Maine Sales and Use Tax Protest, Refund Claim, and Wayfair/Nexus Defense

MAINE SALES AND USE TAX PROTEST AND REFUND CLAIM

TABLE OF CONTENTS

1. Caption and Account Identification
2. Timeliness and Jurisdictional Statement
3. Factual Background
4. Issues Presented
5. Legal Argument — Substantive Sales/Use Tax Issues
6. Economic Nexus / Wayfair Defense (Remote Sellers and Marketplace Facilitators)
7. Refund Claim Under 36 M.R.S. § 2011
8. Penalty Defense and Reasonable Cause
9. Requested Relief
10. Hearing Request and Reservation of Appeal Rights
11. Designation of Representative
12. Verification
13. Certificate of Service
14. Maine Sales and Use Tax Practice Notes
15. Sources and References

1. CAPTION AND ACCOUNT IDENTIFICATION

STATE OF MAINE — DEPARTMENT OF ADMINISTRATIVE AND FINANCIAL SERVICES

MAINE REVENUE SERVICES — SALES, FUEL & SPECIAL TAX DIVISION

RE: PETITION FOR RECONSIDERATION OF SALES AND USE TAX ASSESSMENT AND/OR CLAIM FOR REFUND

2. TIMELINESS AND JURISDICTIONAL STATEMENT

2.1. Petitioner timely files this Petition under 36 M.R.S. § 151(1) within 60 days after receipt of the Notice of Assessment. Petitioner received the Notice on [__/__/____] and files this Petition on [__/__/____].

2.2. The amount in controversy is $[___], which is ☐ less than $1,000 ☐ between $1,000 and $500,000 ☐ greater than $500,000, as relevant to subsequent appeal rights under 36 M.R.S. §§ 151(2) and 151-D.

2.3. To the extent this filing also asserts a refund claim, the claim is filed within three (3) years of the later of (i) the date the underlying return was filed or (ii) the date the tax was paid, as required by 36 M.R.S. § 2011.

2.4. Petitioner is "aggrieved" within the meaning of 36 M.R.S. § 151(1) and has standing to seek reconsideration and refund.

3. FACTUAL BACKGROUND

3.1. Petitioner is a [corporation / LLC / sole proprietor / marketplace facilitator / remote seller] organized under the laws of [STATE], with its principal place of business in [CITY, STATE].

3.2. Petitioner's business activities consist of [describe business — e.g., online retail of tangible personal property; SaaS; lodging; short-term rentals; restaurant operations].

3.3. Maine Activity Profile (calendar years at issue):

3.4. On [__/__/____], MRS issued the assessment that is the subject of this Petition, asserting [describe — e.g., uncollected sales tax of $___ on remote sales delivered into Maine; use tax of $___ on equipment Petitioner brought into Maine; sales tax on services Petitioner contends are non-taxable].

3.5. The assessment is based on [audit method — sample, full review, third-party data, etc.] and covers tax periods [___] through [___].

4. ISSUES PRESENTED

4.1. Whether MRS erred in determining that Petitioner had a sales tax collection obligation under 36 M.R.S. § 1754-B and § 1951-B for the periods at issue.

4.2. Whether MRS erred in classifying the transactions at issue as taxable retail sales of tangible personal property, products transferred electronically, or taxable services within 36 M.R.S. §§ 1752 and 1811.

4.3. Whether the resale, casual-sale, manufacturing, or other statutory exemption applies under 36 M.R.S. §§ 1760, 1764, or 1762.

4.4. Whether MRS erred in computing tax at the [5.5% / 8% / 9% / 10%] rate.

4.5. Whether penalties under 36 M.R.S. § 187-B should be waived for reasonable cause.

4.6. Whether Petitioner is entitled to a refund of sales/use tax overpaid for periods [___] through [___] under 36 M.R.S. § 2011.

5. LEGAL ARGUMENT — SUBSTANTIVE SALES/USE TAX ISSUES

5.1. Imposition Statute and Definitions.

The Maine sales tax is imposed by 36 M.R.S. § 1811 on "the value of all tangible personal property, products transferred electronically and taxable services sold at retail in this State." A "sale at retail" requires a transfer for consideration of property or a taxable service to a final consumer; "taxable services" are limited to those enumerated in 36 M.R.S. § 1752.

