An Act To Make Minor Substantive Changes to the Tax Laws LR 1978(03)
Maine Legislature, Session 121, LD 1470
Committee Amendment CA_A_H421 (House)
Amends: 36 MRSA §1861-A, 36 MRSA §4641, 36 MRSA §4641-D, 36 MRSA §4641-E, 36 MRSA §5122, 36 MRSA §5142, 36 MRSA §5217-A, 36 MRSA §5218, 36 MRSA §5220, 36 MRSA §6652, 36 MRSA §6753

12lST LEGISLATURE 
COMMITTEE AMENDMENT "~,, to H.P. 1075, 
Act To Make Minor Substantive Changes to the 
L.D. 1470, 
Tax Laws" 
Bill, "An 
Amend the bill by striking out everything after the enacting 
clause and before the summary and inserting in its place the 
following: 
'Sec. I. 36 MRSA §1861-A, as amended by PL 2001, c. 583, §12, 
is further amended to read: 
§1861-A. Reporting use tax on individual income 
tax returns 
The assessor shall provide that individuals report use tax 
on items with a purchase price of $5,000 or less on their Maine 
individual income tax returns. 
Taxpayers are required to attest 
to the amount of their use tax liability for the period of the 
tax return. 
Al ternati vely, they may elect to report an amount 
that is .04% of their Maine adjusted gross income. 
The table 
amount does not relate to items with a purchase price in excess 
of $1,000. 
Liability arising from such items must be added to 
the table amount. 
Upon subsequent review, if use tax liability 
for the period of the return exceeds the amount of liability 
ar~s~ng from the return, 
a credit of the amount of liability 
arising from the return is allowed subject to the limitation set 
out in this section. 
The credit is limited to the amount of 
liability arising from the return for items with a sale price of 
Page l-LR1978(3) 
COMMITTEE AMENDMENT 
COMMITTEE AMENDMENT "/1,, to H.P. 1075, L.D. 1470 
$1,000 or 
determined 
$1,000 or 
more than 
1951-A. 
less and may be applied only against a 
liability 
on review with regard to items with a sale price of 
less. 
Use tax on any item with a purchase price of 
$5,000 must be reported in accordance with section 
Sec. 2. 36 MRSA §4641, sub-§l-A, 1[1[A and B, as enacted by PL 
2001, c. 559, Pt. I, §1 and affected by §15, are amended to read: 
A. 
In the case of a corporation, "controlling interest" 
means ei:t:aeF--OO%--el' more than 50% of the total combined 
voting power of all classes of stock of the corporation 
entitled to vote or ItQ'\.-el' more than 50% of the capital, 
profits or beneficial interest in the voting stock of the 
corporation. 
B. 
In the case of a partnership, association, trust or 
other entity, "controlling interest" means ItQ'\.-el' more .thgn 
~ 
of the capital, profits or beneficial interest in the 
partnership, association, trust or other entity. 
Sec. 3. 36 MRSA §4641-D, 2nd 1[ from the end, as amended by P&SL 
1975, c. 78, §21, is further amended to read: 
The register of deeds shall transmit both copies of the 
declaration of value to the State Tax Assessor not later than 40 
days from the date of recordation of the deed subject to the tax 
or« in the case of a transfer of a controlling interest subject 
to tax under this chapter« no later than the 10th day of the 
month following the month in which the report of the transfer is 
received by the register of deeds. 
Sec. 4. 36 MRSA §4641-E, 2nd 1[, as amended by PL 2001, c. 559, 
Pt. I, §11 and affected by §15, is further amended to read: 
Within 3 years of the recording of a deed subject to the tax 
imposed by this chapter or of the date on which a transfer of a 
controlling interest in an entity subject to taxation under this 
chapter is reported to the register of deeds, 
the State Tax 
Assessor may examine any books, papers, records or memoranda of 
the grantor or grantee bearing upon the amount of tax payable, 
and may enforce that right of examination by subpoena. If the 
assessor determines that there is a deficiency of taxes due under 
this chapter, such deficiency must be assessed, together with 
interest and penalties, with notice to the persons liable, but no 
such assessment may be made more than 3 years after the date of 
recording or transfer. 
