An Act To Improve the Job Creation Through Educational Opportunity Program
Maine Legislature, Session 126, LD 1718
Committee: Taxation
Sponsors: GOODE
Amends: 20-A MRSA §12541, 20-A MRSA §12542, 36 MRSA §5122, 36 MRSA §5217-D

Legislative Document 
No. 1718 
H.P. 1228 
House of Representatives, January 9, 2014 
An Act To Improve the Job Creation Through Educational 
Opportunity Program 
Submitted by the Department of Administrative and Financial Services pursuant to Joint 
Rule 204. 
Reference to the Committee on Taxation suggested and ordered printed. 
MILLICENT M. MacFARLAND 
Clerk 
Presented by Representative GOODE of Bangor. 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1.  20-A MRSA §12541, sub-§2, as amended by PL 2009, c. 553, Pt. A, §2, 
is repealed. 
Sec. 2.  20-A MRSA §12541, sub-§2-A, as enacted by PL 2009, c. 553, Pt. A, §3, 
is repealed. 
Sec. 3.  20-A MRSA §12541, sub-§4-A, as enacted by PL 2009, c. 553, Pt. A, §4, 
is repealed and the following enacted in its place: 
4-A.  Financial aid package.  "Financial aid package" means financial aid obtained 
by a student after December 31, 2007 for attendance at an accredited Maine community 
college, college or university after December 31, 2007.  For purposes of a qualified 
individual claiming an educational opportunity tax credit for tax years beginning on or 
after January 1, 2013, "financial aid package" may include financial aid obtained for up to 
credit hours of course work at an accredited non-Maine community college, college or 
university earned prior to transfer to an accredited Maine community college, college or 
university, if the 30 credit hours were earned after December 31, 2007 and the transfer 
occurred after December 31, 2012.  For purposes of an employer claiming an educational 
opportunity tax credit for tax years beginning on or after January 1, 2013, "financial aid 
package" may include financial aid obtained by a qualified employee after December 31, 
2007 for attendance at an accredited non-Maine community college, college or university 
after December 31, 2007.  The financial aid package may include private loans or less 
than the full amount of loans under federal programs, depending on the practices of the 
accredited Maine or non-Maine community college, college or university.  Loans are 
includable in the financial aid package only if entered into prior to July 1, 2023. 
Sec. 4.  20-A MRSA §12541, sub-§7, as amended by PL 2009, c. 553, Pt. A, §7, 
is repealed. 
Sec. 5.  20-A MRSA §12541, sub-§8 is enacted to read: 
8.  Qualified employee.  "Qualified employee" has the same meaning as in Title 36, 
section 5217-D, subsection 1, paragraph E. 
Sec. 6.  20-A MRSA §12541, sub-§9 is enacted to read: 
9.  Qualified individual.  "Qualified individual" has the same meaning as in Title 36, 
section 5217-D, subsection 1, paragraph G. 
Sec. 7.  20-A MRSA §12542, sub-§1, as enacted by PL 2007, c. 469, Pt. A, §1, is 
amended to read: 
1.  Program created; goals.  The Job Creation Through Educational Opportunity 
Program, referred to in this chapter as "the program," is created to reimburse education-
related costs for provide an educational opportunity tax credit to Maine residents who 
obtain an associate degree or a bachelor's degree in this State, and live, work and pay 
taxes in this State thereafter. The program is designed to achieve the following goals: 
A.  Promote economic opportunity for people in this State by ensuring access to the 
training and higher education that higher-paying jobs require; 
B.  Bring more and higher-paying jobs to this State by increasing the skill level of 
this State's workforce; 
C.  Offer educational opportunity and retraining to individuals impacted by job loss, 
workplace injury, disability or other hardship; 
D.  Keep young people in this State through incentives for educational opportunity 
and creation of more high-paying jobs; and 
E.  Accomplish all of the goals in this subsection with as little bureaucracy as 
possible. 
