AUGUSTA — Members of veterans’ organizations and churches attended a public hearing Thursday on a bill that would exempt nonprofit groups from charging sales tax on meals.

LD 1613 was presented by Sen. Tom Saviello, R-Wilton, in an attempt to clarify a decades-old law.

Saviello spoke of three groups the law as written would affect. “Every dollar goes back into the community,” he said of Lions Club pancake breakfasts. Legion supper proceeds support disabled veterans or help maintain buildings.

In Fayette, community members buy ingredients, bake casseroles and then pay to eat at the Keep Me Warm Suppers. Every dollar goes into the heating fund. “I don’t think our intent is to tax that,” Saviello said. 

The bill is as broad as possible to include veterans’ organizations, social clubs, churches and synagogues and similar organizations, Saviello said. “If there is a fiscal note on the bill, you need to find out how much money (in sales tax) actually comes in from these organizations.” He didn’t think it would be very much.

Rep. H. Stedman Seavey, R-Kennebunkport, asked whether taxes had to be collected if donations were asked for rather than required. Saviello said he was told the tax is based on the fair market value of the meal and would have to be collected. 

Rep. Denise Tepler, D-Topsham, said clarification would be needed on the issue of donations. She also questioned whether the Fayette meals would be exempt based on the wording of the bill.

The legislation would affect “an incorporated nonprofit organization, including but not limited to a regularly organized church or house of religious worship, when the proceeds of the sale of the meals are used to fund the purpose of the organization,” according to the bill.

Rep. Gary Sukeforth, I-Appleton, said he had mixed feelings about the bill. He had no problem paying the tax on a meal he buys from a cafe or the Grange because he is the one owing the tax. “I don’t like the complication of having to collect that tax,” he said. 

The Rev. Izzie Radford-Nash, pastor of the Mexico Congregational Church, told committee members her church houses the local food pantry, free of rent, and pays all utility costs. The town has a population of 1,687 and 100 percent of students receive free school meals.

In 2015, the pantry served 1,774 families and 4,641 people. If the disposable income of the church is reduced by the sales tax, there may come a time when the church can no longer offer space for the food pantry, Radford-Nash said.  

The Rev. Margaret Proctor of the Wilton Congregational Church is retired but an active member of that church. When they learned of the tax issue, church leaders spoke of their options: absorb the tax, making it more difficult to make ends meet; take it from proceeds, leaving less to contribute to mission projects; or charge the tax, making it difficult for some to attend because of limited incomes. 

“The sales tax is a problem,” said Don Simoneau, American Legion past state commander and past commander of George Bunten Post No. 10. “A hundred-fifty dollars change is needed for a $400 meal.” People don’t want to run the cash register or make change.

Crystal McKay, president of Paris VFW and deacon of the Harrison Methodist Church, said the first group could only send $75 of the $100 raised at the February supper to the Togus VA Hospital. With no program for heat or electricity help, people are referred to her church for help. “Who will do that if we can’t hold fundraising breakfasts?” she asked. 

The only opposition to the bill came from Greg Dugal, president and CEO of the Maine Restaurant Association.

“Incorporated nonprofits include colleges and universities,” he said. “Some don’t pay property tax or income tax.” He asked the committee to change the definition. “I gladly support modifying the bill toward smaller organizations,” he said.

Tepler said for the work session a clear definition of “casual sales” would be needed. Clear wording on “nonprofit” is also needed.

Sen. Nathan Libby, D-Lewiston, said the law has been on the books for decades but no one knew. He asked for Maine Revenue Services numbers on how much has been collected in past years.       

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