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Maine considers exempting all nonprofits from sales tax

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Maine considers exempting all nonprofits from sales tax


Gov. Janet Mills has proposed extending a sales tax exemption to all nonprofits operating in Maine, which state officials say will address inequities among organizations seeking exemption and simplify the tax exemption process, but will cost the state about $10 million annually.

Of the 47 states with sales tax, Maine is among only 17 — and the only one in New England — without a blanket exemption for nonprofits, according to a report released last month by Maine Revenue Services.

Mills said in a statement that extending the exemption to all nonprofits “eliminates the need for the legislature to pass a new statutory exemption for every nonprofit seeking tax-exempt status and is consistent with the treatment of nonprofits in most other sales tax states.”

The proposal, which is included in the governor’s supplemental budget, would make any nonprofit that is exempt from federal income tax under the Internal Revenue Service automatically exempt from state sales tax on items purchased as part of an organization’s mission.

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The move would make more than 5,200 organizations newly eligible for sales tax exemption, according to the report.

Hospitals and churches have been exempt from the tax since it went into effect in 1951. The legislature has added several dozen categories to the list over the years, including volunteer fire departments, veterans’ service organizations, and nonprofit child care centers, nursing homes and historical societies. 

Maine Revenue Services still receives between 100 and 200 applications each year from nonprofits that think they qualify. Most are eventually approved, but “gray areas” in the law result in a “fair amount of confusion for organizations,” according to the report, and require staff to spend “time and resources on education, customer assistance, and administration to ensure that the law is carried out as intended.”

Source: Maine Revenue Services report.

Mary Alice Scott, public affairs manager of the Maine Association of Nonprofits, called the current law regarding sales tax exemptions “unusual, unfair, confusing and inefficient.”

“It makes sense for every 501(c)(3) organization to receive the same treatment when it comes to sales tax,” Scott told The Maine Monitor. “The IRS recognizes that they are all doing work for the public good; Maine should recognize that, too.”

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Lawmakers in 2020 tried to pass a blanket nonprofit exemption as part of a bill that included other measures related to service provider tax and income tax, but the bill died in the House.

The blanket nonprofit exemption was proposed again last session, but was later amended to instead instruct Maine Revenue Services to study the impact of the measure.

Scott said the confusing nature of the existing system is likely why previous attempts to pass a blanket sales tax exemption have been unsuccessful: “Many organizations review the current list of exemptions and come away having no idea if they are included or not, so you can imagine it was confusing for lawmakers, too.”

A number of nonprofits testified in support of the blanket exemption last year. Many said the few hundred dollars spent on sales tax could make a significant difference if redirected to those they serve. 

The Maine Coalition Against Sexual Assault said sexual assault survivors can spend hours in the hospital when they go through forensic examination, and that when sexual assault centers accompany them, they put together bags of essential supplies such as sweatsuits, nail files, snacks and water. When the centers buy these items, they pay sales tax.

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The coalition also manages emergency funds it gets from the federal government through the Victim of Crime Act for the work it does with survivors, Melissa Martin, public policy and legal director, told the Monitor.

The coalition uses those funds to buy essentials for people experiencing sex trafficking who don’t have stable housing. In one example of a $70,000 purchase for those uses, the coalition paid nearly $4,000 in tax.

Martin said a blanket exemption would allow nonprofits to spend more money on their service work and less time on administrative tasks related to applying for an exemption.

“Are nonprofits going to spend time getting that exemption or are they going to spend time doing their direct service work? I think most organizations have made the choice to spend the time doing their important direct service work,” she said.

Lisa Thomas-Willey, assistant to the executive director at Ruth’s Reusable Resources, which redistributes unwanted office supplies from businesses and gives them to teachers for their classrooms, said the current sales tax exemption system unfairly excludes some nonprofits, is inefficient for retailers and lawmakers, and “it is arbitrary and unclear why some nonprofits are included while others are not.”

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Ruth’s Reusable Resources receives $10,000 to $15,000 annually for its Tools for School backpack program, but $550 to $780 of that grant goes to sales tax, Thomas-Willey said.

“We could provide 50-70 additional backpacks each year with the money we pay in sales tax for the school supplies.”

Trekkers, a youth mentoring nonprofit in Rockland that helps young people from rural Maine navigate adulthood, said it paid nearly $6,000 in sales tax in 2022, which was equivalent to 2 1/2 months of its meal budget to feed the students.

There are more than 7,000 501(c)(3) nonprofit organizations in Maine as of 2018, according to the Maine Association of Nonprofits. Most have annual expenditures of less than $100,000. Nonprofits employ more than 100,000 Maine workers.

A table showing the fiscal impact of a blanket 501 c 3 exemption for Maine by fiscal year. In 2025, the impact would be $3,998,000. In 2026 the impact would be $9,821,000. In 2027, the impact would be $10,119,000. In 2028 the impact would be $10,407,000.
Source: Maine Revenue Services report.

