An Act To Modernize the Tax Laws and Provide over $75,OOO,~OO to Residents of the State in Tax Relief
Maine Legislature, Session 124, LD 1088
Committee: Taxation
Sponsors: PERRY, BERRY, CHASE, FLEMINGS, KNIGHT, PILON, PINGREE, VALENTINO, BARTLETT, BLISS, MILLS, MITCHELL, SIMPSON
Amends: 36 MRSA §5122, 36 MRSA §5125, 36 MRSA §5126, 36 MRSA §5192, 36 MRSA §5203-B, 36 MRSA §5203-C, 36 MRSA §5204, 36 MRSA §5204-A, 36 MRSA §5217-A, 36 MRSA §5218-B, 36 MRSA §5218-C, 36 MRSA §5219-H, 36 MRSA §5224-A, 36 MRSA §5250, 36 MRSA §5275, 36 MRSA §5401, 36 MRSA §5403, 5 MRSA §13090-K, 10 MRSA §1305, 23 MRSA §4210-B, 30-A MRSA §5681, 36 MRSA §1752, 36 MRSA §1754-B, 36 MRSA §1758, 36 MRSA §1760, 36 MRSA §1760-C, 36 MRSA §1763, 36 MRSA §1811, 36 MRSA §1812, 36 MRSA §1817, 36 MRSA §1861, 36 MRSA §1862, 36 MRSA §2020, 36 MRSA §2, 36 MRSA §2552, 36 MRSA §2557, 36 MRSA §4641, 36 MRSA §4641-A, 36 MRSA §4641-B

Legislative Document 
No. lOSS 
H.P.750 
House of Representatives, March 17, 2009 
An Act To Modernize the Tax Laws and Provide over $75,OOO,~OO to 
Residents of the State in Tax Relief 
Reference to the Committee on Taxation suggested and ordered printed. 
Presented by Representative PlOTT! of Unity. 
Cosponsored by Senator PERRY of Penobscot and 
'7JI4~ 111· 71!!I£;1daM-~l 
MILLICENTM. MacFARLAND 
Clerk 
Representatives: BERRY of Bowdoinham, CHASE of Wells, FLEMINGS of Bar Harbor, 
KNIGHT of Livermore Falls, PILON of Sa co, Speaker PINGREE of North Haven, 
VALENTINO of Sa co, ·WATSON of Bath, Senators: BARTLETT of Cumberland, BLISS of 
Cumberland, MARRACHE .of KennebeC', MILLS of Somerset, President MITCHELL of 
Kennebec, SIMPSON of Androscoggin. 
Prin,tcd on recycled pilpcr 
Be it enacted by the People of the State of Maine as follows: 
PART A 
Sec. A-I. 36 MRSA §S111, as amended by PL 1999, c. 731, Pt. T, §§1 to 7, is 
repealed and the following enacted in its place: 
§5111. Imposition and rate of tax 
A tax is imposed for each taxable year beginning on or after January 1; 2010 on the 
Maine taxable income of every resident individual of this State at the rate of 6.5%. 
Sec. A-2. 36 MRS A §Sl11-A, as repealed and replaced by PL 1987, c. 819, §3, is 
repealed. 
Sec. A-3 .. 36 MRS A §S112, as enacted by P&SL 1969, c. 154, Pt. F, §1, is 
repealed. 
. Sec. A-4. 36 MRSA §Sl13, as repealed and replaced by PL 1983, c. 571, §19, is 
repealed. 
Sec. A-S. 36 MRSA §Sl21, as amended by PL 2003, c. 390, §26, is further 
amended to read: 
§5121. Maine taxable income 
The Maine taxable income of a resident individual is equal to the individual's federal 
adjusted gross income as defmed by the Code with the. modifications and 1SHH the 
dsduotions and D8fsonal sxsmntions provided in this chapter. 
Sec. A-6. 36 MRSA §S122, sub-§2, ~, as amended by PL 2003, c. 705, §11 
and affected by § 14, is further amended to read: 
L. Forinc'ome tax years beginning on or after January 1,2000 and before January 1, 
2004, an amount equal to the total premiums spent for qualified long-term care 
insurance contracts as defmed in the Code, Section 7702B(b), 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 and before January 1, 2010, an amount equal to the total premiums 
spent for qualified long-term care insurance contracts as defined in the Code, Section 
7702B(b), as long as the amount subtracted is 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 5125. F or income tax years beginning on or after January 1 , 
2010, an amount equal to the total premiums spent for qualified long-term care 
insurance contracts as defmed in the Code, Section 7702B(b), as long as the amount 
subtracted is reduced by any amount claimed as a deduction for federal income tax 
purposes in accordance with the Code, Section 162(1); 
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Sec. A-7. 36 MRSA §5122, sub-§2, ~T, as amended by PL 2005, c. 519, Pt. 
LLL, § 1 and c. 622, §26, 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. 
F or income tax years beginning on or after January 1, 2004 but before January 1, 
2010, 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 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 5125. For income 
tax years beginning on or after January 1, 2010, an amount equal to the total 
prerriiums spent for qualified long-term care insurance contracts certified under Title 
24-A, section 5075-A, as long as the amount subtracted is reduced by any amount 
claimed as a deduction for federal income tax purposes in accordance with the Code, 
Section 162(1); 
Sec. A-S. 36 MRS A §5124-A, as amended by PL2005, c. 12, Pt. P, §5, is 
repealed. 
Sec. A-9. 36 MRSA §5125,as amended by PL 2007, c. 539, Pt. CCC, §§9 to 11, 
is repealed. 
Sec. A-IO. 36 MRSA §5126, as amended by PL 2001, c. 583, §16, is repealed. 
Sec. A-It. 36 MRS A §5160, as amended by PL 2003, c. 390, §35, is further 
amended to read: 
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§S160. Imposition of tax 
The tax is imposed, at the rates rate provided by section 5111 for single individuals, 
upon the Maine taxable income of estates and trusts. The tax must be paid by the 
fiduciary. 
Sec. A-12. 36 MRSA §5192, sub-§2, as.amended by PL 1985, c. 783, §32, is 
repealed. 
Sec. A-l3. 36 MRSA §5203-B, as amended by PL 2003, c. 673, Pt. JJ, §2 and 
affected by §6, is repealed. 
Sec. A-14. 36 MRSA §5203-C, as amended by PL 2005, c. 618, §§7 and 8 and 
affected by §22, is further amended to read: 
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20. 
§5203-c' State minimum tax 
1. Definitions: As used in this section, unless the context otherwise indicates, the 
following tenns have the following meanings. 
A. "Adjusted alternative minimum tax,"fer individuals, estates and trusts, means the 
e,wess, if £lny, of the alternative minimum taJ( over the amount that would have been 
the alternative minimum ta)( had only the adjustments and items of preference 
specified in the Code, Section 53(d)(1)(B)(ii) been ta:ken into account in determining 
alternative minimum tax. For corporations subject to the tax imposed by this section, 
"adjusted alternative minimum taJ(" means alternative minimum tax. 
B."Alternative minimum tax" means any excess of tentative minimum tax over the 
regular income tax. 
C. 
"Alternative minimum taxable income" means tentative alternative minimum 
taxable income less the applicable exemption amount, e,wept that: 
(1) For taJmble corporations with income from business activity that is taxable 
both vlithin and vlithout tfiis State, "alternative minimum taJ(able income" means 
tentative alternative minimum ta,mble income less the applicable e,(emption 
amount, the result of which is multiplied by the fraction described in section 
5211, subsection 8; or 
(2) For nonresident estates and trusts ,vith income derived from Maine sources, 
"alternative minimum taxable income" means tentative alternative minimum 
taJ(able income less the applicable exemption amount, the result of which is 
multiplied by a fraction, the numerator of v/hich is the taJtpayer's tentative 
alternative minimum taJmble income from Maine sources and the denorllinator of 
'Nhich is the taJ(payer's total tentative alternative minimum taxable income from 
all sources. 
Col. "Alternative minimum taxable income" for taxable corporations with income -
from business activity that is taxable both within and without this State means 
tentative alternative minimum taxable income less the applicable exemption amount, 
the result of which is multiplied by the fraction described in section 5211, subsection 
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D. "Exemption amount" means the applicable exemption as provided by the Code, 
Section 55(d) as of December 31, 2002, except that tentative alternative minimum 
taxable income .as determined under paragraph G must be substituted in the 
computation of the phase-out under the Code, Section 55(d)(3). 
