Updates on Sales Tax Exemption

Date postedDecember 16, 2024
Posted By: Mary Alice Scott Advocacy + Government, Financial Management,

Beginning January 1, 2025, all 501(c)(3) nonprofit organizations in Maine will be exempt from sales tax for mission-related purchases, but before making exempt purchases, organizations must still apply for and receive an exemption certificate issued by Maine Revenue Services.

NOW AVAILABLE: Sales Tax Exemption Application for 501(c)(3)s.

MANP is hosting another informational webinar with Maine Revenue Services on January 22nd! Register here.

Quick Links for this Post

How to Apply

The application to apply online is available through the Maine Tax Portal.

  1. Go to https://revenue.maine.gov/_/#1
  2. Under "Quick Links", click "Register and Apply"
  3. Under "Apply for a Sales Exemption" click "Other Exemption Applications"

Organizations can also mail or scan and email a paper application form to salesapp.MRS@maine.gov. You can navigate to the paper application by visiting the this page of sales tax exempt organizations on Maine Revenue Services' section of Maine.gov. At the bottom of the page, there is a section for "Other Nonprofit Incorporated Agencies." The last listing is "501(c)(3) Organization" and there is a hyperlink in the right column titled "APP-171 (PDF)"

Frequently Asked Questions

About Eligibility + the Application Process
No
Only the 501(c)(3) would be exempt under this provision, but you can review the other exemptions under 36 M.R.S. § 1760 to see if the 501(c)(6) may qualify for a different exemption. 
No.  The exemption will  be retroactive only to the date the completed application was submitted, but no earlier than January 1.
MRS is not able to provide an estimate as they are anticipating a high volume of requests and patience is appreciated.
This is a permanent exemption and does not need to be renewed.
You will still need to report use tax on items purchased where sales tax was not paid to a vendor and the items will not be used in your exempt mission. 
No. This exemption applies only to the exempt 501(c)(3) organization itself.  
Yes.
The required information is listed on the application and, depending on how the organization is organized, may include: copies of organizational documents such as articles of incorporation, constitutions, bylaws, or Secretary of State filing receipts and a copy of the IRS-issued 501(c)(3) determination letters.  
The most recent bylaws will suffice.
The most up-to-date letter indicating the current status of your organization is sufficient.
Yes

The filing receipt for a corporation is documentation issued by the Secretary of State confirming that it accepted an organization's filing for incorporation.  

Documentation can be requested from the Maine Secretary of State's "Interactive Corporate Services" website.  Search for your organization at apps3.web.maine.gov/nei-sos-icrs/ICRS?MainPage=x, then click "Information Summary."

Documentation can be requested from the Maine Secretary of State's "Interactive Corporate Services" website.  Search for your organization at apps3.web.maine.gov/nei-sos-icrs/ICRS?MainPage=x, then click "Information Summary."

You can download copies of IRS determination letters (issued January 1, 2014 and later) using the IRS online search tool "Tax Exempt Organization Search" (TEOS) at irs.gov/charities-non-profits/tax-exempt-organization-search. 

To request a copy of a determination letter issued before 2014, submit Form 4506-B, Request for a Copy of Exempt Organization IRS Application or Letter PDF using the email feature on the form, irs.gov/pub/irs-pdf/f4506b.pdf. 
Prior to January 1, you can print/scan/email your application and supplemental documentation to salesapp.mrs@maine.gov, or you can print and mail your application. As of January 1st, you will be able to use the Maine Tax Portal at revenue.maine.gov, or can continue to print and e-mail or mail your application.
The sooner the better!  Exemptions for complete applications submitted on or after December 16th will go into effect January 1st, following review.
You can make this change or print an updated copy through the Maine Tax Portal.
This depends on whether the parent organization and subsidiary have separate federal EINs (Employer Identification Numbers).  Each organization with a separate federal EIN is required to apply for its own exemption certificate.  
You can make this change through the Maine Tax Portal.
About Using the Exemption
Yes.  You would need/us a resale certificate to purchase the items you resell and an exemption certificate for items you use in your exempt mission.

