ENACTED TAX LEGISLATION – 2013 SESSION

General (non-emergency) Effective date:  October 9, 2013

(includes legislation enacted in prior sessions that become effective beginning in 2013)

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Administrative Provisions
 
General
 
Income/Estate Tax Division
Individual Income Tax
Fiduciary Income Tax
Estate Tax
Corporate Income Tax
Income Tax Withholding
Insurance Premiums Taxes
Franchise Tax
Circuitbreaker Program
Business Equipment Tax Reimbursement Program
Employment Tax Increment Financing (ETIF) Program
 
Sales, Fuel & Special Tax Division
Sales/Use Tax
Service Provider Tax
Motor Fuel Taxes
Potato Tax
Blueberry Tax
Hospital Tax
Maine Bottle Law
 
Property Tax Division
Property Tax Division

ENACTED TAX LEGISLATION 2013 SESSION

General (non-emergency) Effective Date: October 9, 2013 (includes legislation enacted in prior sessions that become effective beginning in 2013)

Administrative Provisions

Maine Board of Tax Appeals.  The law clarifies that taxpayers appealing a reconsidered decision with the Maine Board of Tax Appeals may be represented by accountants, enrolled agents and other persons allowed as representatives under 36 M.R.S.A. § 151-A(2).  The law also lowers the “small claim request” threshold from $5,000 to $1,000.  Claims of $1,000 or more may be appealed to the Maine Board of Tax Appeals.  Effective April 22, 2013.  4 M.R.S.A. § 807(3)(R); 36 M.R.S.A. §§ 151(2)(E) & 151-A(2); LD 430, PL 2013, c. 45.

Maine Board of Tax Appeals.  An appeals conference must be requested within 20 days of filing a statement of appeal.  Effective October 9, 2013.  36 M.R.S.A. § 151-D(10)(A); LD 988, PL 2013, c. 331, § B-1.

Tax Expenditure Review Task Force.  This task force, to be co-chaired by a member of the Senate and a member of the House of Representatives, is being charged with examining Maine’s tax expenditures, identifying best practices and standardized criteria used by other states for measuring the effectiveness of tax expenditures, determining the purpose and economic impact of certain tax expenditures, prioritizing tax expenditures, developing a process for ongoing evaluation of tax expenditures, and recommending repeal or reduction of tax expenditures to achieve a savings of at least $40,000,000.  The task force must submit a report of its findings and recommendations to the Joint Standing Committee on Appropriations and Financial Affairs by December 4, 2013.  LD 1509, PL 2013, c. 368, Pt. S.

Nonprofit Tax Review Task Force.  The Commissioner of the Department of Administrative and Financial Services is required to convene a task force to evaluate the feasibility and desirability for imposing a temporary assessment on certain nonprofit organizations that will generate approximately $100,000,000 in revenue annually.  The task force must consider the treatment of nonprofit organizations by other cities and states.  Report of the task force must be submitted to the Joint Standing Committee on Appropriations and Financial Affairs and the Joint Standing Committee on Taxation no later than December 1, 2013.  LD 1509, PL 2013, c. 368, Pt. AA.

Program Evaluation Reports.  Maine agency program evaluation reports filed periodically with the Legislature, with the appropriate committees must now identify provisions that may require legislative review to determine the necessity of amendment to align Maine statutes with federal law, other state law or judicial decisions.  No longer required to be included in the reports are information regarding agency compliance with federal and state health/safety laws, agency regulatory agenda and summary of rules adopted.   Prior to commencement of the formal review process, each committee will request a one-page list of agency organizational units and the programs therein.  Effective October 9, 2013.  1 M.R.S.A. c. 33; LD 785, PL 2013, c. 110. 3 M.R.S.A. §§ 955, 956 & 957; LD 1140, PL 2013, c. 307.

Freedom of Access Act.  State agencies must acknowledge receipt of an FOAA request within five working days.  An FOAA response must include a good faith, nonbinding estimate of the cost to provide the records.  Failure to provide a written denial or refusal is considered a failure to allow inspection or copying and is subject to an appeal to Superior Court.  Effective October 9, 2013.  1 M.R.S.A. §§ 408-A & 409; LD 1216, PL 2013, c. 350.

General

Conformity.  The law updates references to the United States Internal Revenue Code of 1986 contained in the Maine Revised Statutes, Title 36 so that they refer to the United States Internal Revenue Code of 1986 as amended through January 2, 2013. The bill primarily affects the State's income tax laws and includes, for example, conformity to the federal increased limitations in Code § 179 expenses for tax years beginning in 2012 and 2013.  Applies to tax years beginning on or after January 1, 2013, and for any prior tax year as specifically provided by the United States Internal Revenue Code of 1986 as amended.  36 M.R.S.A. § 111(1-A); LD 1509, PL 2013, c. 368, Pt. TT, § 1.

Individual Income Tax

Non-Maine Active Duty Military Pay.  The income subtraction modification for non-Maine active duty military pay is amended to more accurately describe under what conditions the military pay is eligible for the modification.  Non-Maine active duty military pay qualifies for the modification if all of the following apply:

  • the income was earned during the taxable year for service performed outside Maine under written military orders;
  • the income is included in federal adjusted gross income and is otherwise taxable by Maine;
  • the income is for active duty service in the active components of the US Army, Navy, Air Force, Marines or Coast Guard by a service member whose permanent duty station during the service period was located outside Maine – OR – the income is for active duty service in the active or reserve components of the US Army, Navy, Air Force, Marines or Coast Guard or in the Maine National Guard by a service member in support of a federal operational mission or a declared state or federal disaster response when the orders are either at federal direction or at the direction of the Maine Governor.

