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.
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.
The logos for streaming services Netflix, Hulu, Disney Plus and Sling TV are pictured on a remote control on Aug. 13, 2020, in Portland, Ore. (Jenny Kane/Associated Press)
Maine consumers will soon see a new line on their monthly Netflix and Hulu bills. Starting Jan. 1, digital streaming services will be included in the state’s 5.5% sales tax.
The new charge — billed by the state as a way to level the playing field around how cable and satellite services and streaming services are taxed — is among a handful of tax changes coming in the new year.
The sales tax on adult-use cannabis will increase from 10% to 14%, also on Jan. 1. Taxes on cigarettes will increase $1.50 per pack — from $2 to $3.50 — on Jan. 5.
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All three changes are part of the $320 million budget package lawmakers approved in June as an addition to the baseline $11.3 billion two-year budget passed in March.
Here are a few things to know about the streaming tax:
1. Why is this new tax taking effect?
Taxes on streaming services have been a long time coming in Maine. Former Republican Gov. Paul LePage proposed the idea in 2017, and it was pitched by Gov. Janet Mills, a Democrat, in 2020 and 2024. The idea was rejected all three times — until this year.
State officials said last spring the change creates fairness in the sales tax as streaming services become more popular and ubiquitous. It’s also expected to generate new revenue for the state.
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2. What services are impacted?
Currently, music and movies that are purchased and downloaded from a website are subject to sales tax, but that same music and those same movies are not taxed when streamed online.
The new changes add sales tax to monthly subscriptions for movie, television and audio streaming services, including Netflix, Hulu, Disney Plus, Spotify and Pandora. Podcasts and ringtones or other sound recordings are also included.
3. How much is it likely to cost you?
The new tax would add less than $1 to a standard Netflix subscription without ads priced at $17.99 per month. An $89.99 Hulu live television subscription would increase by about $5 per month.
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Beginning Jan. 1, providers will be required to state the amount of sales tax on customers’ receipts or state that their price includes Maine sales tax.
4. How much new revenue is this generating for the state?
The digital streaming tax is expected to bring in $5 million in new revenue in fiscal year 2026, which ends June 30. After that, it’s projected to bring in $12.5 million annually, with that figure expected to increase to $14.3 million by 2029.
The tax increase on cigarettes, which also includes an equivalent hike on other tobacco products, is expected to boost state revenues by about $75 million in the first year.
The cannabis sales tax increase, meanwhile, will be offset in part by a reduction in cannabis excise taxes, which are paid by cultivation facilities on transfers to manufacturers or retailers. The net increase in state revenue will be about $3.9 million in the first full year, the state projects.
Cars and trucks travel northbound along the Maine Turnpike in Arundel through a messy wintry mix on Feb. 4, 2022. (Gregory Rec/Staff Photographer)
A wintry mix is forecasted to come down on Maine starting in the early hours of Monday morning.
A mix of sleet and snow is expected to start falling around 1 a.m. Monday in the Portland area and closer to 3 a.m. in the Lewiston area. The mix will likely transition to freezing rain on Monday morning in time for the morning commute, making roads icy, according to the National Weather Service in Gray.
“That’s going to make conditions not ideal for traveling,” said Stephen Baron, a meteorologist at the National Weather Service.
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As temperatures inch above 32 degrees Fahrenheit on Monday afternoon, the freezing rain is forecasted to transition to regular rain. Ice on the roads will start to melt over the afternoon as well.
The forecast for the rest of the week is fairly clear as of now. The only other potential precipitation is on Wednesday, with a festive snowfall on New Year’s Eve “around the countdown,” said Baron.
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Sophie is a community reporter for Cumberland, Yarmouth, North Yarmouth and Falmouth and previously reported for the Forecaster. Her memories of briefly living on Mount Desert Island as a child drew her…
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Nearing the end of December, the streams are shrouded in ice. The trout are there, but they are lethargic and in a state of semi-hibernation. From the middle of November, I spend my weekends cutting, splitting and stacking logs for the woodstove; that is, when I’m not plowing snow off the long dirt drive that snakes off the macadam like a woodland stream, winding through hardwoods and coming to rest beside our home.
I could pay Don from the auto shop to do the plowing and we can heat our home with oil, but the effort to clear the drive and keep the stove full is an excuse to spend time outdoors, which keeps me active and sane throughout the winter months and provides the illusion of self-sufficiency.
By the third week of February, the banks of snow have melted along the dirt drive and on either side of the walk leading into our house. Some hardpack remains under the dogwood tree or in the lee of the outbuildings scattered around the 12 acres surrounding our home.
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My jeans bear oil stains that Trish has been unable to remove. The strings from the frayed bottoms trail behind the rubber heels of my felt-packed Sorels like a dry fly reeled against the stream’s current. The fingers of my inexpensive work gloves are worn through in a few places, and I have wrapped them with duct tape to keep the lining from falling out.
