AUGUSTA — A bill that would exempt nonprofit groups from charging sales tax on meals was amended and unanimously recommended for passage Tuesday by the Joint Standing Committee on Taxation.

LD 1613, “An Act to Exempt from Sales Tax Meals Sold by Nonprofit Organizations,” was sponsored by Sen. Tom Saviello, R-Wilton. 

The work session by the committee was postponed last week to obtain a definition of “casual sales” and determine the current extent of tax payments on meals by nonprofit organizations.

Saviello suggested setting a specific number of days per year for which nonprofit organizations would be exempt from having to pay a meals tax. He suggested 12 because many groups hold monthly fundraising suppers.

Saviello said many organizations also have seven-day food booths at local fairs. If such groups also held two rummage or yard sales each year, exempting 21 days would be another possibility.

Each organization would be responsible for keeping track of how many functions it holds annually. After meeting the threshold allowed, the organization would be liable for meals and/or sales taxes.

Rep. H. Stedman Seavey, R-Kennebunkport, said he doesn’t believe such organizations should be paying taxes because they are all very charitable.

Casual sales include transactions at bazaars, fairs, rummage sales, picnics or similar events by a civic, religious or fraternal organization that is not a registered retailer.

Sen. Nathan Libby, D-Lewiston, said many of these organizations are not currently paying taxes. He asked how a note estimating the financial impact of the bill would be attached to the legislation.

Peter Beaulieu, director of Maine Revenue Services, said many organizations are not properly categorized. He said the fiscal note would be an estimate.

Libby asked if the fiscal note would be smaller for a 21-day limit than a 52-day limit. “I’m thinking it would be less than $1 million,” he said.

Beaulieu said if the exemptions were tied to civic, fraternal and religious organizations, educational organizations and hospitals wouldn’t be included. He said most colleges and hospitals contract for meal services.

Committee analyst Julie Jones suggested changing the definition of casual sales to include meals and remove the language “that is not a registered retailer.”

Savillo’s bill was amended to strike the “registered retailer” language, to define casual sales to include meals, and to have no limit on the number of events.

The committee voted 10-0 to recommend passage.

Saviello said a fiscal note will be assigned to the bill this week. The Legislature will vote next week. With the unanimous vote from the committee, he expected the bill would pass in the House and the Senate and go to the governor. If signed, the bill would take effect Aug. 1.

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