What is Sales Tax Nexus Anyway?

Your business owes sales tax in any state where it has “sales tax nexus”. In short, if you have sales tax nexus you need to collect and remit sales tax. If you don’t have sales tax nexus, you generally don’t need to get a permit. 

Sales tax nexus is a legal term that means you have crossed a threshold and now have a sales tax collection responsibility in the state. Nexus can be created by having a physical presence, economic presence, or by other factors.  Nexus rules vary by state and retailers have specific nexus rules based on where they have people, property or inventory.  

What Should You Do Once You Determine You Have Sales Tax Nexus?

Once you determine that you have sales tax nexus in Maine, your next step is to register for a sales tax permit in the state.  Check out our blog post on getting a sales tax permit in Maine for more information about that process.  If you are not interested in doing the work of getting the permit yourself, TaxValet can handle the permit registration for you. 

Common Ways to Have Sales Tax Nexus in Maine

1. Economic nexus in Maine

If you made $100,000 of sales in Maine in the previous or current calendar year OR had 200 or more separate transactions, then you are required to register for, collect, and pay sales tax to the state. If you meet this threshold, it does not matter if you have a physical presence in Maine.  Nexus has been created based on your volume of sales.

For more information, please see Maine Revenue Services.

If you need help determining which states you have crossed economic nexus thresholds, check out our Sales Tax Starter Kit service.

2. Physical presence in Maine

The following creates physical presence nexus in Maine. If you have any of the following in Maine, you will need to get a sales tax permit:

1. A store, office, warehouse, repair facility or other place of business.
2. An employee, salesperson, contractor or other representative.

For more information, see Maine Revenue Services.

If you need help determining which states you have a physical presence in, check out our Sales Tax Starter Kit service.

Do You Need a Sales Tax Permit in Maine If You Only Sell on Marketplaces?

If you are an online retailer who ONLY sells on approved marketplaces (such as Amazon, eBay, etc), Maine sales tax will be remitted by the marketplace, but you are still required to get a sales tax permit. You may not be required to file tax returns IF you obtain a written statement from the facilitator that explicitly states that the facilitator will collect and remit the Maine sales tax on all taxable sales facilitated through the marketplace.

For more information about Marketplace only sellers, see General Information Bulletin No. 109.

Uncommon Ways to Have Sales Tax Nexus in Maine

1. Affiliate Nexus in Maine

What exactly is affiliate nexus? Affiliate nexus can exist when a business has sufficient contact with a state through a separate business. If your out-of-state business has a relationship with an in-state business, then you may have affiliate nexus. 

Please keep in mind that an “affiliated business” does not necessarily mean that it is a marketing “affiliate” in the typical sense of the word. Instead, “affiliate nexus” refers to the relationship between two businesses.

You may have affiliate nexus if your business has ties to a business in Maine that engages in any of the following:

1. Sells a similar line of products under a similar name.
2. Maintains a place of business in Maine that facilities the delivery of property or services sold by the seller.
3. Uses trademarks, trade names or service marks similar to, or the same as, those used by the seller.
4. Delivers, installs, or provides maintenance services for the seller’s customers in Maine.
5. Facilitates the seller’s delivery of property to customers in Maine.
6. Conducts any activities in Maine that are significantly associated with the seller’s ability to establish and maintain a market in the state for the seller’s sales.

For more information about affiliate nexus, see A Reference Guide to the Sales and Use Tax Law Section 1754-B(1-A).

2. Click-through Nexus in Maine

What is click-through nexus? Basically, referrals from in-state entities may trigger nexus for an out-of-state company. Out-of-state sellers of tangible personal property or taxable services are presumed to be engaged in business in Maine if they enter into an agreement with a person in Maine for a commission or other consideration and both of the following are true:

1. The Maine affiliate directly or indirectly refers potential customers to the seller, by a link on an internet website, telemarketing, an in-person presentation or other method.

2. The cumulative gross receipts from the preceding 12 months from retail sales by the seller to Maine customers referred by affiliates exceeded $10,000.

If you are an e-commerce seller who is unsure of where you need to get a sales tax permit, check out our Sales Tax Starter Kit service.

Related Blog Content

How to Register for a Sales Tax Permit in Maine

How to File and Pay Sales Tax in Maine