Applies to tax years beginning after 2013.  36 M.R.S.A. § 5122(2)(LL); LD 988, PL 2013, c. 331, § C-33.

Retirement plan benefits.  The law enacted in 2012 amends the income tax subtraction modification for certain retirement benefits to raise the $6,000 limit to $10,000. The subtraction modification is expanded to include all federally taxable pension income, annuity income and individual retirement account distributions, except pick-up contributions for which a deduction has been allowed.  Applies to tax years beginning on or after January 1, 2014.  36 M.R.S.A. §§ 5122(2)(M) & 5122(2)(M-1), LD 1746, PL 2011, c. 657, Part R.

Disaster assistance.  The law enacted in 2012 exempts from Maine income tax compensation and business income if the only presence in Maine during the taxable year is for the sole purpose of providing disaster relief.  Applies to tax years beginning on or after January 1, 2013.  36 M.R.S.A. §§ 5102, 5142(8-B) & 5211(16-B), LD 1836, PL 2011, c. 622.

Personal Exemption.  For tax years beginning on or after January 1, 2013, the law enacted in 2011 conforms the Maine individual income tax personal exemption amount to the federal personal exemption amount.  36 M.R.S.A. § 5126.  LD 1043, PL 2011, c. 380, Part N.

Standard Deduction.  Generally, Maine standard deduction amounts are equal to federal amounts.  For tax year 2013, however, the Maine standard deduction amount for married filing jointly filers is $10,150 and the deduction for married filing separately filers is $5,075.  36 M.R.S.A. § 5124-A; LD 1509, PL 2013, c. 368, Pt. TT, § 9.

Itemized Deductions. For tax years beginning on or after January 1, 2013, Maine itemized deductions are limited to $27,500.  This limitation will be adjusted annually for inflation for tax years beginning after 2013.  36 M.R.S.A. §§ 5125(2), 5125(4) & 5403; LD 1509, PL 2013, c. 368, Pt. TT, §§ 10, 11 & 19.

Bonus Depreciation.  For tax years beginning in 2013, Maine decouples from the federal bonus depreciation under IRC § 168(k).  The net increase in federal depreciation claimed due to bonus depreciation must be added back to income for Maine income tax purposes.  For property placed in service in Maine, the Maine capital investment credit is extended, with some modifications, for tax year 2013.  In tax years after 2013, the addition modification related to property not subject to the Maine capital investment credit will be recaptured through subtraction modifications.  36 M.R.S.A. §§ 5122(1)(HH) & 5122(2)(MM); LD 1509, PL 2013, c. 368, Pt. TT, §§ 4 & 8.

Tax Rate Schedules.  For tax years beginning on or after January 1, 2013, the individual income tax rates have been changed as follows by law enacted in 2011:  the 2% bracket is changed to a 0% bracket, the 4.5% and 7% brackets are collapsed into a 6.5% bracket and the 8.5% bracket is reduced to a 7.95% bracket.  36 M.R.S.A. § 5111; LD 1043, PL 2011, c. 380, Part N.

Indexing of the individual income tax rate schedules is suspended for two years.  The tax rate schedules applicable to the 2013 tax year will also apply to 2014 and 2015.  Beginning with tax year 2016, the rate schedules will be adjusted for inflation based on the chained consumer price index.  36 M.R.S.A. §§ 5111, 5402 & 5403; LD 1509, PL2013, c. 368, Pt. Q.

Low-Income Tax Credit.  The law repeals the low-income tax credit made obsolete by the tax rate schedules that apply to tax years beginning after 2012. Applies to tax years beginning after 2012.  36 M.R.S.A. § 5219-N; LD 988, PL 2013, c. 331, § C-35.

Property Tax Fairness Credit.  For tax years beginning on or after January 1, 2013, residents with Maine adjusted gross income of $40,000 or less are allowed a refundable property tax fairness credit against Maine income tax.  The credit is equal to 40% of the amount by which property tax or rent constituting property taxes paid during the tax year exceeds 10% of Maine adjusted gross income.  The credit is capped at $300 ($400 for individuals 70 years of age or older).  Renters (including certain renters living in subsidized housing if they receive social security disability payments or supplemental security income disability payments) also qualify if rent paid during the tax year exceeds 40% of Maine adjusted gross income (note that Maine adjusted gross income does not include social security income).  This new credit replaces the Circuitbreaker program.  The Department of Health and Human Services is directed to identify individuals eligible for the credit, but who do not file income tax returns, and to develop a process to assist individuals who are eligible for the credit with completing the necessary income tax forms to apply for the credit.  Effective June 26, 2013.  36 M.R.S.A. § 5219-II; LD 1509, PL 2013, c. 368, Pt. L, §§ 1 & 4.

Job Creation Through Educational Opportunity Program. The law enacted in 2012 amends the Job Creation Through Educational Opportunity Program as follows.  Changes that impact the calculation of the credit for educational opportunity apply to tax years beginning on or after January 1, 2013.

