AUGUSTA — A public hearing on a bill to exempt nonprofit organizations from a sales and use tax on meals used to fund their programs is scheduled for 1 p.m. Thursday, March 3, in Room 127 of the State House.

Sen. Tom Saviello, R-Wilton, submitted the emergency legislation, LD 1613, An Act to Exempt from Sales Tax Meals Sold by Nonprofit Organizations, this year.

American Legion posts, churches and other nonprofits, by law, should be collecting the 8 percent tax on meals served during their fundraising events.

Don Simoneau of Fayette, past state commander of the American Legion, attended a meeting in October to learn how new tax laws that went into effect Jan. 1 would impact George Bunten Post No. 10 of Livermore Falls, of which he is a member. He learned that the Legion should have been collecting the meals tax at its monthly suppers that raise money to support the organization.

Other nonprofits are paying the tax from proceeds, Simoneau said. But Post No. 10 could not afford to absorb the $40 that would be due the state from each supper, he said.

He was told groups that ask for donations should also be collecting taxes because it’s the value of the item — not what was given for it — that determines the tax.

David Heidrich, director of communications for the Department of Administrative and Financial Services, said the law is not new. A specific exemption for the American Legion Auxiliary was passed in 2001.

“The issues at hand are tax-exempt, nonprofit 501(c)(3) status and a state-based exemption from sales and use taxes,” Heidrich said. “Tax-exempt 501(c)(3) status is granted by the Internal Revenue Service. The state of Maine and Maine Revenue Services does not grant tax-exempt status to organizations based or operating within Maine.” 

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