An Act To Reduce Income Taxes and Encourage Economic Growth in Maine
Maine Legislature, Session 122, LD 1660
Committee: Taxation
Sponsors: WOODBURY, PERRY
Amends: 36 MRSA §5111, 36 MRSA §511, 36 MRSA §5203-C, 36 MRSA §5219-N, 36 MRSA §5402, 36 MRSA §5403, 36 MRSA §6651

Legislative Document 
No. 1660 
H.P.1171 
House of Representatives, May 5, 2005 
An Act To Reduce Income Taxes and Encourage Economic Growth 
in Maine 
Reference to the Committee on Taxation suggested and ordered printed. 
!r/~ 
/J1.7T/~ 
MILLICENT M. MacFARLAND 
Clerk 
Presented by Representative WOODBURY of Yarmouth. (GOVERNOR'S BILL) 
Cosponsored by Senator PERRY of Penobscot. 
Printed on recycled paper 
Be it enacted by the People of the State of Maine as follows: 
PART A 
Sec. A-I. 36 MRSA §5111, first 1[, as amended by PL 1999, c. 
731, Pt. T, §1, is further amended to read: 
A tax is imposed feF-ea€h-~a~~~~-~~~~&~~-afseF 
JaR~aFy-+,--aQQQT on the Maine taxable income of every resident 
individual of this State. 
The amount of the tax is determined as 
provided in this section. except that the rates provided in this 
~ection for tax yeQLS beginni~n or after January I. 2005 must 
be adjusted as provided by section 51ll-C. 
Sec. A-2. 36 MRSA §5111, sub-§l-B, as enacted by PL 1999, c. 
731, Pt. T, §3, is amended to read: 
I-B. 
Single individuals and married persons filing separate 
returns; taz years beginning 2002 
and 2003. 
For 
tax years 
beginning 
eR--or--afseF-..Jan.ua..r~-lT in 2002 or 2003, for single 
individuals and married persons filing separate returns: 
If Maine ~aHaBle taxable income is: 
Less than $4,200 
At least $4,200 but 
less than $8,350 
At least $8,350 but 
less than $16,700 
$16,700 or more 
The tax is: 
2CJo of the Maine 
taxable income 
$84 plus 4.5CJo of 
the excess over 
$4,200 
$271 plus 7CJo of 
the excess over 
$8,350 
$856 plus 8.5CJo 
of the excess 
over $16,700 
Sec. A-3. 36 MRSA §5111, sub-§I-C is enacted to read: 
C. 
Single individuals and married persons filing separate 
returns: taz years beginning after 2003. 
For tax years beginning 
on or after January L 
2004. for single individuals and married 
persons filing separate returns: 
If Maine taxable income is: 
The tax is: 
Less than $4.350 
2CJo of the Maine 
. Page 1-LR236l(1) 
At least $4,350 but less than $8,650 
At least $8,650 but less than $17,350 
$17,350 or more 
taxable income 
£§7 plus 4~ 
of the excess 
over $4,350 
$281 plus 7,\ of 
the excess over 
$8,650 
$890 plus 8.5'\ 
of the excess 
over $17,350 
Sec. A-4. 36 MRS A §Sl11, sub-§2-B, as enacted by PL 1999, c. 
731, Pt. T, §5, is amended to read: 
2-B. 
Beads of households; taz years beqinninq 2002 and 
2003. 
For tax years beginning eR-~-~~~-~~Y-~T in 2002 ~ 
2.Q..Q..l, 
for unmarried individuals or legally separated individuals 
who qualify as heads of households: 
If Maine ~aHa9le taxable income is: 
Less than $6,300 
At least $6,300 but 
less than $12,500 
At least $12,500 but 
less than $25,050 
$25,050 or more 
The tax is: 
2,\ of the Maine 
taxable income 
$126 plus 4.5'\ 
of the excess 
over $6,300 
$405 plus 7,\ of 
the excess over 
$12,500 
$1,284 plus 8.5~ 
of the excess 
over $25,050 
Sec. A-S. 36 MRSA §SlU, sub-§2-C is enacted to read: 
2-C. 
Beads of households: taz years beginning after 2003. 
For 
tax 
years 
beginning 
on 
or after January 
1, 
2004, 
for 
unmarried 
individuals 
or 
legally 
separated 
individuals 
who 
qualify as heads of households: 
If Maine taxable income is: 
The tax is: 
Less than $6,550 
2,\ of the Maine 
At least $6,550 but less than $13,000 
At least $13,000 but less than $26,050 
$26,050 or more 
taxable income 
$l31 plus 4.5% 
of the excess 
over $6,550 
$421 plus 7% of 
the excess over 
$13,000 
$1,335 plus 8.5% 
of the excess 
over $26,050 
Sec. A-6. 36 MRSA §5111, sub-§3-B, as enacted by PL 1999, c. 
731, Pt. T, §7, is amended to read: 
3-B. 