  • Allows an individual who transfers to an accredited Maine community college, college or university after completing up to 30 credit hours of course work at a non-Maine accredited community college, college or university to be eligible for 50% of the credit for educational opportunity in the case of an associate degree and 75% of the credit in the case of a bachelor’s degree.
  • Allows an employer to claim the tax credit if a qualified employee meets all eligibility criteria except that the qualified employee's associate or bachelor's degree was awarded by an accredited non-Maine community college, college or university.
  • Removes the requirement that loans eligible for the credit have a term of eight years or more.
  • Requires that loans eligible for the credit be part of the qualifying individual's financial aid package and be entered into before July 1, 2023.
  • Makes the credit refundable to program participants who obtain an associate or bachelor's degree in science, technology, engineering or mathematics (“STEM”).  The credit is not refundable with respect to employers that make loan payments on behalf of qualified employees.
  • Allows an individual deployed for military service to be eligible for the tax credit as long as all the other program qualifications are met.
  • Requires all Maine community colleges, colleges and universities to report to the Department of Education by February 1, 2021 on efforts to promote and enroll individuals in the Job Creation Through Educational Opportunity Program and to train admissions and financial aid staff about the program.  DOE must, by March 1, 2021, report its findings and recommendations regarding the program to the Education and Cultural Affairs Committee and the Taxation Committee.
  • Requires MRS to submit a report by March 1, 2021 to the Education and Cultural Affairs Committee and the Taxation Committee regarding the implementation of the credit for educational opportunity, including statistics on credits claimed.
  • Requires the Taxation Committee to review the credit for educational opportunity by June 1, 2021. The committee is required to consider information provided by MRS and DOE to determine whether the credit should be retained, modified or repealed.

  36 M.R.S.A. §§ 199-C(3) & 5217-D, LD 835, PL 2011, c. 665.

Maine Capital Investment Credit.  The Maine capital investment credit, which previously applied to tax years 2011 and 2012, is extended to tax year 2013, with some modifications.  The credit is equal to 9% of the bonus depreciation addition modification required under 36 M.R.S.A. § 5122(1)(HH)(1) related to property placed in service in Maine.  The new credit does not apply to the Maine financial institutions franchise tax and is prohibited with respect to certain property.  36 M.R.S.A. § 5219-II; LD 1509, PL 2013, c. 368, Pt. TT, § 18.

New Markets Capital Investment Program.  The existing investment limitations of $10,000,000 and $40,000,000 are clarified to apply to each project.  The term “project” is also defined.  In addition, the requirement that a qualified low-income community business that is a manufacturing or value-added production enterprise project to create or retain more than 200 jobs in order to qualify for the $40,000,000 per project limitation is removed.  Effective May 7, 2013.  36 M.R.S.A. § 5219-HH(1)(J); LD 1109, PL 2013, c. 75.

Minimum Tax Credit.  The law reverses a prior law change that requires the minimum tax credit to be reduced by certain refundable tax credits claimed by the taxpayer.  The Maine minimum tax credit should not be reduced by credits other than the Pine Tree Development Zone Credit and the credit for alternative minimum tax paid to other jurisdictions.  Applies retroactively to tax years beginning after 2011.  36 M.R.S.A. § 5203-C(4)(A); LD 988, PL 2013, c. 331, § C-34.
Tax Additions – Lump-sum and early retirement plan distributions – enacted in 2011.  For tax years beginning after 2012, the additional Maine taxes on lump-sum and early retirement plan distributions are repealed.  36 M.R.S.A. § 5204.  LD 1043, PL 2011, c. 380, Part N. 

Income tax return check-offs.  The law enacted in 2012 requires the following minimum annual contribution amounts for each check-off in order for the check off to remain on individual income tax forms in subsequent years: 

    • $10,000 or more in calendar year 2012
    • $13,000 or more in calendar year 2013
    • $16,000 or more in calendar year 2014
    • $19,000 or more in calendar year 2015
    • $22,000 or more in calendar year 2016
    • $25,000 or more for calendar years after 2016.

The law also requires the Taxation Committee to review by April 1, 2017 data regarding contributions made through check-offs and the cost to administer the check-offs.  The committee is authorized to submit a bill to the 128th Legislature to implement recommendations resulting from the review.  36 M.R.S.A. §§ 5283, 5283-A, 5284(2), 5284-A(2), 5285(2), 5285-A(2), 5288-A(1), 5289, 5290 & 5291, LD 1826, PL 2011, c. 685.

Income tax relief. With respect to tax years beginning after 2014, the law enacted in 2012 requires that individual income tax rates be reduced in any year there are sufficient funds in the Tax Relief Fund for Maine Residents to pay for the reduction in that year.  September 1, 2014, and annually thereafter, the State Tax Assessor must determine whether a reduction in the rates can be made.  Any reduction applies to tax years beginning on or after the following January 1.  The rates are to be reduced until there is a single rate of 4%.  LD 849, PL 2011, c. 692.

Fiduciary Income Tax

Administrative Expenses.  The law is changed to clarify that the requirement to add back to Maine fiduciary income administrative expenses claimed for federal fiduciary income tax purposes and also for Maine estate tax purposes applies to tax years beginning on or after January 1, 2013.  36 M.R.S.A. § 5122(1)(Y); LD 988, PL 2013, c. 331, § A-4.

Bonus Depreciation.  For tax years beginning in 2013, Maine decouples from the federal bonus depreciation under IRC § 168(k).  The net increase in federal depreciation claimed due to bonus depreciation must be added back to income for Maine income tax purposes.  For property placed in service in Maine, the Maine capital investment credit is extended, with some modifications, for tax year 2013.  In tax years after 2013, the addition modification related to property not subject to the Maine capital investment credit will be recaptured through subtraction modifications.  36 M.R.S.A. §§ 5122(1)(HH) & 5122(2)(MM); LD 1509, PL 2013, c. 368, Pt. TT, §§ 4 & 8.