COMMITTEE AMENDMENT 
COMMITTEE AMENDMENT ,,~ to H.P. 1075, L.D. 1470 
Sec. 5. 36 MRSA §5122, sub-§2, 1[M, as amended by PL 2001, c. 
396, §34 and affected by §50, is further amended to read: 
M. 
AR--amoun-t.,.--fe!' For each individual who is a primary 
recipient of benefits under an employee retirement plan, an 
amount that is the lesser of: 
(1) 
Six thousand dollars reduced by the total amount 
of the p!'iffiaFy-£eeipieR~~s individual's social security 
benefits and railroad retirement benefits paid by the 
Uni ted States, but not less than $0. 
The reduction 
does 
not 
apply 
to benefits paid 
under 
a 
military 
retirement plan; or 
(2) 
The aggregate of benefits !'eeeivee-~~~-pFiffia!'y 
FeeipieR~ under employee retirement plans aRe included 
in the individual's federal adjusted gross income. 
For purposes of this paragraph, the following terms have the 
following 
meanings. 
"Primary 
recipient" 
means 
the 
individual upon whose earnings the employee retirement plan 
benefits 
are 
based 
or 
the 
surviving 
spouse 
of 
that 
individual. 
"effip~9yee Employee 
retirement plan" 
means 
a 
state, federal or military retirement plan or any other 
retirement benefit plan established and maintained by an 
employer for the benefit of its employees under the Code, 
Section 401(a), Section 403 or Section 457(b) 
9f-~~-GgeeL 
except that distributions made pursuant to a section 457(b) 
plan are not eligible for the deduction provided by this 
paragraph if they are made prior to age 55 and are not part 
of a series of substantially equal periodic payments made 
for the life of the primary recipient or the joint lives of 
the 
primary 
recipient 
and 
that 
recipient's 
designated 
beneficiary. 
"Employee retirement plan" does not include an 
individual retirement account under Section 408 of 'the Code, 
a 
Roth 
IRA 
under Section 408A of the Code, 
a 
rollover 
individual retirement account, a simplified employee pension 
under Section 408(k) of the Code or an ineligible deferred 
compensation 
plan 
under 
Section 
(f) 
of 
the 
Code. 
Benefits under an employee retirement plan do not include 
distributions that are subject to the tax imposed by the 
Code, 
Section 
72(t). 
~9!'--~~~~-~--~~~--paFa~FaphT 
!.!ffii~i~a!'y "Military retirement plan" means benefits received 
as a result of service in the active or reserve components 
of the Army, Navy, Air Force, Marines or Coast Guard; 
Sec. 6. 36 MRSA §5142, sub-§l, as amended by PL 1993, c. 478, 
§l, is further amended to read: 
COMMITTEE AMENDMENT 
COMMITTEE AMENDMENT '/}" to H.P. 1075, L.D. 1470 
1. 
Genera1. 
The 
Maine 
adjusted 
gross 
income 
of 
a 
nonresident individual derived from or connected with sources 
W~~h~R in this State is the sum of the following: 
A. 
The net amount of items of income, gain, 
loss, 
and 
deduction entering into the nonresident individual's federal 
adjusted gross income that are derived from or connected 
with sources in this State including (i) the 
ReRFes~EieR~.!.s 
individual's distributive share of partnership or limited 
liability company 
income 
and deductions 
determined under 
section 5192, (ii) the 
ReRFes~EieR~.!.s individual's share of 
estate or trust 
income 
and 
deductions 
determined 
under 
section 
5176, 
and 
(iii) 
the 
ReRFes~EieRt.!.s--Eiis~FiaQ~~ve 
individual 's pro rata share of the income of an 
elee~~R~ 
s~all-aQsiRess S corporation ~eF-~eQe£~-~~~~~-paFp9ses 
derived from or connected with sources W~~h~R in this State; 
B. 