Individuals filing married joint return or surviving 
spouses; 
tax years beginning 2002 
and 2003. 
For 
tax years 
beginning 9R-9F-af~eF-JaR~aFy-1T in 2002 or 2003, for individuals 
filing married joint returns or surviving spouses permitted to 
file a joint return: 
If Maine ~aHaB19 taxable income is: 
Less than $8,400 
At least $8,400 but 
less than $16,700 
At least $16,700 but 
less than $33,400 
$33,400 or more 
The tax is: 
2% of the Maine 
taxable income 
$168 plus 4.5% 
of the excess 
over $8,400 
$542 plus 7% of 
the excess over 
$16,700 
$1,711 plus 8.5% 
of the excess 
over $33,400 
Sec. A-7. 36 MRSA §511l, sub-§3-C is enacted to read: 
3-C. 
Individuals filing married joint return or surviving 
spouses: taz years beginning after 2003. 
For tax years beginning 
on or after January 1, 2004, for individuals filing married joint 
returns or surviving spouses: 
If Maine taxable income is: 
The tax is: 
Less than $8,700 
At least $8,700 but less than $17,350 
At least $17,350 but less than $34,700 
$34.700 or more 
Sec. A-S. 36 MRSA §Slll-C is enacted to read: 
2'lt. of the Maine 
taxable income 
$174 121 us 4. 5'lt. 
of the excess 
oyer $8,700 
$563 plus 7'lt. of 
the excess oyer 
$17,350 
$1,778 plus 8.5'lt. 
of the excess 
oyer $34,700 
§Slll-C. 
Reductions in individual income taz rates 
1. 
Rates reduced. 
For tax years beginning on or after 
January I. 
2005, 
the 
tax 
rates 
contained in section 
5111, 
subsections l-C, 2-C and 3-C must be adjusted as follows. 
A. 
For tax years beginning in 2005, 
the applicable tax 
rates are those specified in section 5111, subsections 1-C, 
2-C and 3-C except that the rate of 8.5'lt. is reduced to 8.45'lt.. 
B. 
For each tax year beginning in 2006 and 2007, the tax 
rate that was applicable in the immediately preceding tax 
year must be multiplied by an amount equal to the indexing 
suspension factor determined in accordance with subsection 3. 
C. 
For each tax year beginning in 2008 and 2009, the tax 
rate that was applicable in the immediately preceding tax 
year must be reduced by the rate reduction factor determined 
in accordance with subsection 2. 
The resulting rate must be 
multiplied by the indexing suspension factor determined in 
accordance with subsection 3. 
D. 
For each tax year beginning after 2009 but before 2018, 
the rate that was applicable in the immediately preceding 
tax year must 
be 
reduced by 
the 
rate 
reduction factor 
determined in accordance with subsection 2. 
E. 
For tax years beginning in or after 2018. the rates as 
determined for tax years beginning in 2017 apply. 
The rates de~ined----pursuant to this subsection must be rounded 
up to the nearest 11100 of a percentage point. 
The State Tax 
Assessor shall incorporate the changes arising from this section 
into the 
form~~structions and withholding tables for 
the 
appropriate tax years. 
2. 
Rate reduction factor. 
The rate reduction factor is 1% 
of the tax rate provided by ~tion 5111 for tax years beginning 
on or after January L 
2005, without taking into consideration 
the adjustments reguired by this section except for subsection 1, 
paragraph A. 
3. 
Indexing s1J,.s.mm$ion 
f~c_tor. 
For tax 
year_~ggi_nni.Jl_g 
gfter December 31, 2005 and before January 1, 2010, the State Tax 
A.s..sessor 
shall 
determi~h~n.dexin~~ion factor. 
Tne 
indexing suspension factor for each of these years is one minus 
an amount egual to the sum of the following amounts, divided by 
the total projected individual income tax liability for tax years 
~ginning in the next calendar year: 
A. The estimated increase in individual income tax liability 
for tax years beginning in the next calendar year ansJ.ng 
from the suspension of indexing pursuant to section 5403, as 
estimated by the assessor, reduced by: 
(1) The amount of estimated revenue foregone for tax 
years beginning in the next calendar year as a result 
of the 
in~e from $2,000 to $4,750 of the credit 
contained in section 5219-N, subsection I. as estimated 
by the assessor; and 
(2) The amount of estimated revenue foregone for tax 
years beginning in the next calendar year as a result 
of the decrease in the tax rate from 8. 5'\, to 8. 45'\, as 
provided in section 5111-C, subsection L 
paragraph A 
as applied in subseguent years, as estimated by the 
assessor. 
The 
factor 
must 
be 
rounded 
up 
to 
the 
nearest 
1/100 
of 
a 
percentage point. 
The determination reguired by this subsection 
must be made on or about September 15th of the year preceding its 
application. 