E. 
"Federal alternative minimum taxable income" means alternative minimum 
taxable income determined in accordance with the Code, Seotions Section 55(b)(2) 
and 59(c). 
F. 
"Regular income tax" means: 
(1) 
For resident individuals, estates and trusts, the amount derived by 
multiplying the applicable tax rate or rates by taJ(able income under section 5121 
or 5163: 
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(2) 
For nonresident individuals, estates and trusts, the amount derived by 
mUltiplying the applicable tm. rate or rates by taxable income under section 5121 
or5175, the result oh'lhich is adjusted fer nOlll"esident individuals in accordance 
,,yith section 5111, subsection 4; or 
(3) For tm.able corporations, the amount derived by mUltiplying the applicable 
taX: rate or rates against Maine net income under section 5102, subsection g .. 
F-l. "Regular income tax" means the amount derived by multiplying the applicable 
. tax rate or rates against Maine net income under section 5102, subsection 8. 
G."Tentative alternative minimum taxable income" means federal alternative 
minimum taxable income: 
(1) 
Reduced by income that states are prohibited under federal law from 
subjecting to income tax to the extent inc;luded in federal alternative minimum 
taxable income; 
. 
(2) Reduced by income, loss or deductions by which the State decreases federal 
adjusted gross income in the case of individuals or federal taxable income flHhe 
case of corporations, estates and trusts under section 5122, section 5125, 
subsection 3 or section 5164,5176 or 5200-A or as otherwise indicated by law to 
the extent included in federal alternative minimum taxable income; and 
(3) Increased by income, loss or ded.uctions by which the State increases federal 
adj usted gross income in the case of individuals or federal taxable income in-the 
case of corporations, estates and trusts under section 5122, section 5125, 
subsection 3 or section 5164, 5176 or 5200-A or as otherwise indicated by law to 
the extent not included in federal alternative minimum taxable income. 
H. 
"Tentative minimum tm(" means: 
(1) . E]wept as provided in subparagraph (2), in the case of a t(l"payer other than 
a taxable corporation, the sum of: 
(a) An amount equal to 7% of so much of the alternative minimum taxable 
income as does not exceed $175,000; plus 
(b) An amount equal to 7.6% percent of so much of the alternative minimum 
taxable income as e)weeds $175,000. 
For a nonresident individual, the tentative minimum tax must be adjusted in 
accordance "'lith section 5111, subsection 4. 
(2) In the case of a married individual filing a separate return, the sum of: 
(a) An amount equal to. 7% of so much of the alternative minimum taxable 
income as does not exceed $g7,500; plus 
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(b) An amount equal to 7.6% percent of so much of the alternative minimum 
taxable income as e]weeds $g7,500 .. 
For a nonresident indi'vidual,· the tentative minimum tm. must be adjusted in 
accordance with section 5111. suhsection I}. 
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(3) In the case of a tmmble corporation, the tentative minimum tmc for the 
tmmble year is 5,4% of the alternative minimum taJmble income. 
H-l. 
"Tentative minimum tax" for the taxable year is 5.4% of the alternative 
minimum taxable income. 
2. Tax imposed. In addition to all other taxes contained in this Part, a tax in an 
amount equal to the alternative minimum tmc is imposed for each taxable year on the 
following tmcpayers: 
A. Resident individuals, trusts and estates; 
B. Nonresident individuals, trusts and estates with Maine source income; and 
C. 
Tmmble corporations required to file an income tmc return under this Part, 
excluding financial institutions subject to the tmc imposed by chapter 819 and persons 
not subject to the, federal alternative minimum tmc Ulider the Code, Section 55(e). 
2-A. Tax imposed .. In addition to all other taxes contained i~ tIllS Part, a tax in an 
amount equal to the alternative minimum tax is imposed for each taxable year on taxable 
corporations required to file an income tax return under this Part, excluding financial 
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. institutions subject to the tax imposed by chapter 819 and persons not subject to the 
federal alternative minimum tax under the Code, Section 55(e). 
3. Credit full' tax paid te ether taxing jUll'isdictien. A resident individual, estate or 
trust is allovled a credit against the tmc otherwise due under this. section for the amount of 
alternative minimumtmc imposed on that individual, estate or trust for the taMble 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 derived from sources in that· tmdng jurisdiction 
also subject to tmc under this section. 
The credit for any of the specified tmdng 
jurisdictions may not exceed the proportion of the tax otherwise due under this section 
that the amount of the tcl)cpayer's tentative alternative minimum tajmble income derived 
from sources in that tmdng jurisdiction bears to the taxpayer's entiTe tentative alternative 
minimum tmmble income. When a credit is claimed for alternative minimum tmces paid to 
both a state and a political subdivision of that state,the total credit allowable for those 
taxes in the aggregate may not exceed the proportion of the tax otherwise due under this 
section that the amoUl1t of the tmcpayer's tentative alternative minimum tmcable income 
derived from sources in the other state bears to the tmcpayer's entire tentative alternative. 
minimum tmmble income. 
4. Minimum tax credit. A minimum tax credit is allowed as follows. 
A. A minimum tax credit is allowed against the liability arising under this Part for 
any taxable year other than withholding tax liability. The minimum tax credit equals 
the excess, if any, of the adjusted alternative minimum tax, reduced by the credit for. 
tax paid to other jurisdictions determined under subsection 3 and the Pine Tree 
Development Zone tax credit provided by section 5219-W, that was imposed for all 
prior taxable years beginning after 2003 over the amount allowable as a credit under 
this subsection for such prior taxable years, plus unused minimum tax credits from 
years beginning after 1990. 
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B. The credit 'allowable for a taxable year under this subsection is limited to the 
amount, if any, by which the regular income tax after application of all other credits 
arising under this Part exceeds the tentative minimum tax. 
Sec. A-15. 36 MRSA §5204, as amended by PL 1987, c. 772, §38, is repealed. 
Sec. A-16. 36 MRSA §5204-A, as amended by PL 1993, c. 395, §20, is repealed. 
Sec. A-17. 36 MRS A §5216"';C, sub-§l, as enacted by PL 1999, c. 475, §6 and 
affected by § 7, is amended to read: 
.. Credit allowed. A taxpayer who contributes to a family development account 
reserve fund as defined in Title 10, section 1075 is allowed a credit against the tax 
imposed by this Part equal to the lower of: 
A. Twenty-fiv~ thousand dollars; 6f and 
B. Fifty percent of the amount contributed by the taxpayer. 
Only one credit may be claimed on each annual income tax return regardless of filing 
status. The credit allowed under this section may not reduce the tax to less than 0 and 
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must be applied after allowance for all other eligible credits. A tmcpayer \vho claims a 
credit under this section may not claim an itemized charitable deduction under section 
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5125 for the amount of the contribution that aualified for the credit. . 
Sec. A-IS. 36 MRSA §5217-A, as amended by PL 2003, c. 673, Pt. JJ, §4 and 
affected by §6, is further amended to read: 
§5217-A. Income tax paid to other taxing jurisdiction 
A resident individual is allowed a credit against the tax otherwise due under this Part, 
eJccluding the tax imposed by section 5203 C, 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. In 
determining whether income is derived fr~m 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, eJwluding the tm( imposed by section 5203 C, 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; 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, 
eJwluding the tax imposed by section 5203 C, 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. A-19. 36 MRS A §521S-A is enacted to read: 
§5218-A. Household credit 
1.. Credit allowed. A resident individual is allowed a credit, referred to in this 
section as "the household credit," against the tax imposed by this Part. 
Unless· the 
taxpayer elects to calculate· the household credit under section 5218-B, the household 
credit is equal to the amount calculated in this section. An individual filing a return under 
section 5224-A is not eligible for a credit under this section. 
2. Amount of base credit. The base credit is: 
.A. For single individuals and married persons filing separate returns, .$800 for tax 
years beginning in 2010 through 2012 and $825 thereafter; 
B. For unmarried individuals or legally separated individuals who qualify as heads of 
households, $1,200 for tax years beginning in 2010 through 2012 and $1,250 
thereafter; and 
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C. For .individuals filing married joint returns or surviving spouses permitted to file a 
joint return, $1,600 for tax years begiIlIling in 2010 through 2012 and $1,650 
thereafter. 
