An Act To Make Minor Substantive Changes to the Tax Laws
Maine Legislature, Session 121, LD 1470
Committee: Taxation
Sponsors: LEMOINE, STANLEY, PERRY, TARDY
Amends: 36 MRSA §191, 36 MRSA §1504, 36 MRSA §1760, 36 MRSA §5122, 36 MRSA §5200-A, 36 MRSA §5215, 36 MRSA §6753

Legislative Document 
No. 1470 
H.P.1075 
House of Representatives, March 27, 2003 
An Act To Make Minor Substantive Changes to the Tax Laws 
Submitted by the Department of Administrative and Financial Services pursuant to Joint 
Rule 204. 
Reference to the Committee on Taxation suggested and ordered printed. 
17/~ 
/J7.7l)u~ 
MILLICENT M. MacFARLAND 
Clerk 
Presented by Representative LEMOINE of Old Orchard Beach. 
Cosponsored by Senator STANLEY of Penobscot and 
Representatives: PERRY of Bangor, TARDY of Newport. 
Printed on recycled paper 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1. 36 MRS A §ISI, 2nd" as amended by PL 2001, c. 583, 
§l, is further amended to read: 
If 
a 
request 
for 
reconsideration is filed 
within 
the 
specified 
time 
period, 
the 
assessor 
shall 
reconsider 
the 
assessment 
or 
the determination. 
If the 
petitioner 
has 
so 
requested in the petition, the assessor shall hold an informal 
conference with the petitioner to receive additional information 
and to hear 
arguments 
regarding the protested assessment or 
determination. 
The assessor shall give the petitioner 10 working 
days' 
notice of the time 
and place of the conference. 
The 
conference may be held with less than 10 working days' notice if 
a 
mutually convenient 
time 
and place can be 
arranged. 
The 
reconsideration, with or without an informal conference, is not 
an "adjudicatory proceeding" within the meaning of that term in 
the 
Maine 
Administrative 
Procedure 
Act. 
If 
the 
requested 
reconsideration involves a denial or deemed denial of a refund 
claim, a refund claim with respect to which a conference has been 
requested under section 5280 or an assessment that is paid in 
full or part and the assessor fails to mail to the taxpayer a 
decision 
on 
the 
reconsideration 
within 
months 
after 
the 
reconsideration request was filed, the taxpayer may 
I~lect but is 
not obligated to deem the request for reconsiderat:ion denied. 
The taxpayer elects to deem the reconsideration denied by filing 
in Superior Court a petition for review of the deemed denial. 
The deemed denial constitutes final agency action and is subject 
to court review as otherwise provided in this section. 
The 
taxpayer may not make the deemed denial election after either the 
assessor's reconsideration decision has been received by the 
taxpayer or the expiration of 9 .i years following the filing of 
the 
reconsideration 
request, 
whichever 
occurs 
first. 
Notwithstanding any other provision of law, any claim for credit 
or refund of any tax imposed under this Title is deemed denied lG 
.i years after it was filed if the claim has not previously been 
allowed or denied as 
final 
agency action. 
A deemed denial 
constitutes final agency action. 
Sec. 2. 36 MRSA §191, sub-§3-A is enacted to read: 
3-A. 
Additional restrictions for prQPrietary information 
provided to the assessor. 
Information and materials provided in 
confidence to the assessor and used by the bureau for the purpose 
of preparing legislation or legislative analysis, including the 
preparation of fiscal notes on behalf of the Office of Fiscal and 
Program Review, are to be accorded the same confidentiality as 
established by this section for tax information. 
Page l-LR1978(l) 
Sec. 3. 36 MRSA §1504, sub-§9,,n, as enacted by PL 1987, c. 
196, §9, is repealed and the following enacted in its place: 
D. 
Each marina or boat yard leasing, renting or otherwise 
providing storage, mooring or docking space to watercraft 
not registered in this State for 10 or more consecutive days 
between April 15th of any year and April 15th of the next 
year shall maintain a list of all such watercraft. 
The list 
must include, with respect to each watercraft: 
(1) 
The name of the watercraft and its hailing porL 
if any: 
( 2) 
The 
name 
and 
address 
of 
the 
owner 
of 
the 
watercraft: 
(3) 
The registration number, documentation number or 
other number assigned to the watercraft and the state 
or country that assigned the number: 
(4) 
The approximate length of the watercraft; 
(5) 
The manufacturer and model year of the watercraft; 
and 
(6) 
The total amount of time during the year that the 
marina or boatyard maintaining the list leased, rented 
or otherwise provided storage, mooring or docking space 
to the watercraft. 
The list must be available for inspection during normal 
business hours by law enforcement officers and by municipal 
officials, and a copy must be submitted to the State Tax 
Assessor upon reg:uest. 