Maine sales tax law currently has 56 provisions exempting different types of organizations, most requiring the applicant to be a nonprofit, according to the state report.

“While these exemptions are valuable to the organizations that qualify, Maine’s current patchwork of narrowly crafted exemptions creates inequities between similar organizations and confusion for taxpayers, leaving some nearly identical organizations with different eligibility,” according to the Maine Revenue Service.

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In a Feb. 15 presentation to the legislature’s Taxation Committee, Peter Lacy, an attorney with office of tax policy for the Department of Administrative and Financial Services, said that just since 2015 the legislature has approved exemptions for numerous groups, including veteran service organizations, heating assistance organizations, youth camps, nonprofit pet food assistance organizations, cemetery companies and areas agencies on aging.

In response to concerns the sales tax exemption could result in an additional loss of property tax to local communities, Lacy told committee members the measure would not impact a nonprofit’s status for property tax exemptions.

Rep. Joe Perry, D-Bangor, said that during his time on the committee, he’s reviewed numerous bills asking for nonprofit expansions and has never seen one come back and ask for additional property tax exemptions.

“I would have zero concern from my experience on the committee that this is a slippery slope,” he said.

The MRS report argues a clear standard will benefit taxpayers, lawmakers and the state by clearing up confusion and reducing the time spent on processing applications or considering exemptions. 

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“To the extent possible, tax law should be simple and accessible to the public,” MRS wrote in the January report. “Similarly situated organizations should receive similar tax benefits, and a blanket exemption for 501(c)(3) organizations would be a significant step towards the goal of creating a fairer, simpler sales tax.”

The proposed exemption will next go before the Appropriations and Financial Affairs Committee as part of the supplemental budget.





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Maine

Key takeaways from Maine’s new climate action plan

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Key takeaways from Maine’s new climate action plan


Wind Farm Maine

Wind turbines line a ridge on Stetson Mountain in 2009, in Washington County. Robert F. Bukaty/Associated Press, file

The Maine Climate Council is scheduled to release the state’s new climate action plan on Thursday, delivering an ambitious blueprint for how policymakers can accelerate the state’s transition to a clean energy economy and prepare for the impacts of climate change.

The plan, approved by the council at its October meeting, builds on the state’s original 2020 plan, Maine Won’t Wait. But the updated version focuses more than its predecessor on adaptations to the changing climate, building and industrial energy efficiency, and ensuring that all Mainers benefit from the climate actions outlined in the plan.

The plan doesn’t include many specific cost estimates, but notes that the cost of doing nothing would be much higher. It cites the $90 million in public infrastructure damage caused by last winter’s back-to-back storms, the kind of extreme weather events projected to become more frequent and ferocious due to climate change.

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The report identifies potential sources of funding to implement its recommendations, including the state budget, federal grants from the Inflation Reduction Act, private investment in clean energy projects, green bonds to finance climate-related projects and even implementation of a carbon pricing mechanism.

The plan now heads to Gov. Janet Mills, who appointed the first Maine Climate Council and will be on hand Thursday for the report’s release, and the Legislature, which is likely to consider some of these proposals in the upcoming legislative session.

Here are the major takeaways of Maine Won’t Wait 2.0.

• Maine’s ambitious emission reduction goals are reaffirmed.

The updated plan lays out how the state can help prevent the Earth from overheating by sticking to its original greenhouse gas goals: cut carbon emissions by 45% from 1990 levels by 2030 and by 80% by 2050, and achieve carbon neutrality by 2045.

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The plan prioritizes the rapid expansion of renewable energy sources, such as solar, wind, and hydropower, with an aim to reduce the state’s reliance on burning fossil fuels that create heat-trapping greenhouse gases.

It also maintains the state’s previous goal to generate 80% electricity from renewable sources by 2030. Maine is at 55% now.

• Maine will continue to promote the widespread adoption of electric vehicles, including cars, trucks and buses, to reduce transportation-related emissions. But the shift to electrified transportation would occur at a slower pace than laid out in the first climate action plan.

The state’s new goal calls for 150,000 light-duty EVs and 3,000 heavy-duty EVs on the roads by 2030. The 2020 plan called for 219,000 light-duty and 5,000 heavy-duty EVs, but the state has fallen short of those goals. Maine currently has 17,492 electric vehicles.

To reduce “range anxiety” – the concern that there is not enough charging capacity to support longe trips – the plan calls for creating 700 publicly funded fast-charging EV ports by 2028. Maine now has 273.

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The new plan emphasizes efficiency measures in buildings and industries to cut energy consumption. It encourages clean heating and cooling methods, such as a heat pump system, and adoption of new building codes and efficiency standards.