Sec. A-9. 36 MRSA §5203-C, sub-§5 is enacted to read: 
5. 
Rates re(lg,ced. 
Beginning in 2005, and each subse..quent 
calendar year thereafter through 2017, 
on or about September 
15th, 
the State Tax Assessor shall, in accordance with this 
subsection and for taxable years beginning during the calendar 
year I 
adjust the tax rates contained in subsection L 
pararu:.gp.h 
H, 
subparagraphs 
(1) 
and 
(2). 
Each 
tax 
rate 
contained in 
subsection 
L 
paragraph 
H, 
subparagraphs 
(1) 
and 
(2) 
as 
preyious1y adjusted must be reduced in the same proportion to 
. Page 5-LR2361(1) 
effect rates that negate any estimated increase in alternative 
minimum tax revenue for the current fiscal year resulting solely 
from reductions in individual 
income 
tax rates under section 
Slll-C. 
Each rate reduced in accordance with this subsection 
must be ro1lilll.ed up to the 
near~t 11100 of a percentage. 
The 
rates reduced in accordance with this subsection applicable to 
~Q1L~ars that begin in 2017 are the rates that apply to tax 
years that begin after 2017. 
Sec. A-I0. 36 MRSA §5219-N, sub-§l, as amended by PL 2003, c. 
390, §48, is further amended to read: 
1. 
Generally. 
Except 
as 
provided in subsection 
2, 
an 
individual 
whose 
Maine 
taxable 
income 
determined 
as 
if the 
individual were 
a 
resident individual for the entire year is 
$6TQQQ 
$4,7S0 or less is allowed a 
credit equal to the tax 
otherwise imposed on that individual by this Part. 
In no case 
may this credit reduce the Maine income tax 
to less than zero. 
Sec. A-U. 36 MRSA §5402. sub-§l-B, as enacted by PL 1999, c. 
731, Pt. T, §8 and affected by §11, is amended to read: 
I-B. 
Cost-of-livinq 
adjustment. 
The 
"cost-of-living 
adjustment" for any calendar year subseguent to calendar year 
2008 is the Consumer Price Index for the 12-month period ending 
June 30th of the preceding calendar year divided by the Consumer 
Price Index for the 12-month period ending June 30, 
6QQ~ lQQa. 
Sec. A-12. 36 MRSA §5403, as repealed and replaced by PL 
1999, c. 731, Pt. T, §10 and affected by §11, is amended to read: 
§5403. 
Annual adjustments for inflation 
Beginning 
in 
2002, 
and 
each 
subsequent 
calendar 
year 
thereafter, except for calendar years 2004 to 2008, on or about 
September 
lSth, 
the 
State 
Tax 
Assessor 
shall 
multiply 
the 
cost-of-living adjustment for 
taxable years beginning in the 
succeeding calendar year by the dollar amounts of the tax rate 
tables specified in section 5111, subsections 
~-8r-~~--and--~-g 
l-C, 2-C and 3-C as~~ted by s~on SIll-C. 
If the dollar 
amounts of each rate bracket, 
adjusted by application of the 
cost-of-living adjustment, are not multiples of $50, any increase 
must be rounded to the next lowest multiple of $50. 
If the 
cost-of-living adjustment for any taxable year is 1.000 or less, 
no adjustment may be made for that taxable year in the dollar 
bracket amounts of the tax rate tables. 
The assessor shall 
incorporate such changes into the income tax forms, instructions 
and withholding tables for the taxable year. 
Sec. A-13. Application. 
That section of this Part that amends 
the Maine Revised Statutes, Title 36, section 5219-N, subsection 
applies to tax years beginning on or after January 1, 2005. 
PARTB 
Sec. B-1. 36 MRSA c.l05, sub-c. 4-C is enacted to read: 
SUBCHAPTER 4 C 
BUSINESS EOUIPMENT TAX EXEMPTION 
§691. 
Definitions: exemption limitations 
1. 
DefiJ)i_tiQ..J)J~_~!i~_S.!LQ~~",,· 
n~~t~nj. s 
subchapte~.nl..e..s~th..e. 
context 
otherwise 
indicates, 
the 
following 
terms 
have 
the 
following meanings. 
A~~TR-expir~~_op~rty''--------me~s property that was eligible. 
for property tax reimbursement under chapter 915, but is no 
longe.r eligible for such reimbursement due to the fact that 
reimbursements have been made for the entire length of time 
for which reimbursements were allowed under section 6652, 
subsection 1. 
B. 
"Eligible business equipment" means qualified property 
that, in the absence of this subchapter, 
would first be 
subject to assessment under this Part on or after April 1, 
2007 
and 
BETR expired 
property. 
"Eligible 
business 
equipment" 
includes, 
without 
limitation, 
repair 
parts L 
replacement 
parts, 
replacement 
equipment, 
additions, 
accessions 
and 
accessories 
to 
other 
qualified 
business 
property that first became subject to assessment under this 
Part before April 1, 2007 if the part, addition, 
equipmen~ 
accession 
or 
accessory 
would, 
in 
the 
absence 
of 
this 
subchapter, first be subject to assessment under this Part 
on or after Ap.ril 1, 2007. 