3. Additional credit. The.base household credit is increased by $150 for tax years 
beginning in 2010 or 2011 and $155 thereafter for each person for whom the individual is 
entitled to claim an exemption as a· dependent under the Code. 
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4. Phaseout of credit. The household credit calculated under subsections 2 and 3 is 
reduced by $1.50 for every $100 that the individual's taxable income exceeds: 
A. For single individuals and married persons filing separate returns: 
(1) For tax )Tears beginning in 2ei10, $46,950; 
(2) For tax years beginning in 2011, $47,900; 
(3) For tax years beginning in 2012, $48,950; and 
(4) For tax years beginning in 2013 or later, $50,020; 
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B. For unmarried individuals or legally separated individuals who qualify as heads of 
households: 
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(1) For tax years beginning in 2010, $70,400; 
(2) For tax years beginning in-2011, $71,850; 
(3) For tax years beginning in 2012, $73,425; and 
(4) For tax years beginning in 2013 or later, $75,300; and 
C. For individuals filing married joint returns or surviving spouses permitted to file a 
joint return: 
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(1) For tax years beginning in 20 1 0, $93,900; 
(2) For tax years beginning in 2011, $95,800; 
(3) For tax years beginning in 2012, $97,900; and 
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(4) For tax years beginning in 20.13 or later, $10.0.,40.0. . 
.. Credit refundable. The household credit allowed under this section is refundable 
up to $75 for tax years beginning in 20. 1 0. or 20.11 and $80. thereafter for each return filed 
by an individual who is not claimed as a dependent by another individual on a return 
under the Code. 
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6. Adjustment for inflation. Beginning in 20.16, the household credit amounts 
under subsections 2 and 3 and the credit phaseout thresholds under subsection 4 must be 
adjusted annually for inflation as provided in chapter 841. 
7. Purpose. The household credit is intended to provide relief to low-income and 
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middle-income persons from the burden attributable to the impact of local property taxes 
on primary residences and state sales and use tax resulting from the costs of maintairiing a 
household in this State. 
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Sec. A-20. 36 MRSA §5218-B is enacted to read: 
§5218-B.· Alternate calculation of household credit 
1. General. A resident individual who has claimed itemized deductions from federal 
adjusted gross income in determining the individual's federal taxable income for the 
taxable year may elect to calculate the household credit as provided in this section instead 
of under section 5218-A. An individual filing a ·return under section 5224~A is not 
eligible for a credit under this section. The credit calculated under this section is referred 
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to in this section as "the alternate household credit. " 
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2. Base. The alternate household credit is calculated by modifying the individual's 
total federal itemized deductions by: 
A. Reducing the total by any amount attributable to income taxes or sales and use 
taxes imposed by this State or any other taxing jurisdiction; 
B.· Increasing the total by any amount of interest or expense incurred in the 
pf0duction of income taxable under this Part but exempt from federal income tax that 
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was not deducted in determining the individual's federaltaxable income; 
C. Reducing the total by any amount of deduction attributable to income taxable to 
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financial institutions under chapter 819; 
D. Reducing the totaJ by any amount attributable to interest or expenses incurred in 
the production of income exempt from tax undei this Part; and 
E. Reducing the total by any amount attributable to a contribution that qualified for 
and was actually used as a credit UIider section 5216-C. 
3. Additional credit. The base alternate household credit is increased by $150. for 
each person for whom the individual is entitled to· claim an exemption as a dependent 
under the Code. 
4. Maximum alternate credit. An individual's alternate household credit may not 
exceed the lower of: 
A. 
Eight percent of the individual's federal itemized deductions modified under 
subsection 2; and 
B. The following applicable amount: 
(1) For individuals filing as single or for married individuals filing separately, 
$1,100 for tax years beginning in 2010 or 2011, $1,125 for tax years beginning in . 
2012 and $1 ,1 75 thereafter; 
(2) For individuals filin:gas heads of households, $1,650 for tax years beginning 
. 
in 2010 or 2011, $1,675 for tax years beginning in 2012 and $1, 750 thereafter; or 
(3) For married individuals filing jointly, $2,200 for tax years beginning in 2010 
or 2011, $2,250 for tax years beginning in 2012 and $2,350 thereafter. 
5. Phaseout; refundability. An alternate household credit calculated under this 
section is subject to the phaseout and refundability provisions of section 5218-A, 
subsections 4 to 6. The maximum alternate credit amounts under subsection 3, paragraph 
B must be adjusted annually for inflation as provided in chapter 841. 
' Sec. A-21. 36 MRSA §5218-C is enacted to read: 
§5218-C. Adjustment of household credit 
By September 15, 2013, September 15, 2015 and September 15, 2017, the assessor 
. shall adjust the amounts used in the calculation of the household credit under sections 
5218-A and 5218-B to maintain the saine levels of distribution of net tax liability as 
estimated for tax year 2010. 
Sec. A-22. 36 MRSA §5219-H, sub-§2, as repealed and replaced by PL 2003, c. 
673, Pt. F, § 1 and affected by §2, is amended to read: 
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2. Meaning of tax liability. Whenever a credit provided for in chapter 822 is 
limited by reference to tax liability, "tax liability" means the tax liability for all taxes 
under this Part, except the minimum tm( imlJosed bv section 5203 C and. the taxes 
imposed by chapter 827. 
Sec. A-23. 36MRSA §5219-N, a~ amended by PL 2003, c. 673, Pt. JJ, §5 and 
affected by §6, is repealed. 
Sec. A-24. 36 MRSA §5224-A, as amended by PL 1989, C. 596, Pt. J, §5, is 
further amended to read: 
§5224-A. Tax return of part-year resident 
. 
If an individual changes that individual's status as a resident individual or nonresident 
individual during the taxable year, the individual shall file a nonresident return pursuant 
to section 5220, subsection 2. That individual's tax 5hall must be computed, pursuant to 
section 5111, subsection 4, as if that individual were a nonresident individual, except that -
the numerator of the apportioImlent ratio shall be ~ comprised of the individual's Maine 
adjusted gross income, as defined in section 5102, subsection 1-C, panigraph A, for the 
portion of the taxable year during which that individual was a resident, plus that 
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individual's Maine adjusted gross income as defined in section 5102, subsection l-C, 
paragraph B, for the portion of the taxable year during which that individual was a 
nonresident. The part-year resident 5ha!± i§. also be entitled to the credit provided by 
section 5217-A, computed as if the individual's Maine adjusted gross income for the 
entire year were comprised only of that portion wftiel:t that is attributed to the portion of 
the year during which that individual was a resident. 
Sec. A-25. 36 MRSA §5250, sub-§2, as amended byPL 1997, c. 668, §§36 and 
37, is repealed .. 
Sec. A-26. 36 MRS A §5250, sub-§5 is enacted to read: 
.. Adjustment for household credit. The withholding amounts determined by the 
assessor under subsection 1 must take into account the effect of the household credit 
under section 5218-A. 
Sec. A-27. 36 MRSA §5275, sub-§l, as enacted by P&SL 1969, c. 154, §F, is 
amended to read: 
1. An amount less thal,l wages. As the amount of the wages shown on. hls the 
individual's return for any taxable year an amount less than such wages actually shown, 
Sf the individual must pay a fine of $50 for the statement, unless: 
A. 
Such statemenr did not result in a decrease in the amounts deducted and 
withheld; or 
B. 
The taxes imposed with respect to the individual under this Part for the 
succeeding taxable year do not exceed the sum of the payments of estimated tax that 
. are considered payments on account of such taxes. 
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Sec. A-28. 36 MRSA §5275, sub-§2, as amended by PL 1979, c. 378,' §44, is 
repealed. 
Sec. A-29 .. 36 MRSA §5401, as enacted by ill 1983, c. 2, §4, is amended to read: 
§5401. Findings and purpose 
Inflation erodes the value of personal t:memptions and deductions provisions in the 
Maine individual income tax structure intended to moderate the impact of state and local 
taxes and distorts fiscal equity among taxpayers. Inflation-induced increases in individual 
income tax revenues result in annual collections that exceed the amounts anticipated by 
legislative actions establishing rates, exemptions, deductions and other features of the 
Maine individual income tax. 
Furthermore, the income tax laws of this State, in 
combination .with economic inflation, have caused inequitable treatment of the taxpayers 
because the application of inflexible; statutorily prescribed rates of tax, . standard 
deduction and personal exemption to increasing personal incomes has resulted in 
increasing the taxpayer's tax liability while the tmcpayers taxpayer's purchasing power has 
remained the same or, in some instances~ has decreased. It is the purpose of this Act to 
correct this situation by requiring that certain components of the individual income tax 
structure be adjusted in order to compensate for the impact of inflation. 