Sec. 8.  20-A MRSA §12542, sub-§2-A, as amended by PL 2011, c. 548, §7, is 
repealed. 
Sec. 9.  20-A MRSA §12542, sub-§3, as amended by PL 2011, c. 665, §§2 and 3, 
is repealed. 
Sec. 10.  20-A MRSA §12542, sub-§3-A, as amended by PL 2011, c. 665, §4, is 
repealed. 
Sec. 11.  20-A MRSA §12542, sub-§4-A, ¶C, as enacted by PL 2009, c. 553, Pt. 
A, §13, is amended to read: 
C.  An accredited Maine community college, college or university must document for 
the student information required for purposes of the educational opportunity tax 
credit, including, once the student has earned the degree, the total principal of loans 
the student received as part of that student's financial aid package related to course 
work completed at the accredited Maine community college, college or university.  
The accredited Maine community college, college or university shall provide an 
original or certified copy to the student and shall retain a copy of the documentation 
in its files for at least 10 years after the student graduates. 
Sec. 12.  20-A MRSA §12542, sub-§4-A, ¶D, as enacted by PL 2009, c. 553, Pt. 
A, §13, is repealed. 
Sec. 13.  20-A MRSA §12542, sub-§5, as amended by PL 2009, c. 553, Pt. A, 
§14, is further amended to read: 
5.  Effective date; participation by individual already enrolled in degree 
program.  The program must commence for the first semester that begins after the 
effective date of this chapter.  A Maine resident who when the program commences is 
enrolled in an associate or a bachelor's degree program at an accredited Maine 
community college, college or university may participate, subject to the same essential 
terms as other program participants.  Such an individual need only meet the eligibility 
requirements in subsection 3 from January 1, 2008 forward. 
Sec. 14.  36 MRSA §5122, sub-§2, ¶FF, as amended by PL 2011, c. 138, §1 and 
affected by §4, is further amended to read: 
FF.  To the extent included in federal adjusted gross income, student loan payments 
made by the taxpayer's employer in accordance with section 5217-D, whether or not 
the employer claims, or could claim, the credit provided by section 5217-D, 
subsection 5;  
Sec. 15.  36 MRSA §5217-D, as amended by PL 2011, c. 665, §§7 to 12 and 
affected by §13, is further amended to read: 
§5217-D.  Credit for educational opportunity 
1.  Definitions.  As used in this section, unless the context otherwise indicates, the 
following terms have the following meanings. 
A.  "Benchmark loan payment" has the same meaning as in Title 20-A, section 
12541, subsection 2 means the monthly loan payment for the amount of the principal 
cap paid over 10 years at the interest rate for federally subsidized Stafford loans 
under 20 United States Code, Section 1077a applicable during the individual's last 
year of enrollment at an accredited Maine community college, college or university. 
A-1.  "Accredited non-Maine community college, college or university" means an 
institution located outside the State that is accredited by a regional accrediting 
association or by one of the specialized accrediting agencies recognized by the 
United States Secretary of Education. 
A-2.  "Accredited Maine community college, college or university" has the same 
meaning as in Title 20-A, section 12541, subsection 1. 
B.  "Employer" has the same meaning as the term "employing unit," as defined in 
Title 26, section 1043, subsection 10. 
B-1.  "Financial aid package" means financial aid obtained by a student after 
December 31, 2007 for attendance at an accredited Maine community college, 
college or university after December 31, 2007.  For purposes of a qualified individual 
claiming a credit under this section for tax years beginning on or after January 1, 
2013, the financial aid package may include financial aid obtained for up to 30 credit 
hours of course work at an accredited non-Maine community college, college or 
university earned prior to transfer to an accredited Maine community college, college 
or university, if the 30 credit hours were earned after December 31, 2007 and the 
transfer occurred after December 31, 2012.  For purposes of an employer claiming a 
credit under this section for tax years beginning on or after January 1, 2013, the 
financial aid package may include financial aid obtained by a qualified employee 
after December 31, 2007 for attendance at an accredited non-Maine community 
college, college or university after December 31, 2007.  The financial aid package 
may include private loans or less than the full amount of loans under federal 
programs, depending on the practices of the accredited Maine or non-Maine 
community college, college or university.  Loans are includable in the financial aid 
package only if entered into prior to July 1, 2023. 