"Eligible business equipment" 
also includes inventory parts. 
"Eligible business equipment" does not include: 
(1) 
Office furniture, 
including, 
without limitation, 
tables, chairs, desks, bookcases, filing cabinets and 
modular office partitions; 
(2) Lamps and lighting fixtures; 
(3) Property owned or used by an excluded person; 
. Page 7-LR2361(1) 
(4) Telecommunications personal property subject to the 
tax imposed by section 457; and 
(5) Gambling machines or devices, including any device, 
machine, 
paraphernalia or eguipment that is used or 
usable in the playing phases of any gambling activity 
as that term is 
defi~ed in Title 8, 
section 1001, 
subsection 
15, 
whether 
that 
activity 
consists 
of 
gambling 
between 
persons 
or 
gambling 
by 
a 
person 
involving the playing of a machine, "Gambling machines 
or devices" includes, without limitation: 
(a) Associated equipment as defined in Title 8, 
section 1001, subsection 2; 
H)L.CgJl1J211s..~gJ~j-PJIlexlLused directly and pr im.a.rD-y 
in the operation of a slot machine as defined in 
Title 8, section 1001, subsection 39; 
~~~ectronic video machine 
as defined in 
Title 17, section 330, subsection I-A: 
(d) 
Eguipment 
used 
in 
the 
playing 
phases 
of 
lottery schemes; and 
(e) 
Repair and replacement parts of a 
gambling 
machine or device. 
(6) 
PrQPerty 
located 
at 
a 
retail 
sales 
facility 
exceeding 
100,000 
sguare 
feet 
of interior 
customer 
selling space and used primarily in a 
retail sales 
activi ty, unless the facility is owned by a business 
whose Maine-based operation derives less than 50'\ of 
its total annual revenue on a calendar-year basis from 
sales 
that 
are 
subject 
to 
Maine 
sales 
tax. 
For 
purposes of this subparagraph, the following terms have 
the following meanings: 
(a) 
"Primarily" means more than 50'\ of the time: 
(b) 
"Retail sales activity" means 
an activity 
associated with 
the 
selection 
and 
purchase 
of 
goods or the rental of tangible personal property; 
and 
(c) 
"Retail sales facility" means 
a 
structure 
Msed to serve cu~tomers who are physically present 
at the facility for the purpose of selecting and 
purchasing goods at retail or for renting tangible 
personal property. 
"Retail sales faciIi ty" does 
not include a separate structure that is used as a 
warehouse or call center facility. 
C. 
"Excluded person" means: 
(1) 
A p_~bli~ility as defined in Title 35-A, section 
102, subsection 13: 
(2) 
A person that provides radio paging service as 
defined in Title 35-A, section 102, subsection 15; 
(3) 
A person that provides mobile telecommunications 
services 
as 
defined 
in 
Title 
35-A, 
section 
102, 
subsection 9-A; 
(4) 
A cable teJevision company as defined in Title 
30-A, section 2001, subsection 2; 
(5) 
A 
person 
that 
provides 
satellite-based 
direct 
television broadcast services; or 
(6) 
A person that provides multichannel, 
multipoint 
television distribution services. 
D. 
"Inventory parts" 
includes repair parts, 
replacement 
parts. 
replacement 
equipment. 
additions. 
accessions 
and 
accessories 
on 
hand 
but 
not 
in service 
and 
stocks 
or 
inventories of repair parts. replacement parts. replacement 
equipment. additions. accessions and accessories on hand but 
not in service and other machinery and equipment on ha~d for 
future use but not in service if acquired after April 1. 
2006. regardless of when placed in service. 
E. 
"Qualified property" means tangible personal property 
.that.J. 
(1) 
Is used or held for use exclusively for a business 
purpose by the person in possession of it or, in the 
case of construction in progress or inventory parts. is 
intended to be used exclusively for a business purpose 
by the person who will possess that property; and 
(2) Either: 
(a) 
Was subject to an allowance for depreciation 
under the Code on April 1st of the property tax 
year for which a claim for exemption under this 
subchapter is filed or would have been subject to 
an allowance for depreciation under the Code as of 
. Page 9-LR2361(1) 
that date but for the fact that the property has 
been fully depreciated; or 
(b) 
In the case of construction in progress or 
inventory parts, would be subject under the Code 
~~n allowance for depreciation when placed in 
service Qr would have been subject to an allowance 
for depreciation under the Code as of that date 
but for the fact that the property has been fully 
depreciated. 
"Qualified property" also includes all property that is 
affixed or attached to a building or other real estate if 
the property is used primarily to further a particular trade 
or business activity taking place in that building or on 
that real estate. 