Tax Rate Schedules.  For tax years beginning on or after January 1, 2013, the individual income tax rates have been changed as follows by law enacted in 2011:  the 2% bracket is changed to a 0% bracket, the 4.5% and 7% brackets are collapsed into a 6.5% bracket and the 8.5% bracket is reduced to a 7.95% bracket.  36 M.R.S.A. § 5111;  LD 1043, PL 2011, c. 380, Part N.

Indexing of the individual income tax rate schedules is suspended for two years.  The tax rate schedules applicable to the 2013 tax year will also apply to 2014 and 2015.  Beginning with tax year 2016, the rate schedules will be adjusted for inflation based on the chained consumer price index.  36 M.R.S.A. §§ 5111, 5402 & 5403; LD 1509, PL2013, c. 368, Pt. Q.

Job Creation Through Educational Opportunity Program – enacted in 2012. The law amends the Job Creation Through Educational Opportunity Program as follows.  Changes that impact the calculation of the credit for educational opportunity apply to tax years beginning on or after January 1, 2013.

  • Allows an individual who transfers to an accredited Maine community college, college or university after completing up to 30 credit hours of course work at a non-Maine accredited community college, college or university to be eligible for 50% of the credit for educational opportunity in the case of an associate degree and 75% of the credit in the case of a bachelor’s degree.
  • Allows an employer to claim the tax credit if a qualified employee meets all eligibility criteria except that the qualified employee's associate or bachelor's degree was awarded by an accredited non-Maine community college, college or university.
  • Removes the requirement that loans eligible for the credit have a term of eight years or more.
  • Requires that loans eligible for the credit be part of the qualifying individual's financial aid package and be entered into before July 1, 2023.
  • Makes the credit refundable to program participants who obtain an associate or bachelor's degree in science, technology, engineering or mathematics (“STEM”).  The credit is not refundable with respect to employers that make loan payments on behalf of qualified employees.
  • Allows an individual deployed for military service to be eligible for the tax credit as long as all the other program qualifications are met.
  • Requires all Maine community colleges, colleges and universities to report to the Department of Education by February 1, 2021 on efforts to promote and enroll individuals in the Job Creation Through Educational Opportunity Program and to train admissions and financial aid staff about the program.  DOE must, by March 1, 2021, report its findings and recommendations regarding the program to the Education and Cultural Affairs Committee and the Taxation Committee.
  • Requires MRS to submit a report by March 1, 2021 to the Education and Cultural Affairs Committee and the Taxation Committee regarding the implementation of the credit for educational opportunity, including statistics on credits claimed.
  • Requires the Taxation Committee to review the credit for educational opportunity by June 1, 2021. The committee is required to consider information provided by MRS and DOE to determine whether the credit should be retained, modified or repealed.

36 M.R.S.A. §§ 199-C(3) & 5217-D, LD 835, PL 2011, c. 665.

Maine Capital Investment Credit.  The Maine capital investment credit, which previously applied to tax years 2011 and 2012, is extended to tax year 2013, with some modifications.  The credit is equal to 9% of the bonus depreciation addition modification required under 36 M.R.S.A. § 5122(1)(HH)(1) related to property placed in service in Maine.  The new credit does not apply to the Maine financial institutions franchise tax and is prohibited with respect to certain property.  36 M.R.S.A. § 5219-II; LD 1509, PL 2013, c. 368, Pt. TT, § 18.

New Markets Capital Investment Program.  The existing investment limitations of $10,000,000 and $40,000,000 are clarified to apply to each project.  The term “project” is also defined.  In addition, the requirement that a qualified low-income community business that is a manufacturing or value-added production enterprise project to create or retain more than 200 jobs in order to qualify for the $40,000,000 per project limitation is removed.  Effective May 7, 2013.  36 M.R.S.A. § 5219-HH(1)(J); LD 1109, PL 2013, c. 75.

Minimum Tax Credit.  The law reverses a prior law change that requires the minimum tax credit to be reduced by certain refundable tax credits claimed by the taxpayer.  The Maine minimum tax credit should not be reduced by credits other than the Pine Tree Development Zone Credit and the credit for alternative minimum tax paid to other jurisdictions.  Applies retroactively to tax years beginning after 2011.  36 M.R.S.A. § 5203-C(4)(A); LD 988, PL 2013, c. 331, § C-34.

Tax Additions – Lump-sum and early retirement plan distributions – enacted in 2011.  For tax years beginning after 2012, the additional Maine taxes on lump-sum and early retirement plan distributions are repealed.  36 M.R.S.A. § 5204.  LD 1043, PL 2011, c. 380, Part N. 

 

Estate Tax

Estate Tax for deaths occurring after 2012.  The law enacted in 2011 provides that, with respect to the tax on estates of decedents dying after December 31, 2012, the exclusion amount increases from $1,000,000 to $2,000,000.  Also beginning in 2013, a progressive rate structure applies: 8% on estate value of more than $2,000,000 but less than or equal to $5,000,000; 10% on estate value of more than $5,000,000 but less than or equal to $8,000,000; 12% on estate value of more than $8,000,000.  36 M.R.S.A. chapter 577.  LD 1043, PL 2011, c. 380, Part M.

Lien for Taxes.  Two changes to Maine estate tax liens have been enacted.   First, the lien does not attach to any property passing by right of survivorship to a surviving joint tenant who was the decedent’s spouse on the decedent’s date of death.  This new law is effective October 9, 2013,   Such liens already in effect on the effective date of the new law  will be automatically released on that date by operation of the law.   Second, a Maine estate tax lien is automatically released ten years after the decedent’s date of death.  This new law is also effective October 9, 2013 and will apply to liens in effect on or after that date.  Thus, any lien in effect on the effective date of the new law that is ten years old or older is automatically released on that date by operation of the law.  36 M.R.S.A. §§ 4072 & 4112; LD 988, PL 2013, c. 331, §§ A-2 & A-3.

