Advertising issues re: Maine’s sales tax
Can a retailer advertise an offer to pay the sales tax on a consumer’s purchase? No. Not only can the retailer not advertise it, he/she can’t do it in the first place. Under Maine law, payment of sales tax is the responsibility of the ultimate end purchaser. That responsibility cannot be assigned to or assumed by another. Here is an excerpt from Maine Revenue Services’ General Informational Bulletin on sales taxes:
TAX AS SHOWN IN ADVERTISEMENTS AND BILLS.
A seller cannot advertise that no sales tax will be charged on otherwise taxable items or that no sales tax will be charged on certain days or
period of time (otherwise known as a tax holiday). It is illegal for any seller to advertise or hold out or state to the public or to any consumer that the sales tax or any portion of it will not be collected, or will be absorbed by the retailer, or that if collected it will be refunded. If the retailer does not state the amount of the tax separately from the sale price of tangible personal property or taxable services, the retailer shall include a statement on the sales slip or invoice presented to the purchaser that the stated price includes Maine sales tax.
Who pays the sales tax on contest prizes, the station or the prize winner? As noted above, sales tax is paid by the end consumer. However, much depends on how the contest is structured. This is a complex area. Stations should consult their legal counsel for advice based on the specific facts and circumstances of the contest.
Does a broadcast station have to charge sales tax on a video or audio tape that contains a spot it produced for a client? Possibly. Advertising agencies and graphic designers that make sales of tangible personal property and/or fabrication services are required to register as sellers with the State Tax Assessor and to collect, report and remit the Maine sales tax on taxable sales to their clients. Sales tax applies to the entire amount charged to clients for items of tangible personal property such as drawings, paintings, designs, photographs, layouts, audio and video tapes, lettering, assemblies and printed materials such as catalogs, brochures, pamphlets and fliers. Costs incurred by the agency in the production of these items and services performed by the agency which are a part of the production of these items are a part of the taxable sale price of the item, whether or not they are separately stated in the billing to the customer. View the complete Maine Revenue Services instructional bulletin on Advertising Agencies and Graphic Designers.