"Qualified 
property" 
does 
not 
include 
components 
or 
attachments to a building if they are used primarily to 
serve 
the 
building 
as 
a 
building, 
regardless 
of 
the 
particular trade or activity taking place in or on the 
building. 
"Qualified property" also does not include land 
improvements if they are used primarily to further the use 
of the land as land, regardless of the particular trade or 
business activity taking place in or on the land. 
In the 
case of construction in progress or inventory parts, the 
term "used" means intended to be used. 
"Qualified property" 
also does not include any vehicle registered for on-road use 
on which a 
ta~A-sessed pursuant to chapter 111 has been 
paid or any watercraft registered for use on state waters on 
which a tax assessed pursuant to chapter 112 has been paid. 
• 
Addi tiona",,=l~~l=iJQi t~tiJm.&,-". __ 
-",T=h..,.e,-----"e""x,-"e=m"",p,...,t~i,,-,o,,-,n,"-,s"-------.lp,,-,r
"-,o",-v-,--,,,,-i d""-",-e",,d 
pursuant 
to 
this 
subchapter 
are 
limited 
pursuant 
to 
this 
subsection. 
A. 
Exemption 
for 
certain energy facilities 
under 
this 
subchapter is limited as follows. 
(1) 
The exemption provided by this subchapter does not 
apply to a natural gas pipeline, including pumping or 
compression stations, storage depots and appurtenant 
facilities used in the transportation, delivery or sale 
of natural gas, but not including a pipeline that is 
less than a mile in length and is owned by a consumer 
of natural gas delivered through the pipeline. 
(2) 
The exemption provided in this subchapter does not 
apply to property used to produce or transmit energy 
primarily for sale. 
Energy is primarily for sale if 
during the immediately preceding property tax year 213 
or more of the useful energy is directly or indirectly 
sold 
and 
transmitted 
through 
the 
facilities 
of 
a 
transmission and distribution utility. 
(3) 
For purposes of this paragraph, unless the context 
otherwise 
indicates, 
the 
following 
terms 
have 
the 
following meanings. 
(a) 
"Transmission and distribution utility" has 
the Same meaning as defined in Title 35-A, section 
102, subsection 20-B. 
(b) 
"Useful eillt£9y" is energy in any form that 
does not include waste heat, efficiency losses, 
line losses or other energy dissipation. 
B. 
Pollution 
control 
facilities 
that 
are 
entitled 
to 
exemption pu~nt to section 656, subsection 1, paragraph E 
are not entitled to an exemption under this subchapter, 
except if: 
(1) 
The property is entitled to 
an exemption under 
section 656, subsection 1, paragraph E but has not yet 
been certified for exemption under that paragraph; 
( 2) The property has been placed in service after the 
December 
1s~mme~~t~e=l*y~p~r~e~c~e~d~1~'n=g~_A~p=r~i~l~l~s~t~o~f~t~h~e~t~a~x 
year for which the exemption is sought but prior to 
April 1st of 
the~ __ 
p~ro~p~e~r~t~y __ ~t~a~xL-~y~eua~r~~f~o~r~~w~h~ikch~~t~h~e 
exemption is sought: and 
(3) The ta_xpay.er 
ha_~1.!l;>1DjJ::ted the~.e...~1,.lired_~'p_lic~tiQp. 
for certification to the Commissioner of Environmental 
Protection prior to April 1st. 
The exemption 
up.J:l.e~_tll.Ls_R\.,ll:!~ha.p.te~-.nt.inl1_es for property 
that meets the requirements of subparagraphs (1), 
(2) and 
(3) only until the certification for exemption under section 
656, subsection L 
paragraph E has been granted. 
If the 
State Tax As~ssor or an assessor denies an exemption on the 
ground 
that 
the 
pr9~rty in 
question 
is 
entitled 
to 
exempticn under section 656, subsection L 
paragraph E and 
the taxpayer appeals the denial, the State Tax Assessor or 
assessor 
shalL 
at 
the 
taxpayer's 
request. 
allow 
the 
taxpayer up to one year to obtain a 
statement from the 
Commissioner of Environmental Protection that the property 
at issue is not exempt under section 656, 
subsection 1, 
paragraph 
E. 
If 
the 
taxpayer 
timely 
produces 
such 
a 
statement or otherwise demonstrates that the property is ~ 
Page II-LR2361(1) 
exempt 
und~~ion 656, 
subsection L 
paragraph E, 
the 
State Tax Assessor or an assessor shall allow the exemption 
under this subchapter, but only for the year in question. 
§692. 
Exemption of business equipment 
1. 
Eligible business 
eg.ui~"",n",t,---,e,",z""e 
... mp!!!&!~t~._--,E",-l",-",-ig""-",-i!>!.b-=l-,,,e-,b!.!.u~s""-i"",n",,e.2s .... s 
~~;nli-p.ment is exempt from all taxation under this Part. except 
chapters III and 112. 