Adjusted Federal Gross Estate.  The definition of adjusted federal gross estate is amended to remove reference to Maine qualified terminable interest property.  Applies to estates of decedents dying on or after January 1, 2013.  36 M.R.S.A. § 4102(1); LD 988, PL 2013, c. 331, § C-17.

Return Required.  The requirement to file an estate tax return is amended to clarify that the gross estate must be increased by all taxable gifts made within one year of death.  The gross estate must also be increased by Maine elective property.  Effective October 9, 2013.  36 M.R.S.A. § 4107(2)(B); LD 988, PL 2013, c. 331, § C-18.

 

Corporate Income Tax

Bonus Depreciation.  For tax years beginning in 2013, Maine decouples from the federal bonus depreciation under IRC § 168(k).  The net increase in federal depreciation claimed due to bonus depreciation must be added back to income for Maine income tax purposes.  For property placed in service in Maine, the Maine capital investment credit is extended, with some modifications, for tax year 2013.  In tax years after 2013, the addition modification related to property not subject to the Maine capital investment credit will be recaptured through subtraction modifications.  36 M.R.S.A. §§ 5200-A(1)(AA) & 5200-A(2)(Y); LD 1509, PL 2013, c. 368, Pt. TT, §§ 14 & 17.

Disaster assistance.  The law enacted in 2012 exempts from Maine income tax compensation and business income if the only presence in Maine during the taxable year is for the sole purpose of providing disaster relief.  Applies to tax years beginning on or after January 1, 2013.  36 M.R.S.A. §§ 5102, 5142(8-B) & 5211(16-B), LD 1836, PL 2011, c. 622.

Maine Capital Investment Credit.  The Maine capital investment credit, which previously applied to tax years 2011 and 2012, is extended to tax year 2013, with some modifications.  The credit is equal to 9% of the bonus depreciation addition modification required under 36 M.R.S.A. § 5200-A(1)(AA)(1) related to property placed in service in Maine.  The new credit does not apply to the Maine financial institutions franchise tax and is prohibited with respect to certain property.  36 M.R.S.A. § 5219-II; LD 1509, PL 2013, c. 368, Pt. TT, § 18.

New Markets Capital Investment Program.  The existing investment limitations of $10,000,000 and $40,000,000 are clarified to apply to each project.  The term “project” is also defined.  In addition, the requirement that a qualified low-income community business that is a manufacturing or value-added production enterprise project to create or retain more than 200 jobs in order to qualify for the $40,000,000 per project limitation is removed.  Effective May 7, 2013.  36 M.R.S.A. § 5219-HH(1)(J); LD 1109, PL 2013, c. 75.

Minimum Tax Credit.  The law reverses a prior law change that requires the minimum tax credit to be reduced by certain refundable tax credits claimed by the taxpayer.  The Maine minimum tax credit should not be reduced by credits other than the Pine Tree Development Zone Credit and the credit for alternative minimum tax paid to other jurisdictions.  Applies retroactively to tax years beginning after 2011.  36 M.R.S.A. § 5203-C(4)(A); LD 988, PL 2013, c. 331, § C-34.

Job Creation Through Educational Opportunity Program – enacted in 2012. The law amends the Job Creation Through Educational Opportunity Program as follows.  Changes that impact the calculation of the credit for educational opportunity apply to tax years beginning on or after January 1, 2013.

  • Allows an individual who transfers to an accredited Maine community college, college or university after completing up to 30 credit hours of course work at a non-Maine accredited community college, college or university to be eligible for 50% of the credit for educational opportunity in the case of an associate degree and 75% of the credit in the case of a bachelor’s degree.
  • Allows an employer to claim the tax credit if a qualified employee meets all eligibility criteria except that the qualified employee's associate or bachelor's degree was awarded by an accredited non-Maine community college, college or university.
  • Removes the requirement that loans eligible for the credit have a term of eight years or more.
  • Requires that loans eligible for the credit be part of the qualifying individual's financial aid package and be entered into before July 1, 2023.
  • Makes the credit refundable to program participants who obtain an associate or bachelor's degree in science, technology, engineering or mathematics (“STEM”).  The credit is not refundable with respect to employers that make loan payments on behalf of qualified employees.
  • Allows an individual deployed for military service to be eligible for the tax credit as long as all the other program qualifications are met.
  • Requires all Maine community colleges, colleges and universities to report to the Department of Education by February 1, 2021 on efforts to promote and enroll individuals in the Job Creation Through Educational Opportunity Program and to train admissions and financial aid staff about the program.  DOE must, by March 1, 2021, report its findings and recommendations regarding the program to the Education and Cultural Affairs Committee and the Taxation Committee.
  • Requires MRS to submit a report by March 1, 2021 to the Education and Cultural Affairs Committee and the Taxation Committee regarding the implementation of the credit for educational opportunity, including statistics on credits claimed.
  • Requires the Taxation Committee to review the credit for educational opportunity by June 1, 2021. The committee is required to consider information provided by MRS and DOE to determine whether the credit should be retained, modified or repealed.

36 M.R.S.A. §§ 199-C(3) & 5217-D, LD 835, PL 2011, c. 665.

Income Tax Withholding

Tax Rate Schedules.  Indexing of the individual income tax rate schedules is suspended for two years.  The tax rate schedules applicable to the 2013 tax year will also apply to 2014 and 2015.  Beginning with tax year 2016, the rate schedules will be adjusted for inflation based on the chained consumer price index.  36 M.R.S.A. §§ 5111, 5402 & 5403; LD 1509, PL2013, c. 368, Pt. Q.