Sec. A-30. 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 2,GW, 2013, and each subsequent calendar year thereafter, Ol~ or about 
September 15th, 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 ~ 
rate tables specified in section 5111, subsections 1 B, 2 Band 3 B household credit 
amounts under section 5218-A, subsections 2 and 3, the credit phaseout thresholds under 
section 5218~A, subsection 4 and the maximum alternate household credit amounts under 
section 5218-B, subsection 4, paragraph B. If the dollar amounts of each rate bracket for 
each household credit amount under section 5218-A, subsections 2 and 3, credit threshold 
amount under section 5218-A, subsection 4 or maximum alternate household credit 
. amount under section 5218-B, subsection 4, paragraph B, 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 tmc rate tables. The assessor shall incorporate such changes into the income tax 
forms, instructions and withholding tables for the taxable year. 
Sec. A-31. Effective date; application. This Part takes effect January 1, 2010 
and applies to income tax years beginning on or after January 1, 2010. 
PART JB 
Sec. JB-1. 
MRSA §13090-K, sub-§2,as enacted by PL 2001, c. 439, Pt. 
UUUU, § 1, is amended to read: 
2. Source of fund. Beginning July 1, 2003 and every Every July i st thereafter, the 
State Controller shall transfer to the Tourism Marketing Promotion Fund an amount, as 
certified by the State Tax Assessor, that is equivalent to 5% of the +% 8.5% tax imposed 
on tangible persomil property and taxable services pursuant to Title 36, section 1811, for 
the first 6 months of the prior fiscal year after the reduction for the transfer. to the Local 
Government Fund as described by Title 30:A, section 5681, subsection 5. Beginning on 
October 1, 2003 and every Every October· 1 st thereafter, the State Controller shall transfer 
to the Tourism Marketing Promotion Fund an amount, as certified. !:>yJheState Tax 
Assessor, that is equivalc:nUo 5% of the-1%8.5%tax imposed on tangible personal 
property aridiaxable services purs).lant to Title 36, section 1811, for the last 6 months of 
the prior fiscal year after the reduction for the transfer to the Local Government Fund. 
The tax amount must be based on actual sales for that fiscal year and may not consider 
any accruals that may be required by law. The amount transferred from General Fund 
sales arid use tax revenues does not affect the calCulation for the transfer to the Local 
Government Fund. 
Sec. JB-2 .. 10 MRSA §1305, as amended by PL 1997, c. 668, § 1, is further 
amended to read: 
Page II - 124LR1600(Ol)-1 
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§1305. 
Terminal rental adjustment clauses; vehicle leases that are not sales or 
security interests 
Notwithstanding any other provision of law, in the case of motor vehicles or trailers, 
a transaction does not create a sale or security interest merely because the agreement 
provides that the rental price is permitted or required to be adjusted upward or downward 
by reference to the amount realized upon sale or other disposition of the motor vehicle or 
trailer. A transaotion may be oonsidered a sale for ouruoses of Title 36. 
Sec. B-3. 23 MRSA §4210-B, sub-§7, as enacted by PL 2007, c. 677, §1, is 
amended to read: 
7. Sales tax revenue. Beginning July 1, 2009 and every July 1 st thereafter, the State 
Controller shall transfer to the STAR Transportation Fund an amount, as certified by the 
State Tax Assessor, that is equivalent to .§.G% 1/3 of the revenue from the tax' imposed on 
the value of rental for a period ofless than one year of an automobile pursuant to Title 36, . 
section 1811 for the first 6 months of the prior fiscal year after the reduction for the 
transfer to the Local Government Fund under Title 30-A, section 5681, subsection 5. 
Beginning on October 1,2009 and every October 1 st thereafter, the State Controller shall 
transfer to the STAR Transportation Fund an amount, as certified by the State Tax 
Assessor, that is equivalent to .§.G% 1/3 of the revenue from the tax imposed on the value 
of rental for a period of less than one year of an automobile pursuant to Title 36, section 
1811 for the last 6 months of the prior fiscal year after the reduction for the transfer to the 
Local Government Fund. The tax amount must be based on actual sales for that fiscal 
year and may not consider any accruals that may be required by law: The amount 
transferred from General Fund sales and use tax revenues does not affect the calculation 
for the transfer to the Local Government Fund. 
Sec. B-4. 30-A MRS A §5681, sub-§2, ~C, as amended by PL 2007, c. 662, § 1, 
is further amended to read: 
C. 
"Annual growth ceiling" for fiscal year 2005-06 means $100,000,000. 
For 
, subsequent fiscal years, "annual growth ceiling" must be determined by the State Tax 
Assessor by September 1 st annually and means the annual growth ceiling for the 
previous fiscal year adjusted by the lower of the percentage change for the previous 
calendar year in the Consumer Price Index compared to the calendar year 
immediately preceding the previous calendar year and the percentage change in 
receipts for the previous fiscal year from the taxes imposed under Title 36, Parts 3 
and 8 and Title 36, section 2552, subsection 1, paragraphs A to F and L and credited 
to the General Fund compared to the fiscal year immediately preceding the previous 
fiscal year. The annual growth ceiling may not be less than the annual growth ceiling 
for the previous year. 
Sec. B-5. 30-A MRSA §5681, sub-§5, as amended by PL 2007, c. 240, Pt. S, 
§ ~ I and 2, is further amended to read: 
5. Transfers to funds. On the last day of each month, the Treasurer of State shall 
transfer to the Local Government Fund a percentage, as provided in this subsection, of the 
receipts from the taxes imposed under Title 36, Parts 3 and 8, and Title 36, section 2552, 
.23 
2A 
subsection 1, paragraphs A to F and L, and credited to the General Fund without any 
reduction, . except that the postage, state cost allocation program and programming costs' 
of administering state-municipal revenue sharing may be paid by the Local Government 
Fund. Any amounts transferred to the Local Government Fund in excess of the annual 
growth ceiling must be transferred to the Disproportionate Tax Burden Fund. 
The 
percentage transferred to the Local Government Fund on the last day of each month is:' 
A. For months beginning before July 1, 2009, 5.1 %; and 
B. For months beginnirig on or after July 1,2009,5.2%. 
Sec. B-6. 36 MRSA §1752, sulb:-§I-I is enacted to read: 
1-1. 
Amusement, entertainment and recreation services. 
"Amusement, 
entertainment and recreation services" means the following services, except those 
services provided by a governmental entity or an incorporated nonprofit organization: 
admission to entertainment venues and performances, including theaters, movies, 
lectures, concerts, amusement parks, water' parks, fairgrounds except for licensed 
agricultural fairs, 
race tracks, 
carnivals, circuses, 
sports 
activities, 
stadiums, 
amphitheaters, museums, planetariums,· animal parks, petting zoos, aquariums, historical 
sites and convention centers; fees charged for participation in or entry to golf courses, 
miniature golf courses, bowling alleys, swimming pools, skating rinks, ski lifts, billiard 
parlors, gymnasiums, go-cart courses, tennis and racquetball courts and paintball; 
admission fees charged for exhibition shows such as auto, boat, camping, home, garden, 
animal and antique shows; scenic and sightseeing excursions including aircraft, 
helicopter, balloon, blimp, . watercraft, railroad, bus, trolley and wagon rides; whitewater 
rafting and guided recreation, but exclUding guided recreation services on federally' 
navigable waters; entertainment services such as those provided by bands, orchestras, 
disc jockeys, comedians, clowns, jugglers, children's entertainers and ventriloquists; and 
proceeds from arcade games. 
Sec. B-7. 36 MRSA §1752, sulb-§1-J is enacted to read: 
I-J. Candy. "Candy" means a preparation of sugar, honey or other natural or 
artificial sweeteners in combination with chocolate, fruits, nuts or other ingredients or 
flavorings in the form of bars, drops or pieces. 
Sec. B-S. 36 MRSA §1752, sub-§2-F is enacted to read: 
2-F. FabriCation facility. "Fabrication facility" means a site consisting of at least 35 
acres at which the primary business is the performance of fabrication services and any 
activities associated with or in support of fabrication services. 
