An Act To Provide an Income Tax Exemption to Recent College Graduates Who Work in Maine To Help Them Pay College Loans (AFTER DEADLINE)
Maine Legislature, Session 122, LD 1594
Committee: Taxation
Sponsors: STEDMAN, CAIN, DAVIS, EDGECOMB, FLETCHER, GOLDMAN, LANSLEY, MAREAN

Legislative Document 
No. 1594 
H.P.I130 
House of Representatives, April 26, 2005 
An Act To Provide an Income Tax Exemption to Recent College 
Graduates Who Work in Maine To Help Them Pay College Loans 
(AFTER DEADLINE) 
Approved for introduction by a majority of the Legislative Council pursuant to Joint Rule 
205. 
Reference to the Committee on Taxation suggested and ordered printed. 
Presented by Representative STEDMAN of Hartland. 
7J1~1??1l/~ 
MILLICENT M. MacFARLAND 
Clerk 
Cosponsored by Representatives: CAIN of Orono, DAVIS of Falmouth, EDGECOMB of 
Caribou, FLETCHER of Winslow, GOLDMAN of Cape Elizabeth, LANSLEY of Sabattus, 
MAREAN of Hollis. 
Printed on recycled paper 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1. 36 MRSA c. 914·A is enacted to read: 
CHAPTER 914-A 
GRADUATE RETENTION PROGRAM 
56601. 
Program established: short title 
There 
is 
established 
the 
Graduate 
Retention 
Program, 
referred to in th.i&_c:1lil,pyr as "the program." 
This chapter is 
known and may be cited as "the Graduate Retention Act." 
56602. 
Definitions 
As 
used in this 
chapter, 
unless 
the 
context 
otherwise 
indicates, the following terms have the following meanings. 
1. 
Degree. 
"Degree" 
means 
a 
degree 
issued 
by 
a 
postsecondary educational institution, including an educational, 
academic, 
literary 
or 
professional, 
degree. 
"Degree" 
also 
includes an associate, baccalaureate, master's or doctoral degree. 
2. 
EducatimLcQ~tf:t. 
"Education cost..s.'~_means costs __ 
(ti..r~lli 
~ttributable 
to 
attendance 
at 
a 
postsecondary 
educational 
institution, including tuition, 
room and board, 
textbooks and 
~ 
3. 
Education loan. 
"Education 
loan" 
means 
a 
loan or 
extension of credit used to pay education costs. 
For purposes of 
this subsection, 
"loan or extension of credit" includes all 
direct or indirect advances of funds to a person that are made on 
the basis of any obligation of that person to repay the funds or 
that are repayable from specific property pledged by or on behalf 
of the pe~n. "Loan·or extension of credit" may include, to the 
extent specified by the bureau, 
any liability of a 
financial 
institution to advance funds to or on behalf of a person pursuant 
to a contractual commitment. 
4. 
Eligible 
employment 
position. 
"Eligible 
employment 
position" means 
a 
full-time position within the State as an 
employee of 
a qualified business. 
For the purposes of this 
subsection, 
"employee" has the 
same meaning as in Title 26, 
section 591 and "full-time" means at least 40 hours per week. 
5. 
Eligible graduate. 
"Eligible graduate" means a person 
who meets all of the requirements of section 6604. 
• 
6. 
Oualified 
business. 
"Qualified 
business" 
means 
a 
business that is located in this State. 
1. 
Postsecondar~ejl~QAa~l~~in~s~t_i~t~u~t~i~o~n~. __ ~"P~o~s~t~s~e~c¥oun~d~a~r.y 
educational 
institution" 
includes 
public 
and 
private 
postsecondary 
educational 
institutions 
and 
postgraduate 
institutions. 
§6603. 
Program administration 
The program is administered by the bureau. 
§6604. 
Eligibility for program 
A person is eligible to participate in the program if that 
person meets the requirements of this section. 
1. 
~loyee of q1@lified business. 
The person holds an 
eligible employment position. 