This morning, I’m wearing a heavy shirt with a stiff canvas exterior over a long-sleeve T-shirt. The words “Oquossoc Marine” are stitched in black across the front of my cap, the letters rising upward through a grease stain like boulders in a lake around which smallmouth bass might school.
Neatly stacked hardwood inside the lean-to, ready to keep the home warm for months to come. Credit: Courtesy of Bob Romano
I walk the short distance across the yard to a small shed, the lawn crunching under my boots. The morning frost glistens like tiny diamonds sprinkled among the blades of matted grass as the sun edges over a line of spruce to reveal a flawless blue sky.
Lifting the latch, I open the door. The smell of grease and oil hangs in the cold stillness. I reach past the chainsaw and grab the maul from the corner of the shed, walking back outside, passing the near-empty lean-to that contains the remains of two cords of stovewood. By this time of year, the pieces that remain are stacked against the back wall, some littering the floor, a few wedged into the corners.
Throughout November and the early part of December, the sound of my chainsaw fills the air as I down trees, hauling them from the woodlot across the earthen dam of our little pond and cutting them into stove-sized pieces. By January, I’m spending my time splitting the 12-inch logs, allowing them to season in the open air throughout spring and summer until the following fall when I stack them, row upon row, under the eaves of the empty lean-to.
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When I was younger, I split wood from morning until three or four in the afternoon, breaking only for lunch, a mountain of billets rising quickly, leaving the remainder of the winter for feeding birds, exploring the woods, tying flies. These days, I wear a back brace and work for no more than three hours a day, taking an entire winter of weekends to raise my mountain of split wood.
I can rent a gas-powered log splitter and form the pile of logs in days instead of months, but where is the honor in that? No, I prefer this six-pound maul, the one I now cradle in my hands, the same maul I have used to create 40 winters’ worth of firewood. Once, I replaced the shaft when an errant blow splintered it against the side of a stump, only later learning a trick used by hockey players to protect their sticks — duct tape wrapped around the base of the blade.
This morning, I stopped at the three chopping blocks frozen to the ground in front of the rising summit of wood. Chinks and grooves cut into the edges of each stump wherever the maul’s sharp blade has powered through a log. The bark has fallen away, lying in shreds, mixed into sawdust with pieces of kindling, wood chips, shavings and twigs, creating a ligneous gazpacho.
On either side lies a pile of logs, mostly sugar maple, white oak, shagbark hickory and ash; the type of hardwood that splits easily and burns slowly, providing an efficient source of heat for the woodstove. There is a smaller amount of soft wood that is stringy, more difficult to split and faster burning like poplar and tulip.
I like the smell of the resin, the feeling of the sawdust, spongy under my boots, the maul, familiar in my hands, but it is the sight of the growing mountain that I most enjoy, with its base of split logs, ridges of sticks and crags of twisted branch.
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Feet spread apart, I grasp the maul, my left hand around the bottom of the shaft, my right around its base. I take pleasure in the power that spreads from my legs up through my shoulders and down through my arms, the motion of the heavy blade as it swings through the air, the crack of the log as it splits in two. After 20 minutes, I unbutton the canvas shirt, remove the baseball cap and run a hand through my thinning hair.
A few feet from the woodpile a chickadee flits among the branches of an ironwood tree. Landing on the metal rung of the tube feeder, the little bird cocks its head sideways, its black eye looking like a tiny plastic bead. As the bird flies off with a seed, a titmouse appears with its gray breast feathers puffed outward, a little dun-colored pompadour shooting up as it chirps a complaint.
I swing the maul down, the blade striking off center. A quarter of the log splits away while the remaining piece falls over on its side. While the titmouse plucks a seed from the feeder, two goldfinches and a nuthatch impatiently chatter from the branches of a nearby sugar maple.
Clouds have moved in from the west and without the sun there is a chill in the air. Even so, I’m sweating. I hang the outer shirt from a nail hammered into the side of the woodshed and roll up the long sleeves of my T-shirt.
The next swing of the maul fails to split the log. Aiming for a fracture, I try again, causing a chunk of wood to fly end over end across the frozen ground.
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I develop a rhythm — bend, pick up a log, split. Bend, pick up a log and split. There is ample time for reflection. Today, I fancy myself an aging samurai, past my prime, without a lord to follow or battle to fight, but still able to wield a weapon with grace and skill. After a while, I stoop down, tossing the scattered billets toward the top of the pile, the mountain growing high under the ashen clouds.
When snow begins to fall, I remove the canvas shirt from the nail and slip it back on. The flakes are light, dry. They settle on my shoulders, the chopping blocks, the woodpile, covering the branches of the ironwood tree and sticking to the ground.
The birds are now darting back and forth grabbing seeds without hesitation. In the stillness of the afternoon, I hear the flutter of their wings.
