Avalara : Maine eliminates economic nexus transaction threshold for remote sellers and marketplaces

Current law provides that remote sellers and marketplace facilitators must register to collect and remit sales tax in Maine if their gross sales of tangible personal property or taxable services into the state in the previous or current calendar year exceed $100,000 or occur in at least 200 separate transactions. Effective January 1, 2022, the 200 separate transactions threshold is eliminated.

This change stems from the enactment of House Paper 891, An Act To Amend the State Tax Laws, which Governor Janet Mills signed into law on June 11, 2021. The measure doesn't mention the transaction threshold - it simply removed it from the section pertaining to 'Persons required to register.'

Thus, as of January 1, 2021, entities required to register then collect and remit sales tax in Maine include, but aren't limited to:

• Every person with a substantial physical presence in Maine who sells tangible personal property or taxable services in the state (including marketplace sellers and marketplace facilitators)
• Every person with no physical presence in Maine whose sales of tangible personal property or taxable services into the state in the current or calendar year exceed $100,000 (including marketplace sellers whose direct sales exceed the threshold)
• A marketplace facilitator with no physical presence in Maine whose gross sales of tangible personal property or taxable services into the state in the previous calendar year or current calendar year exceed $100,000 (a marketplace facilitator's gross sales include their direct sales and sales facilitated on behalf of marketplace sellers)

Maine Revenue Services hasn't yet updated its website to reflect the new policy; its Sales, Use, and Service Provider Tax FAQ and Marketplace FAQ pages still list the 200 separate transactions threshold.

States that removed the transaction threshold for remote sellers

Maine isn't the first state to do away with the transaction threshold for out-of-state businesses, and it may not be the last.

The following states previously eliminated a transaction threshold:

• California (effective April 1, 2019)
• Colorado (effective April 1, 2019)
• Iowa (effective July 1, 2019)
• Massachusetts (effective October 1, 2019)
• North Dakota (effective January 1, 2019)
• Washington (effective March 15, 2019)
• Wisconsin (effective February 20, 2021)

Removing a transaction threshold may protect the nation's smallest sellers from a registration requirement in the state. Certainly, it simplifies compliance, since remote retailers selling into states with no economic nexus transaction threshold no longer need to keep a running tally of their transactions in those states; they need only tabulate their sales per a state's sales threshold.

Learn more about each state's economic nexus threshold in this state-by-state guide to economic nexus laws.