The portion of the modifications described in section 
5122, 
subsections 1 and 2 that 
Fela~e relates to income 
derived 
from 
or 
connected with 
sources 
in this State, 
including any modifications attributable to the nonresident 
individual as a partner of a partnership. shareholder of an 
S corporation. 
member of 
a 
limited liability company or 
beneficiary of an estate or trust; and 
C. 
Proceeds from any Maine State Lottery or Tri-state Lotto 
tickets purchased in this State. including payments received 
from a 3rd party for the transfer of the rights to future 
proceeds related to any such tickets. 
Sec. 7. 36 MRSA §S21S, sub-§3, 1[A, as amended by PL 1997, c. 
761, §3, is further amended to read: 
A. 
With property considered to be qualified investment of 
at least $5,000,000 for that taxable year with a situs in 
the State 
and placed in service by the taxpayer after 
January 1, 1979; gng 
Sec. 8. 36 MRSA §S21S, sub-§3, 1fB, as amended by PL 1999, c . 
708, §44, is further amended to read: 
B. 
With 
payroll records and reports substantiating that at 
least 100 new jobs attributable to the operation of property 
considered to be qualified investment were created in the 
24-month period following the date the property was placed 
in service. ' To assess the continuing nature of the jobs, 
the taxpayer must demonstrate that the new jobs credit base 
is at least $700,000 for the taxable year of the qualified 
federal creditor for either of the next 2 calendar years. 
The $700,000 must be adjusted proportionally for any change 
COMMITTEE AMENDMENT 
COMMITTEE AMENDMENT "If, to H.P. 1075, L.D. 1470 
in Title 26, section 1043, subsection 2 wages from $7,000. 
With respect to new jobs created after August 1, 1998, but 
before October 1, 2001, the employer must also demonstrate 
that the qualifying jobs are covered by a retirement program 
subject to the Employee Retirement Income Security Act of 
1974, 
United States 
Code, 
Sections 
to 
1461, 
as 
amended; 
that 
group 
health 
insurance 
is 
provided 
for 
employees in those positions; and that the wages for those 
positions, calculated on a calendar year basis, are greater 
than the most recent average 
Fe~--capi-t-&--j,.BeeHle annual wage 
in the labor market area in which the employee is employedf 
aRs.£. 
Sec. 9. 36 MRSA §5217-A, as amended by PL 1991, c. 591, Pt. 
N, §16 and affected by §17, is further amended to read: 
§S217-A. Income tax paid to other taxinq jurisdiction 
A resident individual is allowed a credit against the tax 
otherwise due 
under this Part, 
excluding the tax imposed by 
section 5203-A, 
for the amount of income tax imposed on that 
individual for the taxable year by another state of the United 
States, a political subdivision of any such state, the District 
of Columbia or any political subdivision of a 
foreign country 
that is analogous to a state of the United States with respect to 
income subject to tax under this Part that is derived from 
sources in that taxing jurisdiction 
a*s9--&Ub-j-&o-t--t:9--t.-aH--\lRSe~ 
t:ais-PaFt:. 
In determining whether income is derived from sources 
in another jurisdiction. the assessor may not employ the law of 
the other jurisdiction but shall instead assume that a statute 
equivalent to section 5142 applies in that jurisdiction. 
