An Act To Broaden and Increase the Sales Tax, Increase the Earned Income Tax Credit and Amend the Application Process for the Circuitbreaker Program
Maine Legislature, Session 124, LD 1368
Committee: Taxation
Sponsors: WATSON, PERRY, CROCKETT, FLEMINGS, PERCY
Amends: 36 MRSA §1752, 36 MRSA §1811, 36 MRSA §6201, 36 MRSA §6203-A, 36 MRSA §6203-B, 36 MRSA §6204, 36 MRSA §6210, 36 MRSA §6211

FIRST REGULAR SESSIOr~-2009 
Legislative Document 
No. 1368 
H.P.958 
. House of Representatives, April 2, 2009 
. An Act To Broaden and Increase the Sales Tax, Increase the Earned 
Income Tax Credit and Amend the Application Process for the 
Circuitbreaker Program 
Reference to the Committee on Taxation suggested and ordered printed. 
Presented by Representative WATSON of Bath. 
Cosponsored by Senator PERRY of Penobscot and 
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frl.I7l1iC~{ 
MILLICENT M. MacFARLAND 
Clerk· 
Representatives: CROCKETT of Augusta, FLEMINGS of Bar Harbor, PERCY of Phippsburg. 
Printed I'll fL:cyc'.t:J·pilpcr 
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Be it enacted by the People of the State of Maine as follows: 
PART A 
Sec. A-I. 36 MRS A §1752, sub-§1-1 is enacted to read: 
1-1. 
Amusement, entertainment and recreation services. 
"Amusement, 
entertaiD1nent 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, . can1ivals,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, 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 whitewater rafting, guided 
recreation, but excluding guided recreation services on federally navigable waters, and 
aircraft, helicopter, balloon, blimp; watercraft, railroad, bus, trolley and wagon rides; 
lessons and training in such areas as music, sp011s, dance, martial arts, gymnastics, 
physical fitness, art and crafts; 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. A-2. 36 MRSA §1752, sub-§8-A, as repealed and replaced 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 or items usually consumed as part of a meal served on or off the premises 
of the retailer; and 
B. 
Food and drinks that are prepared by the retailer for human consumption and 
ready for consumption without furtherpreparationt and that are not grocery staples, 
including, but not limited to: 
(1) Candy and confections, including, but not limited to, marshmallows and 
marshmallow creme or fluff; 
(2) Soft drinks; 
(3) Sandwiches and prepared salads; 
(4) 
Supplemental meal items such as corn chips, potato chips and crisped 
vegetable or fruit chips, pork rinds, pretzels, crackers, popped popcorn, cheese 
sticks and cheese puffs; 
(5) Fruit bars, granola· bars, breakfast bars, rice cakes, bread sticks and dried 
sugared fruit; 
(6) Roasted nuts and seeds; 
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(7) Desserts and bakery items, including, but not limited to, doughnuts, cookies, 
pastries, ·toaster pastries, croissants, cakes, pies, ice cream cones, ice cream, ice 
milk, frozen confections, frozen yogurt, sherbet, ready-to-eat pudding and 
. gelatins Emd dessert sauces; and 
(8) Meat jerky, meat bars and dips. 
e. . All food and drinks sold from an establishment ", .. hose sales of food and drinks 
that are prepared by the retailer account for more than 75% Of the establishment's . 
gross receipts. 
"Prepared food" does not include bulk sales of grocery staples. 
As used in this subsection, "without further preparation" means that the product does not 
require boiling,· frying, grilling, baking or cooking of any kind or is not mixed with other 
products before being boiled, fried, grilled, baked. or cooked. "Without further 
preparation" does not include toasting, microwaving or otherwise heating a product for 
palatability rather than for the purpose of cooking the product. 
Sec. A-3. 36 MRS A §1752, sub-§17-B, as amended by PL 2Q07, c. 410, §2.and 
affected by §6, is further amended to read: 
17-B. Taxable servjce. "Taxable service" means the rental of living quarters in a 
hotel, rooming house, tourist or traikr camp; the transmission and distribution of 
electricity; the rental or lease of ~n automobile; 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; amusement, entertainment and recreation services; and 
the sale of prepaid calling service. 
Sec. A-4. 36MRSA §1811, first crr, 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 tlns State. The rate of tax is 7% on the value of liquor sold in licensed 
establishments as defined in Title 28-A, section 2, subsection 15,in accord~nce with Title 
. 28-A, chapter 43; +% 8% on the-value of rental of living quarters in any hotel, rooming 
house or tourist or trailer camp; 10% on the value of rental for a period of less than one 
year of an automobile, including a loaner vehicle that is provided other than to a motor 
vehicle dealer's service customers pursuant to a manufacturer's or dealer's warranty; +% 
8% on the value of prepared food; and .s.% 6% 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 and 
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 estinlated 
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 anestimat,ed quote is provided to the lessee. 
Sec. A-5. 36 MRSA §1811, 3rd~, as repealed and replaced by PL 2003, c. 510, 
Pt. C, § 12 and affected by § 13, is amended to read: 
Rental or lease of an automobile for one year or more must be taxed at the time of the 
lease or rental transaction at .§.% 6% of the following: . the total monthly lease payment 
multiplied by the number of payments in· the lease or rental, the amount of equity 
involved in any trade-in and the value of any cash down payment. 