C.  "Full time" employment means employment with a normal workweek of 32 hours 
or more. 
D.  “Part time” employment means employment with a normal workweek of between 
and 32 hours. 
D-1.  "Principal cap" means: 
(1)  For individuals graduating from an accredited Maine community college, 
college or university before January 1, 2015, the amount calculated by the State 
Tax Assessor under Title 20-A, section 12542, former subsection 2-A; and 
(2)  For individuals graduating from an accredited Maine community college, 
college or university on or after January 1, 2015, the average in-state tuition and 
mandatory fees for attendance at the University of Maine System for the 
academic year ending during the calendar year prior to the year of graduation, 
multiplied by 2 in the case of an associate degree and multiplied by 4 in the case 
of a bachelor's degree. 
E.  "Qualified employee" means an employee who is employed at least part time and 
who is eligible for the credit provided in this section a qualified individual or who 
would be eligible for the credit in this section by meeting all the criteria established 
under Title 20-A, section 12542 a qualified individual except that the employee's 
associate or bachelor's degree was awarded by an accredited non-Maine community 
college, college or university. 
G.  "Opportunity program participant Qualified individual" means an individual, 
including the spouse filing a joint return with the individual under section 5221, who 
obtains the specified degree and complies with the requirements under Title 20-A, 
section 12542 is eligible for the credit provided in this section.  An individual is 
eligible for the credit if the individual: 
(1)  Attended, and obtained an associate or a bachelor's degree from, an 
accredited Maine community college, college or university after December 31, 
2007.  The individual need not obtain the degree from the institution in which 
that individual originally enrolled, as long as all course work toward the degree is 
performed at an accredited Maine community college, college or university, 
except that an individual who transfers to an accredited Maine community 
college, college or university after December 31, 2012 from outside the State and 
earned no more than 30 credit hours of course work toward the degree at an 
accredited non-Maine community college, college or university after December 
31, 2007 and prior to the transfer is eligible for the credit if all other eligibility 
criteria are met.  Program eligibility for such an individual must be determined as 
if the commencement of course work at the relevant accredited Maine 
community college, college or university was the commencement of course work 
for the degree program as a whole; 
(2)  Was a Maine resident while in attendance at the accredited Maine 
community college, college or university.  For purposes of this subparagraph, 
"Maine resident" has the same meaning as in Title 20-A, section 12541, 
subsection 5; 
(3)  Lived in Maine while pursuing the degree, excepting periods when it was 
reasonably necessary for the individual to live elsewhere as part of the relevant 
institution's academic programs or while pursuing course work at an accredited 
non-Maine community college, college or university as provided in subparagraph 
(1); 
(4)  During the taxable year, was a resident individual; and 
(5)  During the taxable year, worked at least part time in this State for an 
employer, worked at least part time in this State as a self-employed individual or 
was deployed for military service in the United States Armed Forces, including 
the National Guard and the Reserves of the United States Armed Forces.  As used 
in this subparagraph, "deployed for military service" has the same meaning as in 
Title 26, section 814, subsection 1, paragraph A. 
H.  "Resident individual" means someone: 
(1)  Who is domiciled in this State; or 
(2)  Who is not domiciled in this State, but maintains a permanent place of abode 
in this State and spends in the aggregate more than 183 days of the taxable year 
in this State, unless the individual is a member of the Armed Forces of the United 
States. 
I.  "Seasonal employment" has the same meaning as in Title 26, section 1251 and in 
regulations promulgated thereunder. 