5.2. Issue 1 — [E.g., Transaction Not a Taxable Service / Not Tangible Personal Property].

[Argument that the transaction is outside the scope of § 1811. For service-provider issues, distinguish between sales tax under § 1811 and the separate Service Provider Tax under 36 M.R.S. Ch. 358.]

Authorities:

• 36 M.R.S. §§ 1752, 1811;
• Code Me. R. tit. 18-125, Ch. 318 (Instrumentalities of Interstate or Foreign Commerce) and other applicable rules;
• [Maine appellate decision], [citation];
• MRS Instructional Bulletin No. [___].

5.3. Issue 2 — [Exemption Applies].

[Argument that the transaction qualifies for exemption under § 1760 (general exemptions), § 1762 (resale), § 1764 (casual sales), or other applicable provision. Attach exemption certificates as Exhibits.]

5.4. Issue 3 — [Use Tax Issue].

If a use-tax assessment is contested under 36 M.R.S. § 1861, address: (a) whether the property was used or stored in Maine; (b) whether sales tax was paid to another jurisdiction (credit under § 1862); and (c) whether an exemption otherwise applies.

5.5. Issue 4 — Rate.

The general rate under § 1811 is 5.5%. Higher rates apply to specific categories: 8% prepared food; 8% on-premises liquor; 9% lodging; 10% short-term auto rentals. Verify that the rate applied matches the statutory category for each transaction.

6. ECONOMIC NEXUS / WAYFAIR DEFENSE (REMOTE SELLERS AND MARKETPLACE FACILITATORS)

6.1. Constitutional Framework.

A state may compel a seller without physical presence to collect and remit sales tax only consistent with the Commerce Clause as construed in South Dakota v. Wayfair, Inc., 138 S. Ct. 2080 (2018). A state's economic-nexus regime must (a) provide a safe harbor for those transacting limited business; (b) avoid retroactive application; and (c) be administered through the simplification framework approximating the Streamlined Sales and Use Tax Agreement.

6.2. Maine's Statutory Threshold — 36 M.R.S. § 1754-B and § 1951-B.

A remote seller is required to register if, in the previous or current calendar year, the seller's gross sales of tangible personal property, products transferred electronically, or taxable services delivered into Maine exceed $100,000, or the seller completes 200 separate such transactions delivered into Maine. Marketplace facilitators are subject to a parallel threshold under § 1951-C and aggregate the sales of marketplace sellers in computing the threshold.

6.3. Petitioner Did Not Meet the Threshold.

Petitioner's Maine sales for the periods at issue were $[AMOUNT] in [YEAR] and $[AMOUNT] in [YEAR], with [####] and [####] transactions respectively, as evidenced by Exhibit [__]. [Argument that the threshold was not crossed for the relevant period; or that any crossing occurred only in a later period not subject to the assessment.]

6.4. Marketplace Facilitator Issue (if applicable).

For sales made through a marketplace facilitator, the facilitator — not Petitioner — is the seller required to collect and remit under 36 M.R.S. § 1951-C. Petitioner is therefore not liable for tax on those transactions, and any duplicative assessment must be abated.

6.5. No Pre-Wayfair Liability.

To the extent the assessment seeks tax for periods preceding July 1, 2018 (the Maine enforcement date for economic nexus), the assessment is invalid as a matter of state policy and may also raise constitutional retroactivity concerns under Wayfair and Quill Corp. v. North Dakota, 504 U.S. 298 (1992), to the extent applicable.

6.6. Streamlined Compliance.

Petitioner registered with MRS on [__/__/____] following recognition of nexus and has timely filed all returns and remitted all tax due thereafter. Voluntary compliance and reasonable diligence support penalty waiver under 36 M.R.S. § 187-B(7).

7. REFUND CLAIM UNDER 36 M.R.S. § 2011

7.1. Periods Covered.

Petitioner claims refund of sales and/or use tax for the following periods:

7.2. Grounds for Refund.

[Identify each ground — overpayment due to mathematical error, exempt sale taxed in error, tax paid to multiple jurisdictions, bad-debt deduction under § 1812, etc.]