2. 
Graduate within P~yj~us 4 years. 
The person must have 
QbtllDed 
a 
degree 
no 
earlier 
tllan 
years 
prior 
to 
the 
commencement of employment in an eligible employment position. 
~<=-Q8!II\itment. 
Tb.ELJ?e_LS_gJl __ ffill~QmIDit to a minimum gf 4 
years gf emplgyment with a qualified business. 
4. 
Education loan. 
The persgn must have an gutstanding 
educatign loan. 
~. Application; loan pQYment deduction 
.1_, _A-pplication: 
nOki.CiLj;O_~.12ye.r. 
An eligible graduate 
ffi9Y participate in the prggram by applying tg the bureau through 
gpplicatign fgrms obtained frgm the qualified business. 
Upon 
acceptance of the eligible graduate intg the prggram. the bureau 
shall ngtify the qualified business gf the eligible graduate's 
participatign. 
Payments made pursuant tg subsectign 2 by the 
employer must be reported to the bureau. 
2. 
Loan 
paxment 
deduction. 
Ngtwithstanding 
any 
gther 
12X_Q.Y.J...s~gn of this Title. a qualified business that employs an 
eligible graduate accepted intg the prggram shall. ngt fewer than 
times each year. 
forward the Maine taxes withheld frgm the 
eligible graduate's pay for the previous quarter tg the financial 
institution hglding the eligible graduate's educatign 19an. 
The 
aI1)QJJnt withheld pursuant to this subsection must be equal to 
~illholding at the Maine single individual income tax rate. 
An 
~ligible graduate may elect tg have a greater amgunt withheld and 
fgrwarded. 
3. 
Time 
limit. 
The 
gualified 
business 
shall 
cease 
withholding loan payment deductions upon the earliest of: 
A. 
The full repayment of the education loan of the eligible 
graduate: 
B. 
The expiration of 5 years following the graduation date 
of the eligible graduate; and 
C. 
The expiration of 4 years following the date of hire of 
the eligible graduate. 
Any 
amount 
withheld 
after 
the 
earliest 
of 
the 
conditi~ 
specified in paragraphs A, Band C must be treated as Maine 
individual income tax withholding. 
56606. 
State tax exemption 
Notwithstanding 
Part 
8, 
a 
loan 
payment 
deduction 
m~~ 
pursuant to section 6605 is deemed to be a payment of Maine taxes 
for purposes of section 5111. 
56607. 
Penalty 
An eligible employee whose employment is terminated or who 
terminates 
employment 
from 
an 
eligible 
employment 
position 
earlier than 4 years after beginning employment in the eligible 
employment position shall pay the full amount of state income 
taxes that would have been due for the period of time the loan 
payment deductions were made pursuant to section 6605. 
This 
section does not apply if the eligible employment position is 
terminated due to the closing of the eligible business or a 
reduction in workforce size. 
56608. 
Rules: application forms 
The bureau shall adop~~les to implement 
tJ).~-lll'ovi§ions of 
this chapter. 
Rules adopted pursuant to this section are major 
substantive rules as defined in Title 5, chapter 375, subchapter 
2-A. 
The 
bureau shall 
provide 
application 
forms 
and 
other 
necessary documents to qualified businesses. 
SUMMARY 
This bill establishes the Graduate Retention Program, the 
purpose of which is to encourage recent college or advanced 
degree program graduates 
to 
work 
in Maine. 
The 
program is 
available to persons who are recent graduates of a postsecondary 
• 
.. 
school, have outstanding education loans and promise to work for 
a 
Maine 
employer 
for 
at least 4 
years. 
The 
program allows 
eligible participants to have an amount withheld from their pay 
equal to or more than the standard withho11ing for Maine income 
taxes for a single individual. 
The amount .. ' thheld is paid by 
the employer directly to the holder of the 
Jd~cation loan and is 
considered payment of Maine 
income 
taxes 
by 
the participant. 
Eligibility is limited to 4 years •