 

Insurance Premiums Taxes

New Markets Capital Investment Program.  The existing investment limitations of $10,000,000 and $40,000,000 are clarified to apply to each project.  The term “project” is also defined.  In addition, the requirement that a qualified low-income community business that is a manufacturing or value-added production enterprise project to create or retain more than 200 jobs in order to qualify for the $40,000,000 per project limitation is removed.  Effective May 7, 2013.  36 M.R.S.A. § 5219-HH(1)(J); LD 1109, PL 2013, c. 75.

Fire Investigation and Prevention Tax.  The Bureau of Insurance is required to determine the percentage of fire risk allocated to each line of insurance every five years.  The allocation rates impact fire investigation and prevention tax assessments calculated based on gross direct premiums for fire risks written in Maine.  Effective October 9, 2013.  25 M.R.S.A. § 2399; LD 296, PL 2013, c. 95.

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Franchise Tax

New Markets Capital Investment Program.  The existing investment limitations of $10,000,000 and $40,000,000 are clarified to apply to each project.  The term “project” is also defined.  In addition, the requirement that a qualified low-income community business that is a manufacturing or value-added production enterprise project to create or retain more than 200 jobs in order to qualify for the $40,000,000 per project limitation is removed.  Effective May 7, 2013.  36 M.R.S.A. § 5219-HH(1)(J), LD 1109, PL 2013, c. 75.

Job Creation Through Educational Opportunity Program – enacted in 2012. The law amends the Job Creation Through Educational Opportunity Program as follows.  Changes that impact the calculation of the credit for educational opportunity apply to tax years beginning on or after January 1, 2013.

  • Allows an individual who transfers to an accredited Maine community college, college or university after completing up to 30 credit hours of course work at a non-Maine accredited community college, college or university to be eligible for 50% of the credit for educational opportunity in the case of an associate degree and 75% of the credit in the case of a bachelor’s degree.
  • Allows an employer to claim the tax credit if a qualified employee meets all eligibility criteria except that the qualified employee's associate or bachelor's degree was awarded by an accredited non-Maine community college, college or university.
  • Removes the requirement that loans eligible for the credit have a term of eight years or more.
  • Requires that loans eligible for the credit be part of the qualifying individual's financial aid package and be entered into before July 1, 2023.
  • Makes the credit refundable to program participants who obtain an associate or bachelor's degree in science, technology, engineering or mathematics (“STEM”).  The credit is not refundable with respect to employers that make loan payments on behalf of qualified employees.
  • Allows an individual deployed for military service to be eligible for the tax credit as long as all the other program qualifications are met.
  • Requires all Maine community colleges, colleges and universities to report to the Department of Education by February 1, 2021 on efforts to promote and enroll individuals in the Job Creation Through Educational Opportunity Program and to train admissions and financial aid staff about the program.  DOE must, by March 1, 2021, report its findings and recommendations regarding the program to the Education and Cultural Affairs Committee and the Taxation Committee.
  • Requires MRS to submit a report by March 1, 2021 to the Education and Cultural Affairs Committee and the Taxation Committee regarding the implementation of the credit for educational opportunity, including statistics on credits claimed.
  • Requires the Taxation Committee to review the credit for educational opportunity by June 1, 2021. The committee is required to consider information provided by MRS and DOE to determine whether the credit should be retained, modified or repealed.

  36 M.R.S.A. §§ 199-C(3) & 5217-D; LD 835, PL 2011, c. 665.

 

Circuitbreaker Program

Program Repealed.  The Circuitbreaker program is repealed, effective August 1, 2013.  The program is replaced by the individual income tax Property Tax Fairness Credit available for tax years beginning on or after January 1, 2013.  The new credit is described above under the section entitled “3) Individual Income Tax.”  The Department of Health and Human Services is directed to identify individuals eligible for the credit, but who do not file income tax returns, and to develop a process to assist individuals who are eligible for the credit with completing the necessary income tax forms to apply for the credit.  36 M.R.S.A. § 6221; LD 1509, PL 2013, c. 368, Pt. L, §§ 2 & 4.

Business Equipment Tax Reimbursement Program

Assignment of reimbursement.  Businesses qualifying for reimbursement under the Business Equipment Tax Reimbursement program may assign reimbursements to the Finance Authority of Maine to pay back loans from that agency.  Effective October 9, 2013.  36 M.R.S.A. §§ 191 & 6656; LD 278, PL 2013, c. 67.

Reimbursements reduced.  For the application period beginning August 1, 2013, reimbursements under the BETR program are reduced to 90% of the otherwise calculated reimbursements.  For the application period beginning August 1, 2014, reimbursements are reduced to 80% of the otherwise calculated amounts.  36 M.R.S.A. § 6652(4); LD 1509, PL 2013, c. 368, Pt. K, § 1.
Study.  The Commissioner of the Department of Administrative and Financial Services must convene a task force to study the most efficient and economical way to transition the BETR program into the Business Equipment Tax Exemption (BETE) program.  Findings of the task force must be reported by December 1, 2013 to the Joint Standing Committee on Taxation, along with recommendations and any necessary implementing legislation.   LD 1509, PL 2013, c. 368, Pt. K, § 2.