Marina and boat yard owners shall 
retain their lists for 3 years. 
Sec. 4. 36 MRSA §1760, sub-§23-C, ,A, as enacted by PL 1999, 
c. 759, §2 and affected by §5, is amended to read: 
A. 
Motor vehicles, except automobiles rented for a period 
of less than one year, all-terrain vehicles as defined in 
Title 12, section 7851 and snowmobiles as defined in Title 
12, section 7821; 
Sec. 5. 36 MRSA §5122, sub-§l, 1JD, as amended by PL 1983, c. 
855, §15, is further amended to read: 
D. 
-~-he-
For income tax years beginning before January L 
2002, the amount of any net operating loss in the taxable 
year whieh .tJl..gt has been carried back to previous years 
pursuant to the YBitee-S~a~es-!R~eFRa~-ReveRQe Code, Section 
172; 
Sec. 6. 36 MRSA §S122, sub-§2, 1JH, as amended by PL 2001, c. 
559, Pt. J, §2, is further amended to read: 
H. 
For each taxable year subsequent to the year of the 
loss, 
an amount equal to the absolute value of the net 
operating loss arising from tax years beginning on or after 
January 
1, 
1989, 
but before 
January 
1, 
1993, 
and 
the 
absolute value of the amount of any net operating loss 
arising from tax years beginning on or after January l, 
2002, for which federal adjusted gross income .. ,as increased 
in accordance 
with 
subsection 1, 
paragraph 
H and 
that 
pursuant to the Code, 
Section 172 
was carried back for 
federal income tax purposes, less the absolute value of loss 
used in the taxable year of loss to offset any addition 
modification required by subsection 1, 
but 
'Only 
to 
the 
extent that: 
(1) 
Maine taxable income is not reduced below zero; 
(2) 
The taxable year is wi thin the allowable federal 
period for carry-over; and 
(3) 
The 
amount has not been previously used as 
a 
modification pursuant to this subsection; 
Sec. 7. 36 MRSA §S142, sub-§l, 1JC, as enacted by PL 1993, c. 
478, §l, is amended to read: 
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. 8. 36 MRSA §S200-A, sub-§l, 1JB, as amended by PL 1987, c. 
504, §18, is further amended to read: 
B. 
-~.ae-
For income tax years beginning 
before~ January l, 
2002, the amount of any net operating loss in the taxable 
year whieh ~ 
has been carried back to previous taxable 
years pursuant to the Code, Section 172; 
Sec. 9. 36 MRSA §S200-A, sub-§2, 1JH, as amended by PL 2001, c. 
559, Pt. J, §4, is further amended to read: 
H. 
For each taxable year 
loss, 
an amount equal to 
operating loss arising from 
subsequent to the year of the 
the absolute value of the net 
tax years beginning on or after 
January 1, 1989 but before January 1, 1993 and the absolute 
value of the amount of any net operating loss arising from 
tax years beginning on or after January 1, 
2002 
that, 
pursuant to the Code, 
Section 172, was carried back for 
federal income tax purposes, less the absolute value of loss 
used in the taxable year of loss to offset any addition 
modification reguired by subsection 1, 
but only to the 
extent that: 
(1) 
Maine taxable income is not reduced below zero; 
(2) 
The taxable year is wi thin the allowable federal 
period for carry-over; and 
(3) 
The 
amount has not been previously used as 
a 
modification pursuant to this subsection; 
Sec. 10. 36 MRSA §5200-A, sub-§2, ,J, as amended by PL 2001, c. 
559, Pt. GG, §16 and affected by §26, is further amended to read: 
J. 
An amount equal to an income tax refund to the taxpayer 
by this State or another state of the United States that is 
included in that taxpayer's federal taxable income for the 
taxable year under the Code, but only to the extent that: 
(1) Maine net income is not reduced below zero; and 
(2) 
The 
another 
amount 
state 
of 
to be 
the 
previously used as 
a 
subsection. 
refunded from this 
United 
States 
has 
modification pursuant 
State or 
not 
been 
to this 
If this modification ame~Bt results in Maine net income that 
is less than zero for the taxable year, the excess negative 
modification amount may be carried baelE--eF forward in the 
same manner as a net operating loss deduction eaFFy-baelE--eF 
eaFFy-£eFwaFs to a taxable year that is within the allowable 
federal period for a---Gar-r-y----baG-lE---e-£--eaFFy-£eFwaFs carrying 
forward 
net 
operating 
losses, 
subject 
to 
the 
above 
limitations; 
Sec. 11. 36 MRSA §5215, sub-§3, ,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. 12. 36 MRSA §5215, sub-§3, 1[B, 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 
crE~ated 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 credit or for either of the next 2 calendar years. 
