Unemployment Tax Liability & Exemptions
This page provides information on unemployment tax liability and exemptions. To view a complete listing, follow the appropriate links as referenced below..
TITLE 26: LABOR AND INDUSTRY (Complete Reference Link)
If you pay $1500 in a quarter in either the previous or current year or, if you employ one or more individuals for 20 calendar weeks in either the previous or current calendar year, (the weeks do not have to be consecutive nor does it have to be the same person employed) you are considered an new employer.
If you acquired a business, trade or organization or substantially all of the assets of another, and at the time of acquisition, are an employer, you are considered a successor.
If an employing unit is owned or controlled by another employing unit, and if treated as a single unit, meets the terms of employment under paragraph A-1; H or J, it is considered an employer in it's own right.
If you are liable for the Federal Unemployment Tax Act (FUTA) and take the credit authorized, you are an employer.
If two or more related corporations concurrently employ the same individual and pay that person through a common paymaster, those corporations shall be considered a single employer.
If you pay wages of $20,000 or more in a quarter in the previous or current calendar year, or employ 10 or more persons for some part of a day for 20 different calendar weeks (not necessarily consecutive weeks or the same persons) in the previous or current calendar year, you are an employer.
If you pay wages of $1000 in a year for the previous or current calendar year, you are an employer.
Four factors, taken in sequence, determine whether or not employment is reportable in Maine:
- Place where work is localized. If the work is/was performed entirely within the State of Maine, it is reportable in Maine. If the work performed in Maine is/was incidental (temporary or transitory), then it is not reportable in Maine, but if incidental outside of Maine, it is reportable in Maine.
- Base of operations. If the service is performed partly in Maine, and the base of operations is in Maine, it is reportable in Maine. The base of operations may be an office, residence of the worker, or other location specified in a contract of employment.
- Place from which the service is directed or controlled. If the service is performed in Maine and the employee is controlled or directed from Maine, it is employment reportable in Maine.
- Place of residence. If the above three factors do not apply and the person performs some service in, and the worker’s residence is in Maine, it is employment reportable in Maine.
Please click here to go to a separate document that fully explains this law.
Some agricultural services are exempt from taxation, if the service is performed by an alien (other than a citizen of a contiguous country with which the United States has an agreement for unemployment) admitted into the US to perform this function per the United States Immigration & Nationality Act (section 214(c) and 101(a) (15) (H)).
Family members are exempt from taxation, if the service is performed by a son or daughter under the age of 18, spouse, mother or father. For sole proprietorships employment is exempt.
Student employment is exempt from taxation, if the student is attending an elementary, secondary or post secondary school while participating in a cooperative program of education and occupational training or on-the-job training that is part of the school curriculum.
If the service is performed in a program approved by Maine law and is conducted by a hospital or nursing program. Then the service is exempt from taxation.
Real estate brokers, salespeople, insurance agents or solicitors, if paid solely on commissions, are exempt from unemployment taxation.
For legal reference 26 M.R.S.A. 13 sec. 1043(11)(F)(19)
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Service performed by an individual under the age of 18 in the delivery or distribution of newspapers or shopping news, not including delivery or distribution to any point for subsequent delivery or distribution, is non-taxable employment.
Hairdressers/Barbers who hold a booth license and rent space are exempt from unemployment tax.
Contract Interviewers are exempt from unemployment tax when conducting interviews for public opinion or market research and when such services are conducted over the phone or on premises not used or controlled by the person providing the service.
Fishing services are exempt from unemployment taxation when performed on a boat unless the service is included in the Federal Unemployment section 3306 (c). Also included is the harvesting of shellfish for purification from a designated area under Title 12, section 6856.
If the entertainment service is performed under contract entered into by the leader or agent, the employment is not taxable.
Services performed in the delivery or distribution of newspapers or magazines to the ultimate consumer by an individual who is compensated by receiving or retaining a commission or profit on the sale of the newspaper or magazine, are exempt from unemployment taxation.
Home knitters performing services as defined in the 29 Code of Federal Regulations, Part 530, section 530, 1 are exempt from unemployment taxation.
Services performed for organized camps are exempt from unemployment taxes if they are performed by a full-time student in less than 13 weeks in a calendar year and the camp:
- Did not operate for more than 7 months in the previous or current calendar year, or
- Had average gross receipts for any 6 months in the preceding calendar year that were not more than 33 1/3% of its average gross receipts for the other 6 months in the previous calendar year.
Service performed by home stitchers as long as that employment is excluded from the Federal Unemployment Tax Act (FUTA), are exempt from unemployment tax.
Services performed by a licensed guide under Title 12, section 7311 and excluded from the Federal Unemployment Tax Act (FUTA), are exempt from unemployment tax.
Service performed by direct sellers as defined in 26 US Code section 3508, b, 2 are exempt from unemployment tax. This does not apply to major improvements or renovations to the structure of a home, business or property.
Service performed by lessees of taxicabs if excluded from the Federal Unemployment Tax Act (FUTA) are also exempt from Maine unemployment tax.
Dance instructors are exempt from unemployment tax when:
- The dance instructor holds a contract with the studio that allows the instructor to provide dance instruction services to other studios.
- The instructor is paid per class, and not hourly, at a rate that is negotiated between the instructor and the studio.
- The instructor controls both the scheduling of the classes and their curriculum.
Service performed by persons enrolled in programs or projects under the National Service laws including the Federal National & Community Service Act of 1990 and the Federal Domestic Volunteer Service Act are exempt from unemployment tax.
Author's services are not taxable for unemployment when the text is furnished to a publisher who:
- Does not control the author's work except to propose topics or edit material.
- Does not restrict from publishing elsewhere.
- Does not furnish a place of work or equipment.
- Does not control time devoted to the work.
- Pays only for material accepted for publication.
This exception does not apply if the employment is subject to federal unemployment tax.
Truck drivers are exempt from unemployment tax when:
- The driver/operator of the truck also owns the truck.
- The driver leases the truck to a motor carrier, as defined in 49 Code of Federal Regulations, 309.5(2000).
- The driver’s employment services are not otherwise subject to unemployment tax.
The following services are exempt from federal and state unemployment taxation:
- Service performed by a church or association of churches.
- Service performed by an ordained minister.
- Service performed in a rehabilitation program for the mentally deficient or physically impaired.
- Service performed in an unemployment work relief program or program financed in whole or partially by any federal agency, state agency or political subdivision for work relief.
- Service performed by a patient of a hospital.
- Service performed by a prison inmate for an institution.
- Service performed by an enrolled student of a college, university or school.
- Service performed by a governmental entity, such as:
- Elected Official
- Legislative body
- Member of the Judiciary
- Member in the Army or Air National Guard
- Temporary service for fire, snow, storm, earthquake, flood or similar emergency
- In a position that, under state law, is designated as a major nontenured policymaking or advisory position