7.3. Timeliness.

The refund claim is filed within three (3) years of the later of the date of filing or the date the tax was paid, satisfying 36 M.R.S. § 2011.

7.4. Supporting Documentation.

Attached as Exhibits [__] through [__]: amended returns, exemption certificates, invoices, proof of payment to other jurisdictions, customer credit memoranda, bad-debt write-off records, and reconciliation work papers.

8. PENALTY DEFENSE AND REASONABLE CAUSE

8.1. Petitioner asserts reasonable cause under 36 M.R.S. § 187-B(7) for waiver of all penalties asserted, on the following grounds:

• ☐ Reliance on competent professional tax advice;
• ☐ Reliance on prior MRS audit closures or Information/Instructional Bulletins;
• ☐ Good-faith uncertainty regarding economic-nexus thresholds and post-Wayfair compliance obligations;
• ☐ Marketplace facilitator's collection responsibility (where applicable);
• ☐ Substantial authority for the position taken;
• ☐ Records lost through casualty/disaster;
• ☐ Other: [___].

8.2. Petitioner acted in good faith and exercised ordinary business care and prudence at all times.

9. REQUESTED RELIEF

WHEREFORE, Petitioner respectfully requests that the State Tax Assessor:

• A. Abate the assessment in full;
• B. Alternatively, reduce the assessment to $[___], reflecting the corrections set forth herein;
• C. Refund $[___] plus statutory interest under 36 M.R.S. § 186 for periods [___] through [___];
• D. Waive all penalties under 36 M.R.S. § 187-B(7);
• E. Issue a written reconsidered decision pursuant to 36 M.R.S. § 151(1);
• F. Grant such other and further relief as is just and proper.

10. HEARING REQUEST AND RESERVATION OF APPEAL RIGHTS

10.1. ☐ Petitioner requests an informal conference with the responding division.

10.2. Petitioner reserves the right to appeal an adverse reconsidered decision within 60 days of receipt to:

• ☐ The Maine Board of Tax Appeals under 36 M.R.S. § 151-D (where the amount in controversy is between $1,000 and $500,000); and/or
• ☐ The Maine Superior Court under 36 M.R.S. § 151(2) and M.R. Civ. P. 80C.

10.3. Petitioner reserves the right to elect "deemed denial" treatment under § 151(1) if MRS fails to issue a reconsidered decision within 90 days (subject to mutually agreed extension).

11. DESIGNATION OF REPRESENTATIVE

12. VERIFICATION

STATE OF [STATE]

COUNTY OF [COUNTY], ss.

I, [OFFICER NAME], being first duly sworn, depose and say that I am [the Petitioner / an authorized officer of Petitioner]; that I have read the foregoing Petition / Refund Claim and know the contents thereof; and that the same is true to my own knowledge except as to those matters stated upon information and belief, and as to those I believe them to be true.

[________________________________]

[OFFICER NAME AND TITLE]

Sworn to and subscribed before me this [____] day of [_______________], 20[____].

[________________________________]

Notary Public

(My Commission Expires: [_______________])

13. CERTIFICATE OF SERVICE

I certify that on [__/__/____], I caused a true copy of the foregoing to be served upon:

Maine Revenue Services
Sales, Fuel & Special Tax Division
P.O. Box 1065
Augusta, ME 04332-1065

by ☐ certified mail, return receipt requested ☐ Maine Tax Portal upload ☐ hand delivery ☐ overnight courier with delivery confirmation.

[________________________________]

[REPRESENTATIVE NAME]