The 
credit, for any of the specified taxing jurisdictions, may not 
exceed the proportion of the tax otherwise due under this Part, 
excluding the tax imposed by section 5203-A, that the amount of 
the taxpayer's Maine adjusted gross income derived from sources 
in that taxing jurisdiction bears to the taxpayer's entire Maine 
adjusted gross income; 
F~evises except that, when a credit is 
claimed 
for 
taxes 
paid 
to 
both 
a 
state 
and 
a 
political 
subdivision of a state, the total credit allowable for those 
taxes does not exceed the proportion of the tax otherwise due 
under this Part, excluding the tax imposed by section 5203-A, 
that the amount of the taxpayer's Maine adjusted gross income 
derived from sources in the other state bears to the taxpayer's 
entire Maine adjusted gross income. 
Sec. 10. 36 MRSA §5218, as amended by PL 2003, c. 20, Pt. FF, 
§1, is further amended to read: 
§S218. Income tax credit for chi1d care expenses 
COMMITTEE AMENDMENT 
COMMITTEE AMENDMENT ,,~ to H.P. 1075, L.D. 1470 
1. 
Resident taxpayer. 
A resident individual is allowed a 
credit against the tax otherwise due under this Part in the 
amount of 25% of the federal tax credit allowable for child and 
dependent care expenses in the same tax year, except that for tax 
years beginning in 2003, 2004 and 2005, the applicable percentage 
is 21.5% instead of 25%. 
2. 
Nonresident 
or 
part-year 
resident 
taxpayer. 
A 
nonresident 9F-~~~--~&iQeBt individual is allowed a credit 
against the tax otherwise due under this Part in the amount of 
25% of the federal tax credit allowable for child and dependent 
care expenses multiplied by the ratio of the individual's Maine 
adjusted gross income, 
as defined in section 5102, subsection 
1-C, 
paragraph 
B, 
to 
the 
B9BFeS~QeBt~s individual's 
entire 
federal adjusted gross 
income, 
as modified by section 5122, 
except that for tax years beginning in 2003, 2004 and 2005, the 
applicable percentage is 21.5% instead of 25%. 
2-A. 
Part-year resident t~ayer. An individual who files 
a 
return as 
a part-year resident in accordance with section 
5224-A is allowed a credit against the tax otherwise due under 
this Part in the 
amount 
of 
25% 
of the federal 
tax credit 
allowable for child and dependent care expenses multiplied by a 
ratio, the numerator of which is the individual's Maine adjusted 
gross 
income 
as 
defined 
in 
section 
5102, 
subsection 
l-C, 
paragraph A for that portion of the taxable year during which the 
individual was a resident plus the individual's Maine adjusted 
gross 
income 
as 
defined 
in 
section 
5102, 
subsection 
C, 
paragraph B for that portion of the taxable year during which the 
individual was a nonresident and the denominator of which is the 
individual's entire federal adjusted gross income, as modified by 
section 5122. 
3. 
Quality child care services. 
The credit provided by 
subsections 1 aBeL 2 and 2-A doubles in amount if the child care 
expenses were incurred through the use of quality child care 
servicesT--A~-~-~-tAi&-6ee~i9RT-~~~~a&&~~-9theFw~se 
~Be~eatesT--'.!q-\ia-l-j,.~}'---oh-1-ld---€-a-£e--seFv~ees!!-~&--t-he--ffiei~ 
.. R4 .. R~--set 
~eFth as defined in section 5219-Q, subsection 1. 
4. 
Refund. 
The credit allowed by this section may result 
in a 
refund of up to $500. 
In the case of 
a 
nonresident 
individual. the refundable portion of the credit may not exceed 
$500 multiplied by the ratio of the individual's Maine adjusted 
gross 
income, 
as 
defined 
in section 
5102, 
subsection 
l-C, 
paragraph a, to the individual's entire federal adjusted gross 
income, 
as 
modified 
by 
section 
5122. 