The $700,000 must be adjusted proportionally for any change 
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 retirE!ment 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 average peF-€api~a-ia€ame annual wage in the labor 
market area in which the employee is employedf-aRa~ 
Sec. 13. 36 MRS A §5218, sub-§4, as enacted by PL 2001, c. 396, 
§38, is amended to read: 
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 ma~, not exceed 
$500 multiplied by the ratio of the individual's Maine adjusted 
gross 
income, 
as 
defined in 
section 
5102, 
subsE·ction 
1-C, 
paragraph B, 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 
1n 
accordance with section 5224-A, 
the refundable portion of the 
credit may not exceed $500 multiplied by a ratio, the numerator 
of which is the individual's Maine adjusted gross 
income 
as 
def ined in section 5102 I 
subsection 1-C I 
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. 14. 36 MRS A §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 wsies-i5-£e~~4£eQ-~~~~~~~-~~~-~~-~a~-Fe~aFBT 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 wsies that has for the taxable year 
sa5--f.~HI 
6eaFee6-wi~siB-~s~6-S~a~eT~ 
A. 
Any Maine taxable incomeT as determined under section 
5175, subsection 2: or 
B. 
Gross income of $eGG $10,000 or moreL regardless of the 
amount of Maine taxable incomeTL 
Sec. 15. 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 average annual peF-€api~a-iBeaHle wage 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. 16. Effective date. 
That section of this Act that amends 
the Maine Revised Statutes, Title 36, section 151, 2nd paragraph 
takes effect January 1, 
2004 and applies to any request 
fo~r 
reconsideration or claim for credit or refund for which final 
agency action has not occurred as of that date. 
Sec. 17. Application. 
Those sections of this Act that amend 
the Maine Revised Statutes, Title 36, section 5122, subsection 1, 
paragraph D and subsection 2, paragraph H and section 5200-A, 
subsection 1, paragraph B and subsection 2, paragraphs Hand J 
apply to tax years beginning on or after January 1, 2002. 
Sec. 18. 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 bill makes the following changes to the laws governing 
taxation. 
1. 
It reduces the period within which a taxpayer may elect 
to deem a claim for refund or credit denied from 9 years to 4 
years and reduces the period of time after which a claim for 
refund or credit is deemed denied by operation of law from 10 
years to 4 years. 
These changes reduce the State's exposure to 
very old refund claims. 
2. 
It provides confidentiality 
provided 
to 
the State 
Tax 
Assessor 
legislation or legislative analysis. 
protection 
and 
used 
to information 
for 
preparing 
3. 
It establishes a requirement that boat yards and marinas 
currently required to maintain a list of watercraft must provide 
a copy of the list to the State Tax Assessor upon request and 
expands the kinds of data that must be included. 
These changes 
are needed to support revenue discovery efforts on watercraft 
used in Maine. 
4. 
It clarifies that the sales tax exemption for motor 
vehicles leased to nonresidents does not apply to short-term 
rentals of automobiles to nonresidents. 
This change corrects an 
apparent oversight in the drafting of statutory changes enacted 
in 2002. 
5. 
It limits the requirement to add back net operating 
losses that have been carried back to previous years for federal 
income tax purposes to tax years beginning before January 1, 
2002, consistent with other recent changes in Maine's treatment 
of 
federal 
net 
operating 
loss 
deductions. 
The 
bill 
also 
standardizes a reference to the United States Internal Revenue 
Code. 
6. 
It allows taxpayers to use a federal net operating loss 
to offset Maine addition modifications in the year of the loss, 
thereby preventing a situation in which a taxpayer might have a 
loss for federal purposes but taxable income for Maine purposes. 
7. 
It provides 
future income stream 
Maine is Maine-source 
that the proceeds from the sale of the 
derived from a lottery ticket purchased in 
income subject to Maine income tax. 
8. 
It limits the requirement to add back net operating 
losses that have been carried back to previous years for federal 
income tax purposes to tax years beginning before January 1, 
2002, consistent with other recent changes in Maine's treatment 
of federal net operating loss deductions. 
9. 
It 
eliminates 
the 
provision 
allowing 
a 
negative 
modification amount attributable to subtraction of a state income 
tax refund to be carried back to prior years. 
The negative 
modification will still be available in carry-forward years. 
This change is consistent with statutory changes made in 2002 
disallowing the use of federal net operating loss carry-backs. 
10. 
It modifies the standard for a qualified employee for 
purposes of the jobs and investment credit to reflect average 
annual wages rather than per capita income. 
Per capita income 
data by labor market area are not available. 
11. 
It makes it clear that the refundable portion of the 
credit for child care expenses must be prorated for 
were not Maine residents for any part of the year. 
conform to current agency practice. 
persons who 
The changes 
12. 
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. 
13. 
It modifies the standard for a qualified employee for 
purposes of 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. 
14. 
The bill makes grammatical changes.