2. 
Just value of ez~tion. In determining the just value 
of exempt business equipment, the assessor shall determine the 
just value of the property in the same manner as prescribed in 
section 701-A as if the property were subject to taxation. 
3. 
Eff~~~~a~aluation. The percentage of just value 
Q~J.Le~~usine~~ equipment 
to 
be 
included in 
the 
annual 
determination of state valuation under sections 208 and 305 is 
75% for tax years 2007 and 2008 and 50% for tax year 2009 and 
subsequent tax years, 
except that 100% of the just value of 
BETR-expired 
~perty 
must 
be 
included 
in 
the 
annual 
determination of state valuation under sections 208 and 305. 
4. 
Property 
tax 
rate. 
The 
value 
of 
exempt 
business 
equipment under this subchapter must be included in the total 
municipal valuation used to determine the municipal tax rate. 
For purposes of computing the municipal tax rate, for the 2007 
and 2008 tax years, 75% of the value of business equipment exempt 
under this subchapter must be included in the total municipal 
y~JJ!?lt..i~~.pJl~r 2009 and subsequent tax years, 
50% of the, 
value of business equipment exempt under this subchapter must be 
included in the total taxable municipal valuation: except that 
100% of the value of BETR-expired property must be included in 
the total municipal valuation used to determine the municipal tax 
rate. 
The 
municipal 
tax 
rate 
as 
finally determined 
may 
be 
applied only to the taxable municipal valuation for that year. 
§693. 
Forms; reporting 
1. 
Reporting. 
On 
or before 
May 
1st of each year, 
a 
.taxpayer claiming __ ~p. exemption under this section shall file a 
report with the assessor of the taxing jurisdiction in which the 
~operty would otherwise be subject to taxation. 
The repor~~ 
identify the property for which exemption is claimed and must be 
made 
on 
a 
form 
prescribed 
by 
the 
State 
Tax 
Assessor 
or 
substitute form approved by the State Tax Assessor. The State Tax 
Assessor shall furnish copies of the form to each municipality in 
the State and the form must be made available to taxpayers prior 
to each April 1st. The assessor of the taxing jurisdiction may 
require the taxpayer to sign the 
form 
and make oath to its 
( 
truth. 
Upon written 
re(llH~J~J;.~lllL...as_sessor may grant ext.e.nsiQns 
of time to file the report. 
Failure to file the report on a 
ti_lJlely basis~nclud.ing aIll'- extensions of time, disgualifieL.tl1e 
property involved from exemption for that tax year. 
The assessor 
of the taxing jurisdiction may reguire in writing that a taxpayer 
answer in writing all reasonable inguiries as to the property for 
which exemption is 
reglJ&tl,ed. 
A taxpayer has 
days 
from 
receipt of such an inguiry to respond. 
Upon written reguesL a 
taxpayer is entitled to a 
30-day extension to respond to the 
inguiry and the assessor may grant additional extensions 
UPJm 
written reguest. The answer to any such inguiry is not binding on 
the assessor. 
All notices and reguests provided pursuant to this subsection 
must be made by personal delivery or certified mail and must 
conspicuously state the conseguences of the taxpayer's failure to 
respond to the notice or reguest in a timely manner. 
If an exemption 
hQs~x~~een gr~~ and the 
St&t~~ 
&tSJtS.sor 
subsegye_ntly 
deJ,ftrmin.e.L-that 
the 
property 
is 
not 
entitled to exemption, 
a supplemental assessment myst be made 
within 3 years of the original assessment date with respect to 
the property in compliance with section 713, without regard to 
the 
limitations 
contained 
in 
that 
section 
regarding 
the 
justification necessary for a supplemental assessment. 
2. 
False filing. 
An individual who knowingly gives false 
information for the pyrpose of claiming an exemption under this 
subchapter commits a Class E crime. 
3. 
Continuation of eligibility. 
A person must annually 
file 
the 
report 
regyired 
by 
this 
section for 
all eligible 
business 
eguipment, 
even 
though there 
may 
be 
no 
substantive 
change in the property from one year to the next. 
§694. 
Duty of assessor: reimbursement by State 
1. 
Examination 
~~ identification. 
The 
assessor 
shall 
~xamine each report pyrsyant to section 693 that is timely filed, 
determine whether the property is entitled to an exemption under 
this subchapter and determine the just value of the property. 
b~n_title~l1_t_~rEt~uJ::seIDe~~..Y-.-S_ta.t..e~~a1.Clllat.igA,_ 
Notwithstanding section 661, upon proof in a form satisfactory to 
the byreau, 
a mynicipality that has approved exemptions under. 
this subchapter may recover from the State the taxes lost by 
reason of the exemption according to the following schedule: 
A. 
For tax years 2007 and 2008, 75% of the property tax 
revenye lost: and 
B. 
For tax year 2009 and subsequent tax years, 50% of the 
property tax revenue lost. 