In 
the 
case 
of 
an 
individual 
who 
files 
a 
return 
as 
a 
part-year 
resident 
in 
accordance with section 5224-A, 
the refundable portion of the 
credit may not exceed $500 multiplied by a ratio, the numerator 
COMMITTEE AMENDMENT 
COMMITTEE AMENDMENT ,,/j-;, to H.P. 1075, L.D. 1470 
of which is the individual's Maine adjusted gross 
income 
as 
defined in section 5102, subsection 1-C, paragraph A for that 
portion of the taxable year during which the individual was a 
resident plus the individual's Maine adjusted gross income as 
defined in section 5102, subsection 1-C, paragraph B for that 
portion of the taxable year during which the individual was a 
nonresident and the denominator of which is the individual's 
entire federal adjusted gross income, as modified by section 5122. 
Sec. 11. 36 MRSA §5220, sub-§§3 and 4, as enacted by P&SL 1969, 
c. 154, §F, §1, are amended to read: 
3. 
Resident estates or trusts. Every resident estate or 
trust wB~eB-46-~e~~4~eQ-~~~~~~~~~~~-~~-&a~-Fe&YFRT that 
has for the taxable year: 
A. 
Any Maine taxable income as defined in section 5163: or 
B. 
Gross income of $10,000 or more, 
regardless of the 
amount of Maine taxable income: 
4. 
Certain nonresident estates or trusts. Every nonresident 
estate or trust 
wB~eB that has for the taxable year 
Ba6--~H)1Il 
69YFe96-W~&B~R-&B~S-S&a&9Tl 
A. 
Any Maine taxable incomeT as determined under section 
5175. subsection 2: or 
B. 
Gross income of $999 $10,000 or moreL regardless of the 
amount of Maine taxable incomeTL 
Sec. 12. 36 MRSA §6652, sub-§ 1, as amended by PL 2001, c. 396, 
§45, is further amended to read: 
1. 
Generally. 
A person against 
whom 
taxes 
have 
been 
assessed pursuant to Part 2, except for chapters 111 and 112, 
with respect to eligible property and who has paid those taxes is 
entitled to 
reimbursement of 
those 
taxes 
from 
the State as 
provided in this chapter. 
For purposes of this chapter, a tax 
applied as a credit against a tax assessed pursuant to chapter 
or 112 is a tax assessed pursuant to chapter 111 or 112. 
Eligible property is subject to reimbursement pursuant to this 
chapter for up to 12 property tax years, but the 12 years must be 
reduced by 
one 
year 
for 
each year 
during which 
a 
taxpayer 
included the same property in its investment credit base under 
section 5219-0, 5219-E or 5219-M and claimed the credit provided 
in one or more of those sections on its income tax return, and 
reimbursement may not be made for taxes assessed in a year in 
which one or more of those credits is taken. 
A successor in 
interest of a person against whom taxes have been assessed with 
COMMITTEE AMENDMENT 
COMMITTEE AMENDMENT ,~, to H.P. 1075, L.D. 1470 
respect 
to 
eligible 
property 
is 
entitled 
to 
reimbursement 
pursuant to this section, whether the tax was paid by the person 
assessed or by the successor, 
as long as 
a transfer of the 
property in guestion to the 
successor has 
occurred and 
the 
successor is the owner of the property as of August 1st, of the 
year in which a claim for reimbursement may be filed pursuant to 
section 6654. 
For purposes of this paragraph, 
"successor in 
interest" 
includes 
the initial successor 
and 
any 
subseguent 
successor. 
When an eligible successor in interest exists, the 
successor is the only person to whom reimbursement under this 
chapter may be made with respect to the transferred property. 
Sec. 13. 36 MRSA §6753, sub-§12, as amended by PL 1999, c. 
388, §2, is further amended to read: 
12. 
Qualified employees. 
"Qualified employees" means new, 
full-time employees hired in this State by a qualified business 
and 
for 
whom 
a 
retirement 
program 
subject to 
the 
Employee 
Retirement Income Security Act of 1974, 29 United States Code, 
Sections 101 to 1461, as amended, and group health insurance are 
provided, 
and whose 
income derived 
from 
employment with the 
applicant, calculated on a calendar year basis is greater than 
the most recent average annual 
~eF--oap-k-a--,iBeeHle ~ 
in the 
county in which the qualified employee is employed and whose 
state income withholding taxes are subject to reimbursement to 
the qualified business under this chapter. 