Sec. B-9: 36 MRSA §1752, sulb-§2-G is enacted to read: 
2-G. Fabrication services. "Fabrication services" means the production of tangible 
37" 
personal property for a consideration for a person who furnishes, either directly or 
indirectly, the materials used in that production. 
Sec. 8-10. 36 MRSA §1752, sub-§4-A is enacted to read: 
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4-A. 
Installation, repair or maintenance services. 
"Installation, repair or 
maintenance seryices" means all services involved in the installation, repair or 
maintenance of jewelry, cameras, guns, musical instruments, electronic and mechanical 
equipment, lawn and garden equipment, computer hardware and office equipment, 
vehicles and appliances; service and maintenance contracts; tailoring, clothing arid shoe 
repair; and furniture repair and restoration. "Installation, repair or maintenance services" 
does not include services performed on tangible personal property used or held for use at 
or located at a manufacturing facility or fabrication facility, other than tangible personal 
property used in administrative support operations, or services performed on aircraft 
including refurbishing of aircraft. 
Sec. B-11. 36 MRSA §1752, sub-§5-D is enacted to read: 
5-D. Lease or rental. "Lease" or "rental" includes sublease or subrental and means 
any transfer of possession or control of tangible personal property for a fixed or 
indeterminate tenn for consideration. A lease or rental may include future options to 
purchase or extend. 
A. 
"Lease" or "rental" includes agreements covering motor vehicles and trailers 
when the amount of consideration may be increased or decreased by reference to the 
amount realized upon sale or disposition of the property; as defined in Section 
7701 (h)( 1) of the Code. 
B. "Lease" or "rental" does not include: 
(1) Any transfer of possession or control of property under a security agreement 
or deferred payment plan that requires the transfer of title upon completion of the 
required payments; 
(2) Any transfer of possession or control of property under an agreement that 
requires the transfer of title upon completion of required payments and payment 
of an option price that does not exceed the greater of $100 and 1 % of th~ total 
required payments; or .. 
(3) Providing tangible personal property along with an operator for a fixed or 
indeterminate period of time. A condition of this exclusion is that the operator is 
necessary for the equipment to perform as designed. For the purpose of this 
paragraph, an operator must do more than maintain, inspect or set up the tangible 
personal property: 
Sec. B-12. 36 MRSA §1752, sub-§8-A, as repealed and repiaced by PL 2001, c. 
439, Pt. TTTT, § 1 and affected by §3, is amended to read: 
8-A. Prepared food. "Prepared food" means: 
A. Meals served on or off the premises of the retailer; 
B. 
Food and drinks that are prepared by the retailer and ready for consumption 
without further preparation; tffia 
C. All food and drinks sold from an establishment whose sales of food and drinks 
that are prepared by the retailer account for more than 75% of the establishment's 
gross receipts-:-; and 
D. Candy. 
"Prepared food" does not include bulk sales of grocery staples. 
Sec. B-13. 36 MRSA §1752, sub-§8-C is enacted to-read: 
8-C. Personal property services. "Personal property services" means the following 
services related to personal property: dry cleaning; laundry and diaper services not 
including self-service laundry services; embroidery and monogramming; car washing; 
-pressure cleaning and washing; pet services such as exercising, sitting, training, grooming 
and boarding for nonmedical purposes; picture framing; domestic services, including 
house cleaning and furniture and rug cleaning; interior decoration; meal preparation; 
butchering; art restoration; warehousing and storage, including rental of storage units and 
warehouse space, but not including warehousing and storage services provided to a 
business; moving services; vehicle towing; and boat mooring. - "Personal property-
services" does not include fabrication services; installation, repair or maintenance 
services; services performed on tangible personal property used or held for use at or 
located at a manufacturing facility or fabrication facility, other than tangible personal 
property used in administrative support functions; or services performed on aircraft 
including refurbishing of aircraft. 
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Sec.B-14. 36 MRSA §1752, sub-§l1, as amended by PL 2007, c. 627, §42 and 
affected by §96 and 'amended by c. 693, §14, is repealed. 
.... 
Sec. B-15. 36 MRSA §1752, sub-§U-A is enacted to read: 
II-A. Retail sale. "Retail sale" means any sale, lease or rental of tangible personal 
property or a taxable service in the ordinary course of business. 
- A. "Retail sale" includes: 
(1) Sale of products for internal human consumption to a person for resale 
through vending machines when sold to a person more than 50% of whose gross 
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receipts from the retail sale of tangible personal property are derived from scli'2 
through vending machines. The tax must be paid by the retailer to the State: 
(2) A sale in the ordinary course of business by a retailer to a purchaser \\ :~,) i:i 
not engaged in selling that land of tangible personal property or taxable ser\·'~·~l} 
the ordinary course of repeated and successive transactions of like characte1.·~_:'nd 
(3) The sale or liquidation of a business or the sale of substantially all or the 
assets of a business, to. the extent that the' seller purchased the assets oCJl~ 
business for resale, lease or rental in the ordinary course of business, ex~~ 
when: 
(a) The sale is to an affiliated entity and the transferee, or ultimate transferee 
in a series of transactions among affiliated entities, purchases the assets for 
resale, lease or rental in the ordinary course of business; or 
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(b) The sale is to a person that purchases the assets for resale, lease or rental 
in the ordinary course of business or that purchases the assets for transfer to 
an affiliate, directly or through a series of transactions among affiliated 
entities, for resale, lease or rental by the affiliate in the ordinary course of 
business. 
For purposes of this subparagraph, "affiliate" or "affiliated" includes both direct 
and indirect affiliates. 
B. 
"Retail sale" does not include: 
(1) Any casual sale; 
(2) Any sale by a personal representative in the settlement of an estate, unless the 
sale is made through a retailer or unless the sale is made in the continuation or 
operation of a business; 
(3) The sale ofloaner vehicles to a new vehicle dealer licensed as such purusant 
to Title 29-A, section 953; 
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(4) The sale of automobile repair parts used in the performance of repair services 
on an automobile pursuant to an extended service contract sold on or after 
September 20, 2007 that entitles the purchaser to specific benefits in the service 
of the automobile for a specific duration; 
(5) The sale, to a retailer that has been issued a resale certificate pursuant" to 
section 1754-B, subsection 2-B or 2~C, of tangible personal property for resale in 
the form of tangible personal property, except resale as a casual sale; 
(6) The sale, to a retailer that has been issued a resale certificate pursuant to 
section 1 754-B, subsection 2-B or 2-C, of a taxable service for resale, except 
resale as a casual sale; 
(7) The sale, to a retailer that is not required to register under section 1754-B, of 
tangible personal property for resale outside the State' in the form of tangible 
personal property, except resale as a casual sale; 
(8) The sal~, to a retailer that is not required to register under section 1754-B, of 
a taxable service for resale outside the State, except resale as a casual sale; or 
(9) The sale, to a person engaged in the business of renting or leasing tangible 
personal property, of tangible personal property for lease or rental. 
Sec. B-16. 36 MRS A §1752, sub-§13; as amended by PL 1981, c. 706, §20, is 
further amended to read: 
13. Sale. "Sale" means any transfer, exchange or barter, in any manner or by any 
means whatsoever, for a consideration and includes leases and contracts payable by rental 
or license fee.s for the right of possession anq use, but only vlhen such leases and 
contracts are deemed by the State TaJ( Assessor to be in lieu of purohase lease or rental of 
tangible personal property. 
Sec. B-17. 36 lV(RSA §1752, sub-§14, 'UB, as amended by PL 2007, c. 627, §43, 
is further amended to read: 
13. 
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B. 
"Sale price" does not include: 
(1) Discounts allowed and taken on sales; 
(2) 
Allowances in cash or by credit made upon the return of merchandise 
pursuant to warranty; 
(3) The price of property returned by customers, when the full price is refunded 
either in cash or by credit; 
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(4) The priee reeeived for labor or serviees used in installing or applying or 
repairing the property sold, if separately eharged or stated; 
(5) Any amount charged or collected, in lieu of a gratuity or tip, as a specifically 
stated service charge, when that amount is to be disbursed by a hotel, restaurant 
or other eating establishment to its employees as wages; 
(6) The amount of any tax imposed by the United States on or with respect to 
retail sales, whether imposed upon the retailer or the consumer, except any 
manufacturers', importers', alcohol or tobacco excise tax; 
(7) The cost of transportation from the retailer's place of business or other point 
from which shipment is made directly to the purchaser, provided that those 
charges are separately stated and the transportation occurs by means of common 
carrier, contract carrier or the United States mail; 
(8) The fee imposed by Title 10, section 1169, subsection 11; 
(9) The fee imposed by section 4832, subsection 1; 
(10) The lead-acid battery deposit imposed by Title 38, section 1604, subsection 
2~B; 
(11) Any amount charged or collected by a person engaged in the rental of living 
quarters as a forfeited room deposit or cancellation fee if the prospective 
occupant of the living quarters cancels the reservation on or before the scheduled 
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. date of arrival; or 
(12) The premium on motor vehicle oil changes imposed by Title 10, section. 
