Application For Retail Tobacco Products License

AINE

EVENUE

ERVICES

SALES, FUEL & SPECIAL TAX DIVISION

GENERAL INFORMATION BULLETIN

September 15, 2001

--- o ---

NO. 91

This bulletin contains important information about recent developments and issues that affect everyone who

pays Maine sales and use taxes. Please read it carefully.

CURRENT LEGISLATIVE CHANGES

SALES TAX RATE ON PREPARED FOOD INCREASES TO 7% ON OCTOBER 1, 2001

he Maine legislature recently enacted a sales tax increase from 5% to 7% on all food prepared by a retailer

effective October 1, 2001. Previously the 7% rate applied only to those establishments that were licensed to

serve alcoholic beverages on premises. Although often referred to during the legislative session as well as in

the media as a “meals tax”, the enacted language applies the 7% rate to all food that any retailer prepares. This

will affect all forms of prepared food, from coffee or a steamed hot dog sold by a convenience store to a meal sold

by a fast food chain.

The new definition of “prepared food” applies to:

•

all meals

•

all food and drink prepared by the retailer and ready-to-eat and

•

all food and drink sold by a retailer that is predominately in the business of selling

food prepared by that retailer.

A detailed notice was mailed last month to all retailers explaining the impact of this new legislation. Additional

copies are available at MRS or can be obtained from our website at

USE OF SALES TAX SHORT FORM

RETAILER’S NOW FACED WITH APPLYING

TEMPORARILY SUSPENDED

MULTIPLE TAX RATES

hose retailers who were previously filing the

he increase of sales tax on prepared food will

“short” version of the sales tax return will be

require certain retailers to impose multiple tax

required to file the “long” version beginning with

rates.

For instance a convenience store selling

the October 2001 return. Many retailers affected by

prepared food will be faced with collecting 7% tax

the change in sales tax rate on prepared food will be

on food that they have prepared such as hot coffee

required to report both 5% and 7% tax. The short

or steamed hot dogs, and 5% on taxable items such

version only accommodates sales at the 5% rate.

as soda, beer and candy.

Since MRS is unable to determine which retailers

will be affected by this change, the use of the

etailers are advised to verify that their cash

“short” version of the sales tax return will be

registers

point-of-sale

equipment

can

temporarily suspended. All sales tax accounts will

accommodate multiple tax rates.

receive the long form automatically beginning

October 2001. MRS plans to re-analyze all sales tax

accounts and reinstate the “short” version for

qualifying retailers early in 2002.

Application For Retail Tobacco Products License - 2002

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