Collection and 
remittance of the tax is th.e responsibility of the person that negotiates the lease 
transaction with the lessee. 
Sec. A-6. Effective date. This Part takes effect October 1,2009. 
PART B 
Sec. B-1. 36 MRS A §5219-S, as repealed and replaced by PL 2007, c. 693, §31, 
lOis amended to read: 
1.1 
§5219-S. Earned income credit 
1. , Resident taxpayer. A resident individual is allowed a credit against the tax 
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otherwise due under this Part in the amount of .§.% 25% of the federal earned income 
credit for the same taxable year. 
2. Nonresident taxpayer; A nonresident .individual is allowed a credit against the 
tax otherwise due under this Part in the amount of .§.% 25 % of the federal earned income 
credit for the same taxable year multiplied by the ratio of the individual's Maine adjusted 
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gross income; as defined in section 5102, 'subsection l-C, paragraph B,. to the individual's 
entire federal adjl.lsted gross income, as modified by section 5122. 
, 3. Part-year resident taxpayer. An individual who files a return as a part-year 
resident in accordance with section 5224-A is allowed a credit against the tax otherwise 
due under this Part in the amount of .§.% 25% of the federal earned income credit for the 
same taxable year multiplied by a ratio, the numerator of which is the individual's Maine 
adjusted gross income as defined in section 5102, subsection l-C, paragraph· A for that 
portion of the taxable year during which the individual was a resident plus the 
individual's Maine adjusted gross income as defined in section 5102, subsection l-C, 
paragraph B for that portion of the taxable year during which the individual was a 
nonresident and the denominator of which IS the individual's entire federal adjusted gross 
income, as modified by section 5122. 
4. Limitation. The. credit allowed by this section mav not reduce the Maine income 
taJe to less than zero 'is fully refundable. 
32PART 
C 
Sec. C-l. 36 MRS A §5276, sub-§l, as amended by PL 2005, c. 332, §25, is 
further amended to read: 
1. General rule. The State Tax Assessor, within the applicable period of limitations, 
may credit an overpayment of income tax, including an overpayment reported on a joint 
return, and interest on the overpayment against any liabiiity arising from a 
redete~nation pursuant to section ~ 
6203~B cir any liability in respect of aiIy tax 
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imposed under this Title owed by the taxpayer, or by the taxpayer's spouse in the case of 
a joint retUrn. The balance, after any setoff pursuant to sect jon 5276-A, must be refunded 
.. by the Treasurer of State. 
Sec. C-2. 36 MRSA §6201, sub-§12, as amended by PL 2005, c. 218, §58, is 
further amended to read: . 
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12. Year for which relief is requested. "Year for which relief is requested" means· 
the calendar year preceding that in which the claim is filed. For a olaim filed during 
January to May of any year, or during the eJttension period aUmved under seotion6215, 
"year for whioh relief is requested" means the oalendar year 2 years preoeding that in 
v;hioh the olaim is filed. 
Sec. C-3. 36 MRSA §6203-A, as enacted by PL 2003, c. 673, Pt. BB, §2, is 
amended to read: 
§6203-A. Procedure for reimbursement 
At least monthly on or before the last day of the month, the State Tax Assessor shall 
determine the benefit for each claimant under this chapter and certify the amount to the 
State Controller to be transferred to the so-called circuit breaker reserve established, 
maintained and administered by the State Controller from General Fund undedicated 
revenue within the individual income tax category. 'At least monthly, the assessor shall 
pay the oertified amounts to eaoh approved applioant qualifying for the benefit under this 
ohapter payments of claims must be made as provided in section 6203-B. Interest may 
not be allowed on any payment made to a claimant pursuant to this chapter. 
Sec. C-4. 36 MRSA §6203-B is enacted to read: 
§6203-B. Payment of claim 
1. Payment options. 
Claimants under this chapter may select anyone of the 
following payment options for each claim. 
A. The claimant may choose to have payment made directly to the claimant. 
B. 
Beginning with claims filed in 2010, the claimant may choose to have the 
payment applied against the claimant's individual income tax for the income tax year 
in which the claim is payable. 
C. The claimant may choose to have payment made directly to the municipality 
where the claimant's homestead is located to offset an equal amount of property taxes 
owed to the municipality by the claimant. 
2. Payment procedure. Upon approval of claims by the assessor, the assessor shall 
prepare and certify a list of individuals entitled to a claim under this chapter who have 
chosen a payment option authorized under subsection 1, paragraph A or C, together with 
the respective amount attributable to each individual and indicating the payment option 
chosen by the claimant, and shall forward the list to the State Controller· on or before 
September 30th, except that in 2009 the certification must be made on or before October 
10th. 
The Treasurer of State, upon direction of the State Controller, shall pay and 
Pag<: 4 - 124LR1710(Ol)-1 
distribute the claims certified by the assessor to the appropriate payee on or before 
October 20th armually. A claim of less than $5 may not be granted. Claims not certified 
by the assessor by September 30th may be certified as soon as practicable thereafter, but 
such claims need not be paid by the State Controller by October 20th. 