1020, subsection 6. 
Sec. B-18. 36 MRSA §1752, sub-§14-F is enacted to read: 
14-F. Soft drink. "Soft drink" means any nonalcoholic beverage that contains 
natural or artificial sweeteners. "Soft drink" does not include any beverage that contains 
milk or milk products, greater than 50% of vegetable or fruit juice by volume or flavored 
or unflavored soy milk, rice milk; almond milk, grain milk and similar milk substitutes. 
Sec. B-19. 36 MRSA §1752, sub-§17-B,as amended by PL 2007, c. 410, §2 and 
affected by §6, is repealed and the following enacted in its place: 
17-B. Taxable service. "Taxable service" means: 
A. Rental of living quarters in a hotel, rooming house or tourist or trailer camp; 
B. Transmission and distribution 'of electricity; 
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C. Rental or lease of tangible personal property; 
D. 
The sale of an extended service contract on an automobile that entitles the 
purchaser to specific benefits in the service of the automobile for a specific duration; 
E. Sale of prepaid calling service; 
F. Amusement, entertairunent and recreation services; 
G. Installation, repair and maintenance services; 
H: Personal property services; and 
I. Transportation and courier services. 
Sec. B-20. 36 MRSA §1752, sub-§20-B is enacted to read: 
'20-B. Transportation and courier services. "Transportation and courier services" 
means in-state transportation of persons or property by taxicab or limousine and courier , 
services. 
Sec. B-21. 36 MRSA §1752, sub-§21, as amended by PL 2005, c~ 215, §17,is 
further amended to read: 
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21. Use. "Use" includes the exercise in this State of any right or power over tangible 
personalqproperty incident to its ownership, including the derivation of income, 'Nhether 
received in money or in the form of other benefits. by a lessor from the rental of tangible 
versonal oronertv located in this State: ' ' 
Sec. 8-22. 36 MRSA §1754-B, sub-§l, ~C, as enacted by PL 1,995, c. 640, §3, 
is amended to read: 
C. Every lessor engaged in the leasing of tangible personal property located in this 
State that does not maintain a place of business in this State but makes retail sales to 
vurchasers from this State; 
Sec. B-23. 36 MRSA §1758, as repealed and replaced by PL 1999, c. 708, §24, is 
repealed. 
Sec. B-24. 36 MRSA §1760, sub-§32-A is enacted to read: 
32-A. Services to certain machinery and equipment. Sales of taxable services 
performed on machinery and equipment exempt from sales tax under subsections 29 to 
32.' 
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,Sec. B-25. 36 MRSA §1760, sub-§45, as amended byPL 2(J07, c. 691, §1 and 
affected by §2, is further amended to read: 
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45. Certain property purchased outside State. Sales of property purchased and 
used by the present owner ou~side the State: 
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A If the property is an automobile, as defined in Title 29-A, section 101, subsection . 
7, and if the owner is an individual who was, at the time of purchase, a resident of the 
other state and either employed or registered to vote there; 
A-I. If the property is a watercraft that is registered outside the State by an owner 
who is an individual who was a resident of another state at the time of purchase and 
the watercraft is present in the State not mme than 30 days during the 12 months 
following its purchase for a purpose other than temporary storage;. 
A-2. If the property is a snowmobile or all-terrain vehicle as defined in Title 12, 
section 13001 and the purchaser is an individual who is not a resident of the State; 
A-3. If the property is an aircraft not exempted under subsection 88 and the owner at 
the time of purchase was a resident of another state or tax jurisdiction and the aircraft 
is present in this State not more than 20 days during the 12 months following its 
purchase, exclusive of days during which the aircraft is in this State for the purpose 
of undergoing "major alterations," "major repairs" or "preventive maintenance" as 
those terms are described in 14 Code of Federal Regulations, Appendix A to Part 43, 
as in effect on January 1,2005. For the purposes of this paragraph, the location ofan 
aircraft on the ground in the State at any time during a day is considered presence in 
the State for that entire day, and a day must be disregarded if at any time during that 
day the aircraft is used to provide free emergency or compassionate air transportation 
arranged by an incorporat~d nonprofit organization providing free air transportation 
in private aircraft by volunteer pilots so children and adults may access life-saving 
~~~or . 
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B. For more than 12 months in all other cases. 
Property, . other than automobiles, watercraft, snowmobiles, all-terrain vehicles and 
aircraft, that is required to be registered for use in this State does not qualify for this 
exemption unless it was registered by its present owner outside this State more than 1'2 
months prior to its registration in this State. If property required to be registered for use 
in this State was notrequired tobe registered for use outside this State, the owner must be 
able to document actual use of the property outside this State for more than 12 months 
prior to its registration in this State: For purposes of this subsection, "use" does not 
include storage but means actual use of the property for a purpose consistent with its 
design. This exemption does not apply to leased property. 
Sec. B:26. 36 MRS A §1760, sUb-§92 is enacted to read: 
92. Certain taxable services. The sale of a taxable service sold by a person that has 
.made sales taxable under this chapter during the most recent calendar year of no more: 
than $5,000. 
. 
Sec. B-27. 36 MRSA §1760-C, as amended by PL 2007, c. 437, §11, is fUrthej-
amended to read: 
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§1760-C. Exempt activities 
The tax exemptions provided' by section 1760 to a person based upon its charitable, 
nonprofit or other public- purposes apply only if the property or service purchased is 
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intended to be used by the person primarily in the activity identified by the particular 
exemption. The tax exemptions provided by section 1760. to a person based upon its 
charitable, nonprofit or other public purposes do not apply where title is held or taken by 
the person as security for any financing arrangement. Exemption certificates issued by 
the State Tax Assessor pursuant to section .1760 must identify the exempt activity and 
must state that the certificate may be used by the holder only when purchasing property 
or services intended to be used by the holder primarily in the exempt activity. If the 
holder of an exemption certificate furnishes that certificate to a person for use in 
purchasing tangible personal property or taxable services that are physically incorporated 
in, and become a permanent part of, real property that is not used by. the holder of the 
·certificate primarily in the exempt ~ctivity, the State Tax Assessor may assess the unpaid 
. tax against the holder of the certificate as provided in section 141. When an otherwise 
qualifying person is engaged in both exempt and nonexempt activities, an exemption 
certificate may be issued to the person only if the person has established to the 
satisfaCtion of the assessor that the applicant has adequate accounting controls to limit the 
use of the certificate to exempt purchases. The tax exemptions provided by section 1760 
to a person based upon its charitable, nonprofit or other public purposes do not. apply to 
the sale of meals or lodging or the rental of automobiles. 
Sec. B-28. 36 MRSA §1763, as amended by PL 2007, c. 693,.§16, is further 
amended to read: 
§1763. Presumptions 
The burden of proving that a transaction was not taxable is on the person charged 
with tax liability. The presumption that a sale was not for resale may be overcome during 
an audit or upon reconsideration if the seller proves that the purchaser was the holder of a 
currently valid resale certificate as provided in section 1754-B at the time of the sale or 
proves through other means thatthe property purchased was purchased for resale by the 
purchaser in the ordinary course of business. Notwithstanding section 1752, subsection 
++ II-A, paragraph B, if the seller satisfies the seller's burden of proof, the sale is not 
consideI:"ed a retail sale. 
. 
Sec. B:-29. 36 MRSA §1811, first ~, as repealed and replaced by PL 2007, c. 