Notwithstanding 
para~r~hs A and 
Bt 
a 
municipality that 
ha~ 
.approved exemptions under this subchapter may recover from the 
State 100% of the property tax revenue lost due to the exemption 
of 
BETR-expired 
property. 
The 
bureau 
shall 
reimburse 
the 
Unorganized Territory Education and Services Fund for taxes lost 
by reason of the exemption according to the sarne schedule. 
3. 
InformatiruLPJ:.2..vided tQJ~; deviations in assessment 
ratio. 
The assessor shall provide by June 1st annually any 
relevant information requested by the bureau for the purpose of 
determining the actual assessment ratio in use 
for personal 
property in the municipality. 
The certified ratio declared by 
the municipality must be considered accurate by the bureau if it 
is within 10% of the assessment ratio last determined by the 
bureau in its annual report of ratio studies. 
The assessor may 
submit additional information on the relevant assessment ratio to 
the bureau in order to prove that a different ratio should 
apply. 
The bureau may accept a certified ratio that deviates 
mQre 
than 10% 
from the bureau's most recent state valuation 
report only if the information submitted by the municipality 
~learly indicates that the certified ratio is more accurate than 
the assessment ratio contained in the bureau's most recent report. 
4. 
Payments by State. 
Reimbursements 
to municipalities 
must be made as described in this subsection. 
A municipality 
claiming reimbursement under this section shall submit a claim to 
the bureau by November 1st of the year in which the exemption 
~_ies or within 30 
days of commitment of taxes, 
whichever 
occurs later. 
The bureau shall review the claims and determine 
the total amount t~ paid. 
The bureau shall certify and the 
Treasurer of State shall pay by December 15th of the year in 
which the exemption applies the amount that the bureau determines 
for that tax year. 
Municipal claims that are timely filed after 
November 1st must be paid as soon as reasonably possible after 
the December 15th payment date. 
5. 
R~.i,mbYI:~~_nt for 
st~~e-""~dated cost..$. 
The 
bureau 
shall 
reimburse municipalities 
and 
the 
Unorganized Territory 
Education 
and Services 
Fund for 
state-mandated costs in the 
manner provided in Title 30-A, section 5685. 
§695. 
Denial of exemption; ap~ 
If the assessor determines that a property is not entitled 
to an exemption under this subchapter, the assessor shall provide 
a notice of denial, including the reasons for the denial, to the 
applicant by either personal delivery or certified mail. 
An 
applicant 
may 
appeal 
a 
denial 
of 
an 
exemption 
under 
this 
subchapter using the procedures provided in subchapter 8. 
If the 
assessor determines that a property receiving an exemption under 
this subchapter in any year within the 3 preceding years was not 
eligible for the exemption, the assessor shall immediately notify 
the bureau in writing. 
§696. 
Sypplemental assessment 
If the assessor makes a determination under section 695 that 
p~rty receiving an exemption under this subchapter was not 
entitled to an exemption under this subchapter, 
the assessor 
shall by means of a supplemental assessment assess the property 
for which the exemption was improperly received, plus costs and 
interest. The taxpayer may appeal the supplemental assessment in 
the 
Same 
manner 
as 
other 
supplemental 
assessments. 
The 
supplemental assessment must be assessed and collected pursuant 
to section 713. 
The bureau shall deduct the 
amount of the 
portion of the supplemental assessment that pertains to any funds 
previously rei~sed to the municipality under section 694 from 
the next reimbursement issued to the municipality. 
§697. 
Audits; determination of bureau 
The bureau may audit the records of a municipality to ensure 
compliance with this subchapter. 
The bureau may independently 
review the records of a municipality to determine if exemptions 
have been properly approved. 
If the bureau determines that an 
exemption 
was 
improperly 
approved 
for 
any 
of 
the 
years 
immediately preceding the determination, the bureau shall ensure, 
by setoff against other payments due the municipality under this 
subchapter 
or 
subchapter 
4-B, 
that 
the municipality is 
not 
reimbursed for the exemption. 
§698. 
Appeals 
The bureau shall send notice to the taxpayer, in the manner 
and of the type provided for in section 151 in the case of a 
reconsideration decision, of any decision that an exemption was 
improperly 
or 
erroneously 
approved. 
The 
taxpayer 
may 
seek 
reconsideration pursuant to section 151 of any such decision. 
Notwi5.~di:ag an--Y--.JL~~~r_~ision of law, if a 
~llQY~~~~i 
not timely request reconsideration of the bureau's decision under 
section 
151, 
the 
local 
taxin~risdiction must 
issue 
a 
supplemental assessment with respect to such property within 90 
days after the 
bur~~etermination. 
The taxpayer may 
n~~ 
appeal that supplemental assessment except as to issues unrelat~ 
to the applicabilit~Qf the exemption. 