No. Organizations may not purchase items exempt under the 501(c)(3) sales tax exemption unless they have applied to MRS for, and been issued, the 501(c)(3) Exemption Certificate.    

A resale certificate allows retailers to purchase items to be resold at retail tax-free.  

A registration certificate is issued when a retailer registers with MRS for a sales and use tax account.  

An Industrial Users' Blanket Certificate of Exemption allows persons engaged in production to purchase certain ingredients, equipment, and other production inputs exempt from tax.  
This question can only be answered by the contractual parties based on the specific facts and circumstances of their agreement.
Yes; but refer to MRS Instructional Bulletin No. 36 and Rule 302 for the responsibilities of an exempt purchaser in presenting the exemption certificate to vendors.
Yes, to the extent the purchases of electricity (including transmission and distribution charges) are used for the organization's exempt purpose.
No.

If the nonprofit organization's organizational purpose is to build or otherwise provide affordable housing, the organization may use their 501(c)(3) Exemption Certificate to purchase items for use in the building of affordable housing.

For items purchased by a contractor, the exemption only applies to items that will be incorporated into the real estate of the exempt organization.  A Contractor’s Exemption Purchase Certificate (STA-119) must be completed by the contractor and supplied to the vendor.  

Any other purchases made by the contractor for use on such a job are taxable.  Taxable purchases include, but are not limited to: consumables, tools, supplies, equipment, equipment rentals, fuel, safety equipment, apparel, and temporary structures. 
Purchases are exempt if the items purchased are to be used primarily for the purposes for which the nonprofit organization was organized.  If these items are sold,  gifted, or used for a purpose other than the organizational purpose, the nonprofit must collect sales tax or incur use tax.
Yes, in Maine a lease is considered a purchase on or after January 1, 2025.
The organization can authorize the consultant to make purchases for the organization in the same manner as the organization can authorize an employee to make purchases for the organization.  The purchase would need to meet the requirements for exemption set forth in MRS Rule 302.  The consultant may not use the organization's exemption certificate to make purchases for use by the consultant.
Purchases are exempt if the items purchased are to be used primarily for the purposes for which the nonprofit organization was organized.  If these items are sold,  gifted, or used for a purpose other than the organizational purpose, the nonprofit must collect sales tax or incur use tax.
Yes, you must provide a copy for each vendor's records.
Purchases subject to sales tax (including the rental of living quarters) are exempt if the items or services purchased are to be used primarily for the purposes for which the nonprofit organization was organized.
In order for a sale to be exempt from tax, the exemption certificate must be taken by the retailer in good faith.  If a retailer has, at the time of the sale, knowledge of facts that give rise to a reasonable inference that the certificate is not being presented in good faith, the retailer is not required to accept the exemption certificate.  Retailers may also put their own requirements on how a purchaser may present their exemption certificate (e.g., submitting documentation to HQ prior to purchasing, establishing an account, etc.).

Purchases of lodging, food and beverage for mission-related events will be exempt if the items or services purchased are to be used primarily for the purposes for which the nonprofit organization was organized.  The exemption does not apply to any items purchased for personal use.  

The rental of audio media and audio equipment pursuant to a rental-purchase agreement, and video media or video equipment are rentals subject to the service provider tax; the 501(c)(3) exemption only applies to items and services taxable under the sales tax, not the service provider tax.
You should not use your exemption certificate to purchase items or components of items that are being resold by you.  If you are selling the items in a retail sale, you should be purchasing the items with a resale certificate, or in the case where you are changing the character or composition of the items before they are sold, providing the vendor with an Industrial Blanket Certificate, which requires a sales tax registration number.  If you are selling the items at casual sale, you should be paying tax on the items when you purchase them and not collecting tax from the purchaser. 
Prizes and other incentives that are given away are subject to tax.
Items purchased by your organization for resale at retail sale may be made tax-free by presenting a resale certificate to your vendors, not your 501(c)(3) Exemption Certificate.  Sales tax must be collected on the sales the organization makes to its customers in its retail store, unless another exemption applies.  The 501(c)(3) exemption does not apply to the sales a nonprofit organization makes in a retail store.

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