An Act To Allow Employers To Take a Tax Deduction for Their Employees' Transportation Costs
Maine Legislature, Session 122, LD 0785
Committee: Taxation
Sponsors: MARLEY
Amends: 36 MRSA §5122, 36 MRSA §5200-A

Legislative Document 
No. 785 
H.P.562 
House of Representatives, February 15,2005 
An Act To Allow Employers To Take a Tax Deduction for Their 
Employees' Transportation Costs 
Reference to the Committee on Taxation suggested and ordered printed. 
Il/~ 
1J7.1lld£~ 
MILLICENT M. MacFARLAND 
Clerk 
Presented by Representative MARLEY of Portland. (BY REQUEST) 
Printed on recycled paper 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1. 36 MRSA §5122, sub-§2, ~Q, as corrected by RR 2003, c. 
1, §38, is amended to read: 
Q. 
A fraction of any amount previously added back by the 
taxpayer 
to 
federal 
adjusted 
gross 
income 
pursuant 
to 
subsection 1, paragraph N. 
(1) 
With respect to property first placed in service 
during taxable years beginning in 2002, the adjustment 
under this paragraph is available for each year during 
the 
recovery 
period, 
beginning 
years 
after 
the 
beginning of the taxable year during which the property 
was first placed in service. 
The fraction is equal to 
the amount added back under subsection 1, paragraph N 
with respect to the property, divided by the number of 
years in the recovery period minus 2. 
(2) 
With 
respect 
to 
all 
other 
property, 
for 
the 
taxable year 
immediately following 
the 
taxable 
year 
during which the property was first placed in service, 
the fraction allowed by this paragraph is equal to 
5'<-0 
of the amount added back under subsection 1, paragraph 
N with respect to the property. 
For each subsequent 
taxable year during the recovery period, the fraction 
is 
equal 
to 
95% 
of 
the 
amount 
added 
back 
under 
subsection 1, paragraph N with respect to the property, 
divided by the number of years in the recovery period 
minus 2. 
In the case of property expensed pursuant to Section 179 of 
the 
Code, 
the term "recovery period" means 
the 
recovery 
period that would have been applicable to the property had 
Section 179 not been applied; aaG 
Sec. 2. 36 MRSA §5122, sub-§2, ff, as amended by PL 2003, c. 
705, §12 and affected by §14, is further amended to read: 
T. 
For income tax years beginning on or after January 1, 
2002 
and before January 1, 
2004, 
an amount equal to the 
total premiums spent for long-term care insurance policies 
certified under Title 24-A, section 5075-A as long as the 
amount subtracted is reduced by the long-term care premiums 
claimed as an itemized deduction pursuant to section 5125. 
For income tax years beginning on or after January 1, 2004, 
an amount equal to the total premiums spent for qualified 
long-term care 
insurance contracts certified under Title 
24-A, section 5075-A, as long as the amount subtracted is 
Page l-LR0940 (1) 
• 
reduced by any amount claimed as a deduction for federal 
income tax purposes in accordance with the Code, 
Section 
162(1) 
and by the long-term care premiums claimed as 
an 
itemized deduction pursuant to section 5125T; and 
Sec. 3. 36 MRSA §5122, sub-§2. ~U is enacted to read: 
U. 
For income tax years beginning on or after January 1, 
2005, 
to 
the extent included in federal 
adjusted gross 
income, 
the 
amount 
of 
qualified 
transportation 
fringe 
benefit program reimbursement provided by an employer to an 
employee under Section 132 of the Code. 
Sec. 4. 36 MRSA §5200-A, sub-§2, ~L. as amended by PL 2003, c. 
20, Pt. EE, §3, is further amended to read: 
L. 
An 
amount 
equal 
to 
the 
absolute 
value 
of 
any 
net 
operating loss arising from a tax year beginning or ending 
in 2001 for which federal taxable income was increased under 
subsection 1, paragraph M and that, pursuant to Section 102 
of the federal Job Creation and Worker Assistance Act of 
2002, Public Law 107-147, was carried back more than 2 years 
to the taxable year for federal income tax purposes, but 
only to the extent that: 
(1) Maine taxable income is not reduced below zero; 
( 2 ) The taxable year is either within 2 years prior to 
the 
year 
in 
which 
the 
loss 
arose 
or 
within 
the 
allowable 
federal 
period 
for 
carry-over 
of 
net 
operating losses; and 
(3) 
The 
amount 
has 
not 
been previously used 
as 
a 
modification pursuant to this subsection; aHa 
Sec. 5. 36 MRSA §5200-A, sub-§2, ~M, as repealed and replaced 
by PL 2003, c. 479, §6, is amended to read: 
M. 
A fraction of any amount previously added back by the 
taxpayer to federal taxable income pursuant to subsection 1, 
paragraph N. 
(1) 
With respect to property first placed in service 
during taxable years beginning in 2002, the adjustment 
under this paragraph is available for each year during 
the 
recovery 
period, 
beginning 
years 
after 
the 
beginning of the taxable year during which the property 
was first placed in service. 
The fraction is equal to 
the amount added back under subsection 1, paragraph N 
with respect to the property, divided by the number of 
years in the recovery period minus 2. 
(2) 
With 
respect 
to all other 
property, 
for 
the 
taxable year 
immediately following 
the taxable year 
during which the property was first placed in service, 
the fraction allowed by this paragraph is equal to 5°'0 
of the amount added back under subsection 1, paragraph 
N with respect to the property. 
For each subsequent 
taxable year during the recovery period, the fraction 
is 
equal 
to 
95% 
of 
the 
amount 
added 
back 
under 
subsection 1, paragraph N with respect to the property, 
divided by the number of years in the recovery period 
minus 2. 
In the case of property expensed pursuant to Section 179 of 
the Code, 
the 
term "recovery period" means 
the 
recovery 
period that would have been applicable to the property had 
Section 179 not been appliedT; and 
Sec. 6. 36 MRSA §S200-A, sub-§2, ~p is enacted to read: 
P. 
For income tax years beginning on or after January 1, 
2005, 
to 
the extent included in federal 
adjusted gross 
income, 
the 
amount 
of 
gualified 
transportation 
fringe 
benefit program reimbursement provided by an employer to an 
employee under Section 132 of the Code. 
SUMMARY 
This bill establishes an income tax modification to exempt 
from state taxation the amount of qualified transportation fringe 
benefit program payments provided by an employer to an employee. 
Qualified benefits include cash reimbursement for transit passes, 
qualified parking and transportation in certain commuter highway 
vehicles.