Notwithstanding any other 
provision of law, if a taxpayer appeals a decision of the bureau 
to disqualify an exemption and does not prevail in that appeaL 
the 
local 
taxing 
jJJlisdiction 
must 
issue 
a 
supplemental 
assessment with respect to the property at issue within 90 days 
after the appeal has been resolved in the bureau' s favor. 
The 
taxpayer may not appeal that supplemental assessment except as to 
i.s..sJ.ies 
unrelated 
to 
the 
applicability 
of 
the 
exemption. 
Notwithstanding any other provision of law, if a taxpayer appeals 
a decision of the bureau that an exemption was improperly or 
erroneously approved and the taxpayer prevails in that appeal, 
the 
bureau 
shall 
promptly 
restore 
any 
reimbursement 
to 
the 
municipality that was not made or was set off or otherwise denied 
the municipality under section 697. 
§699. 
Legislatiye findings 
The Legislature finds that encouragement of the growth of 
capital investment in this State is in the public interest and 
promotes the general welfare of the people of the State. 
The 
Legislature further finds that the high cost of owning qualified 
business property in this State is a disincentive to the growth 
of capital investment in this State. 
The Legislature further 
finds that the tax exemption set forth in this subchapter is a 
reasonable 
means 
of 
overcoming 
this 
disincentive 
and 
will 
encourage capital investment in this State. 
Sec. B-2. 36 MRSA §6651, sub-§l, as amended by PL 2001, c. 
396, §43, is further amended to read: 
1. 
Eligible property. 
"Eligible property" means qualified 
business property first placed in service in the State, 
or 
constituting construction in progress 
commenced in the State, 
after April 1, 1995, but does not include property that qualifies 
for exemption pursuant to chapter 105, subchapter 4-C. 
"Eligible 
property" includes, without limitation, repair parts, replacement 
parts, additions, accessions and accessories to other qualified 
business property placed in service on or before April 1, 1995 if 
the part, addition, accession or accessory is first placed in 
service, or constitutes construction in progress, in the State 
after April 1, 1995, unless such property qualifies for exemption 
pursuant to chapter 105, 
subchapter 4-C. 
"Eligible property" 
also includes inventory parts. 
SUMMARY 
Part 
A 
increases 
the 
existing 
low-income 
tax 
credit 
threshold from $2,000 to $4,750. 
Individuals with Maine taxable 
income of not more than the threshold are not required to file a 
Maine income tax return. 
The increase in the threshold applies 
to tax years beginning after 2004 and is funded through tax year 
2009 by suspending the annual inflation adjustment to the dollar 
bracket amounts of the individual income tax schedules. 
Part A also reduces individual income tax rates in 3 ways. 
First, it reduces the top marginal tax rate from 8.5% to 8.45% 
for tax years beginning with 2005. 
Second, for tax years 2006 to 
2009, 
it uses 
a 
portion 
of 
the 
revenue 
savings 
from 
the 
suspension of the annual inflation adjustment to permanently 
reduce the tax rates over the same period. 
The annual inflation 
adjustment is reinstated for tax years beginning after 2009. 
Third, starting with tax years beginning in 2008, the rates are 
further reduced 1% each year until the 
2005 rates have been 
reduced by a total of 10% by virtue of this adjustment. 
This 
rate reduction is applied prior to, and is in addition to, the 
rate reduction funded from suspending the inflation adjustment. 
The 
rate reductions effected by Part A are permanent. 
The 
individual alternative minimum tax rates are also reduced to 
ensure 
that 
taxpayers 
do 
not 
become 
subject 
to 
the 
Maine 
alternative minimum tax solely as a result of the regular income 
tax rate reductions. 
Part B establishes a property tax exemption for property of 
qualified businesses 
that is first subject 
to 
property 
tax 
assessment on or after April 1, 
2007 in the absence of the 
exemption. 
Property first subject to property tax assessment 
prior to April 1, 
2007 will remain eligible for the Business 
Equipment Tax Reimbursement, "BETR," program for the duration of 
the 12-year window for BETR program entitlement. 
Property that 
is no longer eligible for the BETR program because it has been 
subject to BETR reimbursement for the full 12-year period for 
BETR 
program entitlement is 
then eligible 
for 
the 
business 
equipment property tax exemption. 
Part B further establishes the rate of reimbursement the 
State must pay to municipalities for property tax revenue lost as 
a result of the exemption. 
For the 2007 and 2008 property tax 
years, 
the 
rate 
of 
reimbursement 
is 
75% 
and 
for 
2009 
and 
subsequent property tax years, the rate of reimbursement is 50%. 
Municipalities will be reimbursed 100% with respect to property 
that is no longer eligible for the BETR program because it has 
been subject to BETR reimbursement for the full 12-year period 
for BETR program entitlement. 
Finally, Part B provides that business property that first 
became subject to property tax in the absence of the exemption on 
or after April 1, 2007 does not qualify for the BETR program.