627, §51 and affected by §96, is amended to read: 
A tax is imposed on the value of all tangible personal property and taxable services 
sold at retail in this State. The I:ate of tax is :f% 8.5% on the value of liquor sold in 
licensed establishments as defined in Title 28-A, section 2, subsection 15, in accordance . 
with Title 28-A, chapter 4~; +% 8.5% on the value of rental of living quarters in any 
hotel, rooming house or tourist or trailer camp that is not a campground; 7% on the value 
of rental of living quarters in a campground; +G% 15% on the value of rental for a.period 
of less than one year of an automobile, including a loaner vehicle that is provid~dother 
than to a motor vehicle dealer's service customers pursuant to a manufacturer's or 
dealer's warranty; .+% 8.5% on the value of prepared food; and 5% on the value of all 
other tangible personal property and taxable services. Value is measured by the sale 
price, except as otherwise provided. The value of rental for a period of less than one year 
of an automobile is the total rental charged to the lessee and includes, but is not limited 
to, maintenance an~ service contracts, drop-off or pick-up fees,. airport surcharges, 
mileage fees and any separately itemized charges on the rental agreement to recover the 
owner's estimated costs of the charges imposed by government authority for title fees, . 
inspection fees, local excise tax and agent fees on all vehicles in its rental fleet registered 
in the State. All fees must be disclosed when an estimated quote is provided to the lessee. 
Sec. B-30. 36 MRSA §1811, 3rd~, as repealed and replaced by PL 2003, c. 510, 
Pt. C, § 12 and affected by § 13, is repealed. 
.Sec. B-31. 36 MRSA §1812, sub-§l,as reallocated by PL 1999, c. 790, Pt. A, 
§48,"is repealed and the following eriactedin its place: 
1. Computation. Every retailer must add the sales tax imposed by section "1811 to 
the sale price on all sales of tangible personal property and taxable services that are 
. subject to tax under this Part. The tax when so added is a debt of the purchaser to the 
retailer until it is paid and is recoverable at law by the retailer from the purchaser in the 
same manner as. the sale price. When the sale price involves a fraction of a dollar, the tax 
computation must be carried to the3rd decimal place," then rounded down to the riext 
whole cent whenever the 3rd decimal place is one, 2, 3 or 4 and rounded up to the next 
whole cent whenever the 3rd decimal place is 5, 6, 7, 8 or 9. 
Sec. :8-32. 36 MRSA §1812, sub-§2, as amended by PL 1991, c. 846, §24, is 
further amended to read: 
2. Several items. When several purchases are made together and at the same time, 
the tax ffil:l5t may be computed on each item individually or on the total amount of the 
several items, except that purchases taxed at different rates must be separately totaled as 
the retailer may elect. 
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Sec. :8-33. 36 MRSA §1817 is enacted to read: 
§1817. Accelerated payment oftax on leases and rentals 
The tax imposed by this Part on the rental or lease of tangible personal property must 
be collected by the lessor at the time" the property that is the subject of the lease is 
delivered to the lessee or at the time the initial payment under the lease is required to be 
made by the lessee, whichever is earlier, on the basis of the total amount of the 
consideration to be paid by the lessee under the terms of the lease agreement. If the total 
amount of the consideration for the lease includes amounts that are not calculated at the 
time the lease is executed, the tax attributable'to those amounts must be collected by the 
lessor at the time those amounts are billed to the lessee. In the case of an open-end lease, 
the tax must be collected by the lessor on the basis of the total amount to be paid during 
the initial fixed term of the lease, and then for each subsequent renewal period as it comes 
due. 
For purposes of this section, "consideration" includes, withciutlimitation, the 
amount of any down payment, trade-in credit or 3rd-party rebate that is applied to reduce 
the cost of the leased property upon which the lease payments are computed. Collection 
39· 
and remittance of the tax is the responsibility of the person that negotiates the lease 
transaction with the lessee. 
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Sec. B-34. 36 MRSA §1861, as amended by PL 1995, c. 640, §6, is further 
amended to read: 
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§1861. Imposition 
A tax is imposed, at the respective rate provided iI1 section 1811, on the storage,use 
. or other consumption in this State of tangible personal property or a taxable service, the 
sale of which would be subject to tax under section 1764 or 1811. Every person so 
'storing, using or otherwise consuming is liable for the tax until the person has paid the tax 
or has taken a receipt from the seller, as duly authorized by the assessor, showing that the 
seller has collected the sales or use tax,- in which case the seller is liable for it. Retailers 
registered under section 1754-B or 1756 shall collect the tax and make remittance to the 
assessor. The amount of the tax payable by the purchaser is that provided in the case of 
sales taxes by section 1812. When tangible personal property is leased outside the State 
and subsequently brought into the State, the tax due under tIlls section is the proportion of 
the tax otherwise due under this Part that the remaining portion of the lease bears to the 
entire term of the lease. 
When tangible personal property purchased for resale is 
withdrawn from inventory by the retailer for the retailer's own use, use tax liability 
accrues at the date of withdrawal. 
Sec. B-35. 36 MRSA §1862, as amended by PL 1987~ c. 772, §24, is further 
amended to read: 
§1862. Taxes paid in other jurisdictions 
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The BW tax provisions of chapters 211 to 225 shall imposed by this Part does not -
apply with respect to the use, storage or other consumption in this· State of purchases 
outside the State where the purchaser has paid a sales or use tax equal to or greater than 
the amount imposed by chapters 211 to 225 this Part in another taxing jurisdictio"n,---tlw 
proof of pa-yment of the tax to be according to rules made by the State Tax Assessor. If 
the amount of sales or use tax paid in another taxing jurisdiction is not equal to or greater 
than the amount of tax imposed by chapters 211 to 225 this Part, then the purchaser shall 
pay to the State Tax Assessor an amount sufficient to make the total amount of tax paid in 
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the other taxing jurisdiction and in thls State equal to the amount imposed by chapters 
to 225 this Part. . When tangible personal property is leased outside the State and 
subsequently brought into the State, the credit allowed under this section may not exceed 
the proportion of the tax otherwise due under this Part that the period for which the 
property was leased in the other taxing jurisdiction bears to the entire term of the lease. 
Sec. B-36. 36 MRSA §2020 is enacted to read: 
§2020. Removal from the State of leased property 
If leased property with respect to which the tax imposed by thls Part has been paid on 
an accelerated basis is permanently removed from the State, the lessee is entitled to a 
refund of the tax allocable to that portion of the lease that remains in effect after the 
property has been removed from the State. A refund may not be issued unless the taxing 
jurisdiction to whlch the property is removed allows a corresponding refund with respect 
to the lease of property upon which a sales or use tax was due and has been paid in thls 
State. A refund may not be issued if the other taxing jurisdiction allows a credit to the 
Jessee for the sales or use tax paid in this State on the lease transaction. The refund must 
be requested in accordance with the provisions of section 2011. 
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Sec. 8-37. 36 .MRSA §2551, sub-§l, as enacted by PL 2003, c. 673, Pt. V, §25' . 
. and affected by §29, is repealed. 
Sec. 8-38. 36 MRSA §2S52, sub-§I, CUI, as amended by PL 2007, c: 539, Pt. 
DDD, §6, is further amended to read: 
I. Community support services for persons with mental retardation or autism; aHd 
Sec. 8-39. 36 MRSA §2552, sub-§I, ClffJ, as amended by PL 2007, c. 539, Pt. 
DDD, §7 arid c. 627, §67, is repealed and the following enacted in its place: 
J. Home support services; and 
. Sec. B-40. 36 MRSA §2552, sub-§I, CiffK, as repealed by PL 2007, c. 539, Pt. 
DDD, §8 and amended by c. 627, §68, is repealed, 
Sec. B-41. 36 MRSA §2557, sulb-§33, as enacted by PL 2007, c, 627, §74, is 
amended to read: 
33. 
International telecommunications 
telecommunications service to a business; and 
service. 
Sales of international 
Sec. 8-42. 36 MRSA §2557, sub-§34, as emicted by PL 2007, c. 627, §75, is 
amended to read: 
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34. Interstate telecommunications service. Sales of interstate telecommunications 
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service to a business. 
Sec. B-43. 36 MR:SA §2559, as amended by PL 2007, c. 539, Pt.DDD, §9, is . 
further amended to read: 
§2559. Application of revenues 
Revenues derived by the tax imposed by this chapter must be credited to a General 
Fund suspense account. On or before the last day of each month, the State Controller 
shall transfer a percentage of the revenues received by the State Tax Assessor during the 
preceding month pursuant to the tax imposed by section 2552, subsection 1 , paragraphs A 
to F and L to the Local Govenunent Fund as provided by Title 30-A, section 5681, 
subsection 5. The balance remaining in the 'General Fund suspense account must be 
transferred to service provider tax General Ftmd revenue. On or before the 15th day of 
each month, the State Confroller shall transfer all revenues received by the assessor 
during the preceding month pursuant to the tax imposed by section 2552, subsection 1, 
paragraphs G to J to the Medical Care ServIces Other Special Revenue Funds account, 
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the Other Special Revenue Funds Mental Health Services, - C6minunity Medicaid 
program, the Medicaid Services - Mental Retardation program and the Office of 
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Substance Abuse - Medicaid Seed program within the Department of Health and Human 
Services. 