J.  "Term of employment" includes all months when the individual is actually 
employed. It includes time periods when an individual is on leave or vacation. It 
extends to the full year for individuals working for employers who customarily 
operate only during a regularly recurring period of 9 months or more in a calendar 
year. For individuals working for employers who customarily operate only during 
regularly recurring periods of less than 9 months in a calendar year, including 
seasonal employment, the term of employment extends only to time periods when 
months during which the individual is actually working. 
2.  Credit allowed.  A taxpayer constituting an opportunity program participant 
qualified individual or an employer of a qualified employee is allowed a credit against the 
tax imposed by this Part for each taxable year under the terms established in accordance 
with the provisions of this section. The credit is created to implement the Job Creation 
Through Educational Opportunity Program established under Title 20-A, chapter 428-C. 
A.  A taxpayer entitled to the credit for any taxable year may carry over and apply to 
the tax liability for any one or more of the next succeeding 10 years the portion, as 
reduced from year to year, of any unused credits. 
B.  More than one A taxpayer may claim a credit based on loan payments actually 
made to a relevant lender or lenders to benefit a single opportunity program 
participant, but no 2 taxpayers may claim the credit based on the same payment under 
this section only with respect to loans that are part of the qualified individual's 
financial aid package and only with respect to loan payment amounts paid by the 
taxpayer during that part of the taxable year that the qualified individual worked in 
this State.  Payment of loan amounts in excess of the amounts due during the taxable 
year do not qualify for the credit.  Refinanced loans that are part of the qualified 
individual's financial aid package are eligible for the credit under this section if the 
refinanced loans remain separate from other debt, including debt incurred in an 
educational program other than the degree program for which a credit is claimed 
under this section.  Forbearance or deferment of loan payments does not affect 
eligibility for the credit under this section.  An individual working in this State for 
any part of a month during the Maine residency period of the taxable year is 
considered to have worked in this State for the entire month.  An individual who 
worked outside this State for an entire month during the Maine residency period is 
considered to have worked in this State during that month, except that in no case may 
this exception exceed 3 months during the Maine residency period of the taxable 
year. 
C.  Except as provided in paragraph D subsection 3, the credit under this section may 
not reduce the tax otherwise due under this Part to less than zero.  The credit allowed 
to an employer of a qualified employee may not reduce the tax otherwise due under 
this Part to less than zero. 
D.  Notwithstanding paragraph C, the credit allowed to an opportunity program 
participant is refundable if the opportunity program participant obtains an associate 
degree or bachelor’s degree in science, technology, engineering or mathematics. 
3.  Calculation of the credit; qualified individuals.  The Subject to subsection 2 
and except as provided in this subsection, the credit in this section with respect to a 
qualified individual is equal to the amount determined on the basis of the amount under 
paragraph A or paragraph B, whichever is less, multiplied by the proration factor.  For 
purposes of this subsection, the proration factor is the amount derived by dividing the 
total number of academic credit hours earned for a bachelor's or associate degree after 
December 31, 2007 by the total number of academic credit hours earned for the 
bachelor's or associate degree.: 
A.  If the The benchmark loan payment is less than the actual monthly amount, then 
the credit claimed may not exceed the product of the benchmark loan payment and 
multiplied by the number of months during the taxable year in which the taxpayer 
made loan payments.; or 
B.  If the opportunity program participant's actual The monthly loan payment amount 
is less than the benchmark loan payment, the credit must be based on the actual 
multiplied by the number of months during the taxable year in which the taxpayer 
made loan payments made during the taxable year. 
The credit under this subsection for an individual who transferred to an accredited Maine 
community college, college or university from an accredited non-Maine community 
college, college or university after December 31, 2012 and who earned no more than 30 
credit hours of course work toward the degree at an accredited non-Maine community 
college, college or university is equal to 50% of the amount otherwise determined under 
this section in the case of an associate degree and equal to 75% of the amount otherwise 
determined under this section in the case of a bachelor's degree. 
Notwithstanding subsection 2, paragraph C, the credit under this subsection is refundable 
to the extent the credit is based on loans included in the financial aid package acquired to 
obtain a bachelor's degree or associate degree in science, technology, engineering or 
mathematics or, with regard to an individual obtaining an associate degree in any field on 
or after January 1, 2015, to obtain an associate degree from an accredited Maine 
community college, college or university. 