New goals include reducing commercial building energy demand by 10% by 2030, improving industrial process efficiency by 1% a year by 2030 and weatherizing 35,000 homes by 2030. Maine has weatherized 11,472 to date.

While calling for measures to slow climate change, the plan also emphasizes the need to prepare for the inevitable impacts, including sea-level rise, extreme weather events, and coastal erosion, and the need to protect critical infrastructure, natural resources and communities.

It includes strategies to protect Maine’s coastal communities and the working waterfront from sea-level rise and storm surges, such as elevating infrastructure, restoring coastal ecosystems, the use of incentives and fast-track permits, and new flood control measures.

The plan promotes carbon sequestration as part of the solution by recognizing the key role of Maine forests, wetlands and eel grass beds in trapping carbon and keeping the greenhouse gas out of the atmosphere. It  promotes the purchase, protection and restoration of such carbon sinks.

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Equity and social justice will be factored into the state’s responses to climate change. The plan emphasizes the importance of ensuring that the benefits of climate action are shared across all communities in Maine and addresses the disproportionate impact of climate change on marginalized communities.

The plan includes a number of goals to achieve by 2030, including 40,000 heat pumps installed in low-income households, 10,000 low- to middle-income homes weatherized and the creation of 1,500 energy-efficient affordable housing units. It also calls for EV rebates, rooftop solar installations or community solar projects and resilience grants to be directed to less affluent households and communities.

The plan identifies opportunities to create green jobs to spark economic growth through investments in clean energy, energy efficiency and climate resilience.

It sets a new goal to create 30,000 clean energy jobs by 2030. Maine has 15,557 now.

More forests, wetlands and working farms would be protected from development to offset the state’s carbon emissions, provide wildlife habitat and clean water, and help the tourism and natural resource industries. Maine has struggled to fund land acquisition at the rate sought by the council.

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The plan maintains the 2020 goal to conserve 30% of Maine lands by 2030. A little more than 22.2% of lands in Maine are protected now. Maine now conserves about 50,000 acres a year, but would need to protect 250,000 more acres a year if it hopes to hit that goal.



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Report says children's mental health, education and labor force growth will impact Maine's economy

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Report says children's mental health, education and labor force growth will impact Maine's economy


In it’s annual report released Wednesday, the Maine Economic Growth Council identified children’s mental health, education and labor force growth as several challenge areas facing Maine’s economy. The council said high housing and energy costs are also concerns.

The annual Measures of Growth report identifies where the Maine economy is improving and where there is still more work to do compared to other states across the country.

Yellow Light Breen, President of the Maine Development Foundation, a public-private organization focused on improving Maine’s economy, said the drop in elementary and middle school students test scores are most concerning to him.

“If we really want to have well educated 20-year-olds, 30-year-olds and 40-year-olds in the Maine of the future, we have to do right by them in preschool and in early elementary,” Breen said.

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According to the report, the state is doing well in the areas of internet connectivity, improved roadways and limited increases in greenhouse gas emissions and forestland removal.





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Tom's of Maine toothpaste tainted with bacteria, says U.S. Food and Drug Administration | CBC News

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Tom's of Maine toothpaste tainted with bacteria, says U.S. Food and Drug Administration | CBC News


A recent inspection of a Tom’s of Maine facility found that the company’s toothpaste was made using bacteria-tained water, among other serious health violations, according to the U.S. Food and Drug Administration.

In a warning letter to CEO Noel Wallace, the FDA said the inspection uncovered disease-causing bacteria in water used to make Tom’s Simply White Clean Mint Paste. The water was sampled between June 2021 to Oct. 2022.

The company uncovered a different bacteria in its Wicked Cool! Anticavity Toothpaste, and justified the bacteria as “sample contamination” without sufficient evidence, the FDA said.

An agency investigator also found a mould-like substance near a water storage tank at the company’s facility in Sanford, Maine, and a powdery residue on a surface near a station where Tom’s Silly Strawberry Anticavity was being made.

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The FDA letter said that the facility’s water system is inadequate and that the company needs a better complaints system to address consumer concerns.

“For example, approximately 400 complaints related to [odour], [colour], and taste in your toothpaste products, including those for children, were not investigated,” the letter read.

“These complaints are not investigated because your procedure requires an investigation only if a trend is identified.”

The agency added that the violations outlined in the letter were not intended as an exhaustive list, and that it’s the company’s responsibility to identify the cause of violations and prevent them from recurring.

Tom’s of Maine is a natural personal care brand owned by household products giant Colgate-Palmolive. CBC News reached out to the company for a statement.

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“We’re working with the FDA and are remedying the issues raised in their May inspection of the Tom’s toothpaste manufacturing plant in Sanford, Maine,” a spokesperson said.

“We have always tested finished goods before they leave our control, and we remain fully confident in the safety and quality of the toothpaste we make.”

CBC News also reached out to several retailers to ask if they carry any of the products mentioned in the letter.



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