3. Review by assessor; setoff required. The assessor shall review every application 
filed pursuant to this chapter and may reject a claim if the assessor determines that no 
payment is due. If the assessor determines that a claim has been incorrectly determined, 
the assessor shall adjust the claim. The assessor shall notify the claimant in writing of 
any.rejection or adjustment and the reasons for the rejection or adjustment. The rejection 
or adjustment is final unless appealed by the claimant pursuant to section 6213. The 
assessor shall set off against the claim payment any other tax liability owed by the 
claimant pursuant to this Title. 
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4. ' Payments made in error. If the assessor determines that a claim has been 
incorrectly calculated or paid in error, the amount paid may be recovered by assessment 
pursuant to section 141, and the assessment bears Interest from the date of payment of the 
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claim, until refunded or paid, at the rate provided by section 186. 
Sec. C-S. 36 MRSA §6204, as amended by PL 2005, c. 2, Pt. E, §3 and affected 
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by § § 7 and 8 and is further amended to read: 
§6204. Filing date 
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A, claim may not be paid unless the claim is filed with the Bureau of Revenue 
Services on or after August 1 st and on or before the following May 31 st, except that in 
2009 the filing period begins August 1, 2009 and ends December 31, 2009. For program 
years that begin after 2009, the period for filing a claim with the Bureau of Rev'enue 
Services begins on January 1st following the year for whiCh relief is requested and ends 
on the following June 30th. 
Sec. C-6. 36 MRSA §6210, as amended by PL 2005, c, 218, §59, is further 
amended to read: 
§6210. Administration 
The State Tax Assessor shall make available suitable forms with instructions for 
claimants. The claim must be in the form prescribed by the assessor and must be signed 
by the claimant. 
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The assessor shall include a checkoff to request an application for A claimant may 
apply for a benefit under the Maine Residents Property Tax Program on the that 
claimant's individual income tax form. The assessor shall also provide a paperless option 
for filing an application for the Maine Residents Property Tax Program. 
Sec. C..,7. 36 MRSA §6211, as amended by PL 2005, c, 332, §27, is repealed, 
Sec. C-S. Modification of income tax form. The State Tax Assessor shall 
modify the individual income tax form to include the ability of an individual to use the 
form to submit a claim under the Maine Residents Property Tax Program and to indicate 
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the method of paYment of the claim as described in the Maine Revised Statutes, Title 36, 
section 6203-B. 
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Bec. C-9. 
Inclus·ion of application for Maine Residents Property Tax 
Program on Department of Health and Human Services public assistance 
application. The Department of Health and Human Services, office of integrated access 
and support shall add to its unifom1 application for public assistance the ability to request 
an application for the Maine Residents Property Tax Program. The office shall forward a 
request for ari application for the Maine Residents Property Tax Program to the State Tax 
Assessor. 
Sec. C-IO. Transition; delay of payments. Notwithstanding the Maine Revised 
Statutes, Title 36, section 6203-A, in order to accommodate the transition of the 
application period for the Maine Residents Property Tax Program from August 1 st to the 
following May 31 st for benefits from the prior calendar year to an application period 
beginning January 1 st and ending June 30th, for benefits arising during the 2009 calendar 
year, the State Tax Assessor shall delay payment of those benefits until after July 1, 2010 . 
.sec. C-l1. Application. This Act applies to applications fOLthe Maine Residents 
Property Tax Program filed on or after August 1, 2009, exclusive of applications filed on 
extension from the prior filing period. 
SUMMARY 
Part A broadens the sales tax base by adding amusement, entertainment and 
recreation services and including certain prepared foods, such as candy, potato chips and 
bakery products. This bill also increases the general sales tax rate from 5% to 6% and the 
sales tax on prepared food and lodging from 7% to 8%. 
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Part B increases the state earned income credit from 5% to 25% of the federal credit 
and provides that the state earned income credit is fully refundable. 
Part C amends the Maine Residents Property Tax Prograrn; also known as "the 
Circuitbreaker Program," by allowing an individual to apply for a benefit using the 
individual income tax form. Due to the difference in the time period covered by the 
Circuitbteaker Program and individual income taxes; the filing period for benefits under 
the Circuitbreaker Program is changed from August 1 st to the following May 31 st to 
January 1 st to the following June 30th, beginning with benefit years beginning after 2009. 
For the first year that this change in the application period is in effect, a double 
benefit payment will occur. Currently, benefits that accrue during a calendar year are not 
claimed and payable until after August of the following year. Since the effect of this Part 
is to allow an individual to use the income tax form to apply for benefits that accrued the 
immediately prior year and be paid within a month of the end of the calendar year, that 
could result in 2 payments being made: one from 2008 and one from 2009. In order to 
lessen the impact of ~ouble payments, the State Tax Assessor is directed to delay any 
benefits claimed for the 2009 calendar year until after July 1, 2010. 
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Part C also requires the Department of Health and Human Services to add to its 
uniform application for public assistance; including· MaineCare and food stamps, the 
ability to request an application for the Maine Residents Property Tax Program. 
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