AUGUSTA — A legislative committee held a work session Tuesday to address the almost $2 million fiscal note attached to a bill to exempt nonprofits from collecting sales tax on fundraising meals.

The size of the fiscal note could become an issue when the bill reaches the Appropriations table for funding. 

LD 1613, “An Act to Exempt from Sales Tax Meals Sold by Nonprofit Organizations,” was sponsored by Sen. Tom Saviello, R-Wilton. It was brought to his attention that nonprofit organizations, by law, should be collecting meals and sales taxes.

Many organizations didn’t know about the law. Others are now collecting meals taxes after learning of the law last fall. Saviello’s bill would remove the meals tax requirement.

Saviello told the Joint Standing Committee on Taxation that nonprofit organizations that cater meals for others should be remitting meals taxes.

Rep. Diane Russell, D-Portland, asked what goes into the fiscal note and under what circumstances nonprofits are submitting the meals tax.  

Michael Allen, associate commissioner for the Maine Department of Administrative and Financial Services, said Maine Revenue Services does receive taxes on the sales of meals from nonprofit organizations. The tax returns from those nonprofits became the basis for the fiscal note.

“We increased the fiscal note as there may be organizations that didn’t use the correct business code, then reduced the estimate, as some organizations may not serve alcoholic beverages,” Allen said.

“There is no real way to break down a catered event and a fundraising event,” he said.

Rep. H. Stedman Seavey, R-Kennebunkport, said most organizations shouldn’t be paying meals tax.

“We’ve kicked a sleeping dog,” he said. “We have to do something to make it equal and fair.”

Rep. Thomas Skolfield, R-Weld, said members of many organizations are criminals because these taxes aren’t being remitted.

“The whole thing is silly,” he said. “We need to fix it.”

One suggestion was to include civic, fraternal and religious organizations with an amendment already on the books for American Legion auxiliaries.

Another was to limit the number of events these organizations could hold in a year before becoming liable for meals and sales taxes.

Asked if it would be helpful to create different codes within statutes to differentiate catering and fundraising, Allen said he wasn’t sure it could be done.

Seavey proposed sticking with the previous vote.

Russell suggested that the committee should strongly advocate that the bill be funded by the Appropriations Committee.

Those present agreed.

“This does exactly what we want it to do,” said Sen. Earle McCormick, R-West Gardiner, chairman of the committee.

Saviello said all members of nonprofits should contact their senators and representatives to encourage funding for the bill.

pharnden@sunmediagroup.net

Copy the Story Link