 

Employment Tax Increment Financing (ETIF) Program

Assignment of reimbursement.  Employers qualifying for reimbursement under the Employment Tax Increment Financing program may assign reimbursements to the Finance Authority of Maine to pay back loans from that agency.  Effective October 9, 2013.  36 M.R.S.A. §§ 191 & 6758; LD 278, PL 2013, c. 67.

 

Sales/Use Tax

Sales tax exemption/refund for products used in commercial agricultural production – enacted in 2012.  The law expands the scope of the Maine Revised Statutes, Title 36, section 2013, which provides for the refund of sales tax on purchases of depreciable machinery and equipment used for commercial agricultural production and certain other purposes, to include items used in commercial wood harvesting and in the commercial production of crops, plants, trees, compost and livestock, which is intended to include greenhouse and nursery products.  Applies to purchases made on or after July 1, 2013.  36 M.R.S.A. §§ 1760(7-B) & 2013; LD 1746, PL 2011, c. 657, Part N.

Prepaid wireless service fees – enacted in 2012. The law establishes a methodology for the determination of the amount of fees imposed on prepaid wireless telecommunications service, and reallocates and amends the method of collection of the statewide prepaid wireless E-9-1-1 surcharge levied on prepaid wireless telecommunications service consumers. The seller is required to remit the fees and surcharges to the State Tax Assessor in the same manner as the sales tax; the assessor is required to remit the fees and surcharges to the Public Utilities Commission for disbursement by the commission to the various funds.  Effective January 1, 2013.  LD 1799, PL 2011, c. 600.

Rate increases.  The general sales/use tax rate is increased from 5% to 5.5% effective October 1, 2013, and the 7% rate on meals and lodging increases to 8% also effective October 1, 2013.  The law provides that these rates revert to 5% and 7% on June 30, 2015.   36 M.R.S.A. §§ 1811 and 1812, LD 1509, PL 2013, c. 368, Part M.

Digital products. The law clarifies that sales/use tax applies to products transferred electronically if the non-digital form of the product would be subject to tax as a sale of tangible personal property.   Effective June 26, 2013.  36 M.R.S.A. § 1811, LD 1509, PL 2013, c. 368, Part N.

Publications.  The sales/use tax exemption for regularly-issued publications is repealed effective October 1, 2013.  LD 1509, PL 2013, c. 368, Part P.

Aircraft.   The law extends the sunset date of the current exemption for aircraft and aircraft parts from June 30, 2015 to June 30, 2033 and requires review of exemption by the Legislature’s Taxation Committee by June 30, 2023.  Effective October 9, 2013.  36 M.R.S.A. § 1760(88-A), LD 279, PL 2013, c. 379.

Snowmobiles and All-Terrain Vehicles.  The law repeals the blanket exemptions for snowmobiles and ATVs sold to nonresidents.   Effective October 9, 2013, a snowmobile or ATV must be immediately removed from Maine in order for the sale to be exempt.  36 M.R.S.A. § 1760(23-C)(A), LD 720, PL 2013, c. 86. 

Truck warranties.  The law provides that extended warranties on trucks are subject to sales/use tax for sales occurring on or after October 9, 2013.  36 M.R.S.A. §§ 1752(17-B), 1752(11)(B)(17), and 1752(20-B), LD 728, PL 2013, c.156. 

Registration requirement – out-of-state sellers.  The law enacts a rebuttable presumption that certain out-of-state sellers that make sales in Maine are required to be registered for Maine sales/use tax purposes.  Effective October 9, 2013.  36 M.R.S.A. § 1754-B(1) and (1-A), LD 346, PL 2013, c. 200.

Resale certificates.  The law amends the statutory provisions governing the issuance and renewal of resale certificates in order to reflect current administrative practice.  Effective October 9, 2013. 36 M.R.S.A. § 1754-B(2-C), LD 988, PL 2013, c. 331, § A-1.

Casual sale exclusion – certain sales to business entities.  The law provides that casual sales of motor vehicles and certain other items are exempt from sales/use tax when the sale is to a corporation, partnership, LLC or LLP and the seller is the owner of 50% or more of the common stock of the corporation or of the ownership interests in the partnership, LLC or LLP.  Prior to this change, the seller needed to be a majority owner of the common stock of the corporation or of the ownership interests in the partnership, LLC or LLP.  Effective October 9, 2013.  36 M.R.S.A. § 1764, LD 988, PL 2013, c. 331, § C-9.

Sales by certain libraries and support organizations.  The law provides that sales by a public lending library, or by a nonprofit corporation organized to support such a library, are exempt from sales/use tax provided that proceeds from the sales are used to benefit the library.  Effective October 9, 2013.  36 M.R.S.A. § 1760(50), LD 915, PL 2013, c. 420.

 

Service Provider Tax

New services subject to tax.  The law provides that “group residential services for persons with brain injuries” are subject to the tax effective June 26, 2013 and that “personal home care services” are subject to the tax effective October 9, 2013.  In both cases the services are covered only when provided by designated agencies under a contract with the Maine Department of Health and Human Services.   36 M.R.S.A. §2552(1)(G) and (M).  LD 1509, PL 2013, c. 368, Part OOOO and LD 988, PL 2013, c.331, secs. C-12 through C-14.

Motor Fuel Taxes

Disclosure of information by Maine Revenue Services.  The law allows MRS to publish or otherwise disclose the number of gallons sold in a given month by a registered gasoline distributor or special fuel supplier.  Effective October 9, 2013.  36 M.R.S.A. §§ 191(2)(L) and (Q), LD 240, PL 2013, c. 25.