~Qualified employees~ 
must be residents of this State. 
Sec. 14. Application. 
That section of this Act that amends 
the Maine Revised Statutes, Title 36, section 5220, subsections 3 
and 4 applies to tax years beginning on or after January 1, 2003.' 
SUMMARY 
This is the minority report of the committee. 
The amendment 
replaces the bill. 
The amendment makes the following changes to 
the laws governing taxation. 
1. 
It corrects 
a 
conflict 
between 
the 
Maine 
Revised 
Statutes, Title 36, section 1861-A and section 1951-A regarding 
an individual's use tax responsibility to the State by clarifying 
that items with a purchase price of more than $5,000 must be 
reported separately in the same manner as sales made by retailers 
as required by Title 36, section,1951-A. 
2. 
It clarifies the administrative requirements pertaining 
to the sale of a controlling interest in real property in the 
real estate transfer tax law, consistent with statutory changes 
enacted in 2002. 
COMMITTEE AMENDMENT 
COMMITTEE AMENDMENT ,~, to H.P. 1075, L.D. 1470 
3. 
It defines 
"primary recipient" 
for 
purposes of 
the 
pension income deduction and clarifies the treatment of early 
withdrawals and lump sum distributions. 
4. 
It clarifies that the adjusted gross income described in 
Title 36, section 5142 is the Maine adjusted gross income defined 
in section 5102, subsection l-C, paragraph B and taxed by section 
5111, sUbsection 4 and that the Maine adjusted gross income of a 
nonresident individual includes the individual's share of income, 
deductions and modifications attributable to Maine-source income 
of a partnership or limited liability company, estate, trust or S 
corporation. 
These changes conform to current agency practice. 
5. 
It provides that the proceeds 
from the sale of the 
future income stream derived from a lottery ticket purchased in 
Maine is Maine-source income subject to Maine income tax. 
6. 
It clarifies that the credit for income tax paid to 
another taxing jurisdiction is limited to tax paid with respect 
to income that Maine recognizes as being derived from sources in 
the other taxing jurisdiction. 
The changes conform to current 
agency practice. 
7. 
It clarifies the calculation 
care expenses by part-year residents. 
current 
agency practice. 
The bill 
verbiage. 
of the credit 
The changes 
also deletes 
for child 
conform to 
superfluous 
8. 
It makes it clear that the refundable portion of the 
credi t for child care expenses must be prorated for persons who 
were not Maine residents for any part of the year. 
The changes 
conform to current agency practice. 
9. 
It eliminates the requirement to file a Maine income tax 
return for estates and trusts that had gross income less than 
$10,000 and no Maine taxable income. 
10. 
It amends 
the business equipment tax 
reimbursement 
statutes to provide that business equipment tax reimbursement is 
available, 
and limited to, 
a 
successor in interest that owns 
eligible business property on August 1st of the year in which a 
claim may be made. 
11. 
It modifies the standards for a qualified employee for 
purposes of the jobs and investment tax credit and the Maine 
Employment Tax Increment Financing Act to reflect average annual 
wages rather than per capita income. 
Per capita income data by 
county are not available. 
FISCAL :\OTE REQ[IRED 
(See attached) 
COMMITTEE AMENDMENT 
Approved: 05/15/03 ~aC'-
Office of Fiscal and Program Review 
LD 1470 
An Act To Make Minor Substantive Changes to the Tax Laws 
LR 1978(03) 
Fiscal Note for Bill as Amended by Committee Amendment" " 
Committee: Taxation 
Fiscal Note Required: Yes 
Fiscal Note 
Minor cost increase - General Fund 
Minor revenue impact - General Fund 
LRI978(3) - Fiscal Note - Page 1 of 1