Melanie operates Mels Bakery in Foxboro, Massachusetts, and has retail stores in Connecticut, Maine, Massachusetts, New Hampshire, and Rhode Island. Mels Bakery also ships specialty breads nationwide upon request. Determine Mels Bakerys sales tax collection responsibility and calculate the sales tax liability for Massachusetts, Connecticut, Maine, New Hampshire, Rhode Island, and Texas, based on the following information:

a. The Massachusetts stores earn $595,000 in sales. Massachusettss sales tax rate is 5 percent; assume it exempts food items including bakery goods.

Massachusetts' sales tax liability

b. The Connecticut retail stores have $476,000 in sales ($347,500 from in-store sales and $128,500 from catering) and $19,500 in delivery charges for catering activities. Connecticut sales tax is 6 percent and excludes food products but taxes prepared meals (catering). Connecticut also imposes sales tax on delivery charges on taxable sales.

Connecticut sales tax liability

c. Mels Bakerys Maine retail store has $326,000 of sales ($257,000 for take-out and $69,000 of in-store sales). Maine has a 5 percent sales tax rate and a 7 percent sales tax rate on prepared food; it exempts other food purchases such as take-out purchases.

Maine sales tax liability

d. The New Hampshire retail stores have $278,500 in sales. New Hampshire is one of five states with no sales tax. However, it has a room and meals tax rate of 8 percent. New Hampshire considers any food or beverage served by a restaurant for consumption on or off the premises to be a meal. (Note: Sales and use taxes are excise taxes levied on the sale or use of tangible personal property within a state regardless of what they are called.)

New Hampshire sales tax liability

e. Mels Bakerys Rhode Island stores earn $328,500 in sales. The Rhode Island sales tax rate is 7 percent and its restaurant surtax is 1 percent. Rhode Island considers Mels Bakery to be a restaurant because its retail store has seating.

Rhode Island sales tax liability

f. One of Mels Bakerys best customers relocated to Texas, which imposes an 8.25 percent state and local sales tax rate but exempts bakery products. This customer entertains guests regularly and made 10 orders totaling $16,900 of food items this year. Assume Texas only has a sales threshold of $500,000 to establish an economic nexus.

Texas sales tax liability