14. MAINE SALES AND USE TAX PRACTICE NOTES

• 60-day reconsideration deadline is jurisdictional. Like income tax matters, sales/use tax assessments must be protested within 60 days under 36 M.R.S. § 151(1). Missing the deadline forecloses reconsideration, Board, and Superior Court review — and even a later refund-action workaround is generally unavailable for amounts assessed.
• Refund SOL — three years. Under 36 M.R.S. § 2011, refunds must be claimed within 3 years of the later of filing or payment. The refund clock and the assessment-protest clock can run simultaneously; where appropriate, file both a protest and a refund claim.
• Economic nexus is well-established post-Wayfair. Maine has enforced economic nexus since July 1, 2018. The current threshold is $100,000 in gross Maine sales OR 200 transactions. Legislative activity has at times targeted the 200-transaction prong; counsel must verify the operative threshold for the period at issue.
• Marketplace facilitators are the seller of record. Under 36 M.R.S. § 1951-C, marketplace facilitators are responsible for collection and remittance on behalf of marketplace sellers. Marketplace sellers should not be assessed on facilitator-collected transactions; raise this defense in writing.
• Service Provider Tax is separate. Maine imposes a Service Provider Tax under 36 M.R.S. Chapter 358 on certain enumerated services (e.g., extended cable, fabrication, telecommunications). Confirm that the assessment is under the correct tax and rate.
• Resale and exemption certificates. Sellers must obtain valid resale or exemption certificates at the time of sale. A certificate obtained after audit is generally accepted only if the buyer's exempt status during the period is otherwise demonstrable. Build the exemption documentation in the protest record.
• Use tax credit for tax paid to other states. 36 M.R.S. § 1862 allows credit for legally imposed sales tax paid to another jurisdiction, up to the Maine rate. Document with invoices and proof of payment.
• Bad-debt deduction. Sales tax on uncollectible accounts may be recovered under 36 M.R.S. § 1812. Maintain a written bad-debt accounting policy consistent with federal income tax treatment.
• Voluntary disclosure. Where unfiled periods exist, MRS's Voluntary Disclosure Program can limit the lookback to three years and abate penalties. Compare a VDA to a § 151 protest before filing.
• Burden of proof. As with all Maine tax appeals, the taxpayer bears the burden under § 151(2)(F). Compile transaction-level data, exemption certificates, and accounting reconciliations during the reconsideration phase.
• Interest accrual. Interest under § 186 continues during reconsideration. Consider partial protest payment for large exposures while the dispute is pending.

15. SOURCES AND REFERENCES

• 36 M.R.S. § 1752 — Definitions: https://legislature.maine.gov/statutes/36/title36sec1752.html
• 36 M.R.S. § 1754-B — Persons required to register: https://www.mainelegislature.org/legis/statutes/36/title36sec1754-B.html
• 36 M.R.S. § 1811 — Sales tax imposed: https://www.mainelegislature.org/legis/statutes/36/title36sec1811.html
• 36 M.R.S. § 1861 — Use tax: https://legislature.maine.gov/statutes/36/title36sec1861.html
• 36 M.R.S. § 1951-B — Remote sellers: https://legislature.maine.gov/statutes/36/title36sec1951-B.html
• 36 M.R.S. § 1951-C — Marketplace facilitators: https://legislature.maine.gov/statutes/36/title36sec1951-C.html
• 36 M.R.S. § 2011 — Refund of sales and use tax: https://legislature.maine.gov/statutes/36/title36sec2011.html
• 36 M.R.S. § 151 — Reconsideration: https://legislature.maine.gov/statutes/36/title36sec151.html
• 36 M.R.S. § 151-D — Maine Board of Tax Appeals: https://legislature.maine.gov/statutes/36/title36sec151-D.html
• 36 M.R.S. § 187-B — Penalties: https://legislature.maine.gov/statutes/36/title36sec187-B.html
• MRS — Sales, Use & Service Provider Tax: https://www.maine.gov/revenue/taxes/sales-use-service-provider-tax
• MRS — Guidance for Remote Sellers: https://www.maine.gov/revenue/taxes/sales-use-service-provider-tax/guidance-documents/remote-sellers
• MRS Sales/Use Instructional Bulletins: https://www.maine.gov/revenue/taxes/sales-use-service-provider-tax/instructional-bulletins
• Maine Tax Portal: https://revenue.maine.gov/
• South Dakota v. Wayfair, Inc., 138 S. Ct. 2080 (2018)
• Quill Corp. v. North Dakota, 504 U.S. 298 (1992) (overruled by Wayfair)
• Apex Custom Lease Corp. v. State Tax Assessor, 1998 ME 27, 705 A.2d 1310

Disclaimer: This template is provided for informational purposes only and does not constitute legal advice. An attorney licensed in Maine must review and customize this document before filing. Sales and use tax statutes, MRS rules, and economic nexus thresholds change frequently; verify all authorities and dates before use.