations with online retailers to develop an agreement to collect the sales tax.

At today’s public hearing held in the Taxation Committee, the bill received support from business owners and leaders from all across the state.

“Maine businesses and Maine products compete nationally and it is most important that we level the playing field for Maine businesses,” said Alfond.

Rep. Berry’s bill takes a two-pronged approach to level the playing field between bricks-and-mortar businesses and online retailers. Under current laws, Maine can only require sales tax collection from businesses with a substantial physical presence in the state.

“This leaves bricks-and-mortar retailers — the same Main Street businesses who sponsor our Little League teams, employ our neighbors, and pay income and property taxes here in Maine — at a real disadvantage,” Berry said in his testimony.

The first part of Berry’s bill would implement an e-fairness law to close a loophole that allows large online retailers that use affiliates to avoid paying sales tax.

The second part of Berry’s bill aims to facilitate tax collection from multistate retailers by simplifying Maine’s sales tax laws and aligning them with those of other states. The bill directs the Department of Administrative and Financial Services and the Bureau of Revenue Services to determine what changes would be necessary to align Maine laws with the national Streamlined Sales and Use Tax Agreement, or SSUTA, and report proposed legislation to the Taxation Committee by Jan. 15, 2014.

Implementation of streamlining under SSUTA guidelines, either fully or in a scaled-back manner, is a condition for states that want the authority to collect state and local sales taxes from all large Internet and mail-order retailers under the proposed federal Marketplace Fairness Act. The federal proposal is now under consideration in Congress and has the support of Gov. Paul LePage, Maine’s congressional delegation, the National Governors Association and the National Council of State Legislatures.

Rep. Adam Goode, House chair of the Taxation Committee, said it’s important that Maine moves forward with both parts of Berry’s legislation. He said the conversation about streamlining will be bipartisan and will closely involve the business community.

“The economy is changing. People are buying in different ways. We don’t want Maine’s bricks-and-mortar stores to be left in the dust,” said Good.

Berry noted that streamlining of the sales tax can take place incrementally, with each part eliminating red tape for multistate retailers.