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Amend the bill in Part A in section 2 by striking out all of subsection 2-B (page 1, lines 26 to 33 in L.D.) and inserting the following:
 
‘2-B.  Digital audio-visual and digital audio services.     "Digital audio-visual and digital audio services" means the electronic transfer of digital audio-visual works and digital audio works to an end user with the right of less than permanent use granted by the seller, including when conditioned upon continued payment from the purchaser or a subscription.
 
For purposes of this subsection:
 
A.  "End user" means a person other than a person who receives by contract a product transferred electronically for further commercial broadcast, rebroadcast, transmission, retransmission, licensing, relicensing, distribution, redistribution or exhibition of the product, in whole or in part, to another person;
 
B.  "Permanent" means perpetual or for an indefinite or unspecified length of time;
 
C.  "Subscription" means an agreement with a seller that grants a purchaser the right to obtain products transferred electronically, in a fixed quantity or for a fixed period of time, or both; and
 
D. "Transfer electronically" or "electronic transfer" means obtainment by the purchaser by means other than tangible storage media.’
Amend the bill in Part A by striking out all of section 8 and inserting the following:
‘Sec. A-8.  36 MRSA §2556-A  is enacted to read:
§ 2556-A. Sourcing for sales of digital audio-visual and digital audio services
The sale of digital audio-visual and digital audio services is sourced in this State pursuant to this section.
 
1.  Sourced to address of purchaser in seller's business records.     The sale is sourced to the location indicated by an address for the purchaser that is available from the business records of the seller that are maintained in the ordinary course of the seller's business when use of this address does not constitute bad faith.
 
2.   Sourced to address of purchaser not in seller's business records.     For a sale when subsection 1 does not apply, the sale is sourced to the location indicated by an address for the purchaser obtained during the consummation of the sale, including the address of a purchaser's payment instrument, if no other address is available, when use of this address does not constitute bad faith.
 
3.  Sourced to address from which service provided.     When subsections 1 and 2 do not apply, including the circumstance in which the seller is without sufficient information to apply subsection 1 or 2, the location is determined by the address from which the service was provided, disregarding for these purposes any location that was merely the site from which the digital transfer of the product sold was provided.
 
4.  Mobile telecommunications service providers.    Notwithstanding subsections 1 to 3, the sale of digital audio-visual and digital audio services by a provider of mobile telecommunications service is sourced in the same manner as mobile telecommunications services pursuant to section 2556.’
Amend the bill in Part B in section 1 in subsection 10 on the 2nd line (page 3, line 26 in L.D.) by striking out the following: "substantial"
Amend the bill in Part B in section 2 in §5200-B in subsection 1 on the first line (page 3, line 33 in L.D.) by striking out the following: "substantial"
Amend the bill in Part B in section 2 in §5200-B in subsection 3 on the 2nd line (page 4, line 14 in L.D.) by striking out the following: "substantial"
Amend the bill in Part B in section 2 in §5200-B by inserting at the end the following:
 
‘4.  Federal protection.    A state that is without jurisdiction to impose a tax on the net income of a taxpayer because that taxpayer comes under the protection of 15 United States Code, Sections 381 to 384, does not gain jurisdiction to impose such a tax because the taxpayer's property, payroll or sales in the State exceed a threshold established in subsection 1.’
Amend the bill by inserting after Part D the following:
PART E
‘
Sec. E-1.  36 MRSA §1760, sub-§104  is enacted to read:
 
104.  Section 501(c)(3) nonprofit organizations.      Sales to a nonprofit organization that has been determined by the United States Internal Revenue Service to be exempt from federal income taxation under Section 501(c)(3) of the Code, if the tangible personal property or taxable services sold are to be used primarily for the purposes for which the nonprofit organization was organized.
Sec. E-2.  36 MRSA §2557, sub-§40  is enacted to read:
 
40.  Section 501(c)(3) nonprofit organizations.     Sales to a nonprofit organization that has been determined by the United States Internal Revenue Service to be exempt from federal income taxation under Section 501(c)(3) of the Code, if the services sold are to be used primarily for the purposes for which the nonprofit organization was organized.
Sec. E-3. Study; additional legislation. The Department of Administrative and Financial Services, Bureau of Revenue Services, Office of Tax Policy shall study the entity-based exemptions provided to qualifying nonprofit organizations from sales tax pursuant to the Maine Revised Statutes, Title 36, section 1760 and from service provider tax pursuant to Title 36, section 2557. The department shall submit legislation repealing or otherwise modifying any of those exemptions that are found to be duplicative or unnecessary to the joint standing committee of the Legislature having jurisdiction over taxation matters by December 2, 2020. The joint standing committee may report out a bill to the First Regular Session of the 130th Legislature regarding that report. Notwithstanding Title 36, section 191, the Office of Tax Policy may disclose the number of nonprofit organizations not exempt under Section 501(c)(3) of the federal Internal Revenue Code of 1986 that have active exemption certificates under each sales or service provider tax exemption.
Sec. E-4. Effective date. This Part takes effect October 1, 2020.
PART F
Sec. F-1. Appropriations and allocations. The following appropriations and allocations are made.
 
ADMINISTRATIVE AND FINANCIAL SERVICES, DEPARTMENT OF
 
Revenue Services, Bureau of 0002
 
Initiative: Provides one-time funding for computer programming charges.

GENERAL FUND	2019-20	2020-21	
All Other	$0	$26,000	
			
GENERAL FUND TOTAL	$0	$26,000	
 
’
Amend the bill by relettering or renumbering any nonconsecutive Part letter or section number to read consecutively.
 
SUMMARY
This amendment is the majority report of the committee. This amendment amends provisions of the bill relating to the taxation of digital audio-visual and digital audio services. The amendment clarifies the corporate income tax nexus provisions of the bill by referring to "nexus" instead of "substantial nexus." The amendment also exempts from the sales and use tax and from the service provider tax sales to a nonprofit organization that has been determined by the United States Internal Revenue Service to be exempt from income taxation under Section 501(c)(3) of the federal Internal Revenue Code of 1986 if the property or services sold are to be used primarily for the purposes for which the nonprofit organization was organized. The amendment requires the Department of Administrative and Financial Services, Bureau of Revenue Services, Office of Tax Policy to review sales tax and service provider tax exemptions to identify provisions that should be repealed or amended because they are duplicative or otherwise unnecessary and to submit legislation repealing or modifying those exemptions. The amendment also adds an appropriations and allocations section.
FISCAL NOTE REQUIRED
(See attached)