 

Potato Tax

Disclosure of information to Maine Potato Board.  The law allows MRS to disclose to the Maine Potato Board information obtained in the administration of the potato tax.  Effective March 27, 2013.  36 M.R.S.A. § 191(2)(A-1), LD 9, PL 2013, c. 10.

 

Blueberry Tax

Statutory clarification.  The law adds a new statutory definition of the term “unprocessed wild blueberries”, clarifies who is responsible for reporting the blueberry tax, and makes other changes to update and clarify the tax.   Effective October 9, 2013.  36 M.R.S.A. Chap. 701, LD 988, PL 2013, c. 331, secs. C-20 through C-30.

 

Hospital Tax

Taxable year.  The law provides that for state fiscal years beginning on or after July 1, 2013, a hospital’s taxable year is the hospital’s fiscal year that ended during calendar year 2012.  Effective June 26, 2013.   36 M.R.S.A. §2892, LD 1509, PL 2013, c. 368, Part QQ.

 

Maine Bottle Law

Initiators of deposit – small manufacturer exemption.  The law creates an exemption for a manufacturer that produces no more than 50,000 gallons of its product in a calendar year.  Effective October 9, 2013.   36 M.R.S.A. § 1866-E(6), LD 1121, PL 2013, c. 259.

Property Tax Division

Telecommunications taxation reform – enacted in 2011.  The law replaces the telecommunications personal property tax with an excise tax on telecommunications businesses for the privilege of operating in Maine. The excise tax is equal to the just value of qualified telecommunications equipment taxed at a rate of 19.2 mills in fiscal year 2012. For fiscal year 2013 and subsequent years, the State Tax Assessor must apply the tax rate of the municipality or the unorganized territory in which the qualified telecommunications equipment is located to the just value of the equipment as adjusted by the municipality's or the unorganized territory's certified assessment ratio. The bill establishes procedures for the assessment, collection and appeal of the excise tax.  LD 441, PL 2011, c. 430.

Veterans’ property tax exemption applications.  The law requires that veteran’s exemption applications, together with information provided with the application as proof of entitlement, may not be made available for public inspection.  Effective June 10, 2013.  LD 973, PL 2013, c. 222.

Vehicle excise tax for certain reconstructed vehicles.  The law establishes the basis for the determination of motor vehicle excise tax for vehicles in excess of 26,000 lbs. that have been reconstructed using a prepackaged ‘glider kit’ and for which a new certificate of title has been issued.  Provided that the prepackaged kit does not include a power train or engine, the excise tax for the re-titled vehicle is to be based on the maker’s list price of the prepackaged kit.  Effective October 9, 2013.  LD1379, PL 2013, c. 263.

Information required for abatement and appeals.  The law directs assessors or municipal officers to include in the written decision to the property owner the reason or reasons that support the decision to approve or deny an abatement request.  Effective October 9, 2013.  LD 719, PL 2013, c. 182.

Conveyance of the interest of the State in certain real estate in the Unorganized Territory.  This Resolve authorizes the State Tax Assessor to sell certain tax-acquired parcels located in the Unorganized Territory that were acquired by the State for nonpayment of property taxes.  Effective October 9, 2013. LD 1414, Resolves, 2013, c. 32.

Unorganized Territory Municipal Cost Component.  This law establishes the budget for state and county services for the Unorganized Territory (UT).  Effective May 30, 2013.  LD 1228, PL 2013, c. 174.

Cooperative housing owners’ exemption for the blind.  This law provides an exemption up to the just value of $4,000 for a cooperative housing unit of a qualifying shareholder who is a permanent resident and is legally blind as determined by a properly licensed Doctor of Medicine, Doctor of Osteopathy or Doctor of Optometry.  Effective October 9, 2013. LD 1164, PL 2013, c. 416.

Sudden and Severe Disruption of Valuation.    The law amends the sudden and severe disruption of valuation qualification and filing requirements for municipalities that incur a loss of at least 2% of the total municipal valuation when that loss is attributable to a single taxpayer as follows:  

  • The application must be submitted by March 31 of the year following the year in which the loss occurred.
  • The loss in valuation must be attributable to cessation of business operations, removal, functional or economic obsolescence not due to short term market volatility, or destruction or damage to the property resulting from disaster.
  • The loss was not reasonably determinable in the prior year.
  • The application must be accompanied by an appraisal prepared by a qualified appraiser and must consider all three (3) approaches to valuation.
  • The benefit to a qualified application for sudden and severe will be reflected in adjustments to education subsidy and revenue sharing in the fiscal year following the filing of the application.

Effective April 1, 2013.  LD 1509, PL2013, c. 368, Pt. O.

Business Equipment Tax Exemption (BETE).  The law amends BETE filing requirements when the value of all property owned by a single taxpayer in a municipality exceeds 2% of the valuation of the municipality for the prior year as follows:  

  • The taxpayer filing for exemption of qualified equipment is required to provide sufficient information, including income and expense information, for the assessor to be able to determine the just value of the property owned by the taxpayer as well as the value of the property for which exemption is claimed.  If the taxpayer fails to provide sufficient information to the assessor, the exemption will be disallowed. 
  • The municipal assessor is required to certify to the State Tax Assessor that the taxpayer provided sufficient information necessary to value the property and that the assessor considered the information in the determination of just value.  Failure of the assessor to certify this disqualifies the municipality from an enhanced reimbursement for exempt qualified property.
  • The municipality is required to provide the State Tax Assessor with an appraisal of the BETE qualified property performed by a qualified appraiser.  The appraisal must include a summary of the appraiser’s consideration of the three (3) approaches to valuation.

Effective April 1, 2014.  LD 1509, PL2013, c. 368, Pt. O.