Sec. B-44. Monthly reports. The State Tax Assessor shall provide monthly 
reports to the Joint Standing Committee on Taxation through April 1, 2010 regarding the 
State's activities in implementing the provisions of that Part of this Act that broaden the 
sales tax base and increase the, sales tax on prepared meals, lodging and rentals of 
automobiles for less than one year. 
The report must include a plan for providing 
information to taxpayers and the public about new sales and use tax obligations under that 
Part, progress, reports on implementation of the plan and copies of taxpayer materials and 
informational materials that are proposed for issuance by the State Tax Assessor. The 
State Tax Assessor shall inform the committee about implementation issues and may seek 
the committee's advice on implementation. The committee may submit legislation to the 
this Act that broadens the sales tax base and increases the sales tax on prepared meals, 
lodging and rentals of automobiles for less than one year. 
Sec. B-45. Application date. Those portions of this Part that affect the taxation 
of leases and rentals of tangible personal' pmperty apply to leases entered into, extended . 
or renewed on or after April 1, 2010. 
Sec. B-46. Appropriations and allocations. The following appropriations and 
allocations are made. 
ECONOMIC AND COMMUNITY DEVELOPMENT, DEPARTMENT OF 
Office of Tourism 0577 
Initiative: Allocates funds to the Tourism Marketing Promotion Fund due to the increase 
in certain sales tax revenue. 
OTHER SPECIAL REVENUE FUNDS 
All Other 
OTHER SPECIAL REVENUE FUNDS TOTAL 
2009-10 
$0 
$0 
Sec. B-47. Effective date. This Part takes effect January 1,2010. 
PARTC 
Sec. C-l. 36 MRSA §4641, sub-§2-B is enacted to read: 
2010-11 
$1,835,868 
$1,835,868 
2-B. Residential property. "Residential property" means real property consisting of 
one to 4 dwelling units, at least one of which is intended to be.used as a residence by the 
grantee. 
Sec. C-2. 36 MRSA §4641-A, sub-§l, ~A-l is enacted to read: 
A-I. 
In addition to the tax imposed under paragraph A, a tax is imposed on· 
residential property with a value greater than $500,000 at the rate of $2.80 per $500 
or fractional part· of $500 of the value of the property transferred that exceeds 
$500,000. 
Sec. C-3. 36 MRSA §4641-B, sub-§3, as enacted by PL 2001, c. 559, Pt. I, §4 
and affected by § 15, is amended to read: 
3. Disposition of funds. Each register of deeds shall, on or before the 10th day of 
each month, pay over to the State Tax Assessor 90% of the tax collected pursuant to thls 
section 4641-A, subsection 1, paragraphs A and B and section 4641-A, subsection 2 and 
100% of the tax collected pursuant to section 4641-A, subsection 1, paragraph A-I during 
the previous month. The remaining 10% of the tax collected pursuant to section 4641-A, 
subsection 1, paragraphs A and Band section4641-A, subsection 2 must be retained for 
the county by the register of deeds and accounted for to the county treasurer as 
reimbursement for services rendered by the county in collecting the tax. 
If the tax 
collected is not paid over by the 10th day of the month, the State Tax Assessor may 
impose interest pursuant to section 186. 
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Sec. C-4. 36 MRSA §4641-B, sub-§4, as repealed and replaced by PL 2007, c. 
539, Pt. WW, §2, is amended to read: 
35. 
4. Distribution of State's share of proceeds. The State Tax Assessor shall pay all 
net receipts received pursuant to this section to the Treasurer of State and shall at the 
same time provide the Treasurer of State with documentation showing the amount of 
revenues derived from the tax imposed by section 4641-A, subsection 1, paragraphs A, 
A-I and Band the amount of revenues derived from the tax imposed by section 4641-A, 
subsection 2. 
A. The Treasurer of State shall credit 112 of the revenues derived from the tax 
imposed by section 4641-A, subsection 1, paragraphs A and B to the General Fund 
and shall monthly pay the remaining 112 of such revenues to the Maine State Housing 
Authority, which shall deposit the funds in the Housing Opportunities for Maine 
Fund created in Title 30-A, section 4853, except that: 
(l) 
In fiscal year 2003~04, fiscal year 2004-05 and fiscal year 2005-06, 
$7,500,000 of the remaining 112 of those revenues must be transferred to the 
General Fund before any· payments are made to the Maine State Housing 
Authority; 
(2) In fiscal year 2006~07, $7,687,067 of the remaining 112 of those revenues 
must be transferred to the General Fund before any payments are made to the 
Maine State Housing Authority; 
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(3) In fiscal year 2007-08 and fiscal year 2008-09, $5,000,000 of tlie remaining 
of those revenues must be transferred to the General Fund before any 
payments are made to the Maine State Housing Authority; 
(4) In fiscal year 2008-09, $90,000 of the remaining 1/2 of those revenues must 
be transferred to the General Fund before any payments are made to the Maine 
State Housing Authority; 
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(5) In fiscal year 2009-10, $3,320,000 of the remaining 112 of those revenues 
must be transferred to the General Fund before any payments are made to the 
Maine State Housing Authority; 
(6) In fiscal year 2010-11, $3,720,000 of the remaining 112 of those revenues 
must be transferred to the General Fund before any payments are made to the 
Maine State Housing Authority; 
(7) In fiscal year 2011-12, $3,830,000 of the remaining 112 of those revenues 
must be transferred to the General Fund before any payments are made to the 
Maine State Housing Authority; 
·(8) In fiscal year 2012-13, $3,950,000 of the remaining 112 of those revenues 
must be transferred to the General Fund before any payments are made to the 
Maine State Housing Authority; and 
(9) In fiscal year 2008-09, $2,972,414 of the remaining 112 of those revenues 
must be transferred to the General 'Fund before any payments are made to the 
Maine State Housing Authority. 
B. Neither the Governor nor the Legislature may divert the, revenues payable to the 
Housing Opportunities for Maine Fund to any other fund or for any other use. Any 
proposal to enact or amend a law to allow distribution of less than 112 of the revenues 
derived from the tax imposed by section 4641-A, subsection 1 to the Housing 
Opportunities for Maine Fund, as adjusted under paragraph A, must be submitted to 
the Legislative Council and to the joint standing committee of the Legislature having 
jurisdiction over affordable housing matters at least 30 days prior to any, vote or 
public hearing on the proposal. 
C. The Treasurer of State shall credit to the General Fund all of the revenues derived 
from the tax imposed by section 4641-A, subsection 1, paragraph A-I and section 
4641-A, subsection 2. 
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Sec. C-S. Effective date. This Part takes effect October 1,2009. 
SUMMARY 
This bill reforms the State's tax structure and reduces the burden of taxes on residents 
of the State. The bill contains the following provisions. 
Part A makes fundamental changes to simplify and reduce the burden of the State's 
income tax and create an income tax that is intended to be more beneficial to investment 
and economic growth in the State. The current structure of 4 tax brackets, personal 
exemptions and deductions is replaced by a flat rate of 6.5% on all taxable income. The 
progressivity of the current income tax is maintained through a household credit that 
alleviates the impact of the 6.5% rate on low-income and middle-income households. 
The alternative minimum tax on individuals is abolished. 
Part B broadens the sales tax base by including certain services, including certain 
amusement, entertainment and recreation services; installation, repair and maintenance 
services; personal property services; transportation and courier services; and lpng 
distance telephone service. Part B also changes the point of imposition of sales tax 
related to leased property from the sale of that property to the leasing business to the lease 
payments by the consumer. Part B also increases the' sales tax on prepared food and 
lodging to 8.5% and the sal~s tax on rentals of automobiles of less than one year to 15%. 
5. 
Part C changes the real estate transfer tax by providing that residences with a value 
greater than $500,000 will be taxed at 1 % on the value of the residence that exceeds 
$500,000 with the full increase accruing to the General Fund. 
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