Simplify the Taxation of Leasing Tangible Personal Property and To Clarify the Incidence of Use Tax

Last updated: May 21, 2017

Details about this bill
Category: Taxation
Status: Defeated
Sponsor: Representative Gary Hilliard, House 76
Session: 128
Bill #: LD 1589

Position:

Monitoring.

UPDATE: The bill was voted Ought Not to Pass.

Summary:

Part A moves the point of taxation with respect to leases of tangible personal property from a use tax on the lessor to a sales tax on each lease payment, in order to simplify the law and provide consistency with the tax treatment of leases in other states that impose a sales tax.

It updates the Maine Revised Statutes, Title 36, Part 3 to include leases, rentals and lessors in many existing provisions regarding sales and sellers and to add new provisions regarding leases, rentals and lessors that correspond to existing provisions regarding sales and sellers. It also updates sales tax exemptions that currently exempt sales to certain entities to also exempt leases and rentals to those entities.

It sources the first lease or rental payment to this State for taxation when the property is received in this State. Subsequent payments are sourced to this State as long as the primary property location for the period covered by the payment is in this State.

It clarifies the exemption for historical societies, museums and incorporated nonprofit memorial foundations.

It applies to sales occurring, and lease or rental agreements executed, on or after January 1, 2018.

 

Part B clarifies when owners of property that has been used outside of Maine are liable for a use tax when the property is brought into Maine. The bill updates several provisions, enacting a clear 90-day standard for use in Maine to give rise to a use tax liability. It applies to sales occurring, and lease or rental agreements executed, on or after January 1, 2018.

Part C terminates, as of December 31, 2017, the ability to claim an excise tax reimbursement for rental vehicles.