For purposes of this subsection, the proration factor is the amount derived by dividing the 
total number of academic credit hours earned for a bachelor's or associate degree after 
December 31, 2007 by the total number of academic credit hours earned for the 
bachelor's or associate degree. 
4.  Conditions for an opportunity program participant claiming the credit.  An 
opportunity program participant may claim the credit only if the participant is a resident 
individual.  The participant may claim the credit based only on regular payments made 
during months in which the individual was working for an employer located in this State 
or was deployed for military service in the United States Armed Forces, including the 
National Guard and the Reserves of the United States Armed Forces.  As used in this 
subsection, "deployed for military service" has the same meaning as in Title 26, section 
814, subsection 1, paragraph A. A married couple filing jointly under Title 36, section 
5221 may claim the credit only to the extent that the spouse on whose behalf the credit is 
claimed meets these requirements. 
5.  Calculation of the credit; employers.  A Subject to subsection 2, a taxpayer 
constituting an employer making loan payments during the taxable year on loans included 
in a qualified employee's financial aid package may claim the a credit under this section 
under the following circumstances equal to the benchmark loan payment or the actual 
monthly loan payment made by the employer on the loans, whichever is less, multiplied 
by the number of months during the taxable year the employer made loan payments on 
behalf of the qualified employee during the term of employment.  The credit under this 
subsection may not be claimed with respect to months of the taxable year during which 
the employee was not a qualified employee.  The employer may undertake to make 
partial or full loan payments directly to the relevant lender or lenders on behalf of a 
qualified employee, having taken reasonable steps to ascertain that the employee is in fact 
a qualified employee, and may claim a credit based on amounts that came due and were 
paid by the employer during the term of employment. To receive the credit, the employer 
must retain for 5 years any proof of eligibility that the employee or independent 
contractor provides. 
The employer may claim a credit for the amount that the qualified employee could have 
claimed during any months when the qualified employee was employed, had the qualified 
employee made the partial or full loan payments instead, under conditions where the 
qualified employee had sufficient income to claim the full credit for the taxable year.  If 
the qualified employee is employed only on a part-time basis during the taxable year, the 
employer may claim a credit only up with respect to that employee is limited to half of 
the total that the qualified employee could have claimed had the qualified employee made 
all payments and earned sufficient income to claim the full credit for the taxable year, but 
the amount the employer claims must still be based on amounts actually paid.  An 
employer is not disqualified under this section if the qualified employee is not eligible to 
claim the credit solely because the employee's associate degree or bachelor's degree was 
awarded by an accredited non-Maine community college, college or university 50% of 
the credit otherwise determined under this subsection. 
SUMMARY 
This bill consolidates under the tax laws the provisions of statute that govern the 
determination of the income tax credit for educational opportunity.  Currently, the 
relevant provisions are contained in the Maine Revised Statutes, Title 20-A and Title 36.  
By consolidating the provisions, the bill clarifies eligibility for the credit and, without 
changing the amount of the credit, the method by which the credit is calculated.  In an 
effort to further reduce the administrative burden of the credit, the bill also extends the 
refundable portion of the credit available to individuals to all associate degrees, whether 
degrees in science, technology, engineering or mathematics or not, obtained from 
accredited Maine community colleges, colleges or universities for tax years beginning, 
and individuals graduating, on or after January 1, 2015.  The bill also requires that an 
individual work in Maine after graduation in order to qualify for the credit, except that an 
individual may work outside Maine for up to 3 months and still qualify.  This is a change 
from current law, which allows a qualifying individual to work outside Maine the entire 
year, as long as the individual is working for an employer located in Maine.  The bill also 
removes the requirement that an individual work for an employer located in Maine.  In 
addition, the bill clarifies that self-employed individuals who are not employers may 
participate in the program.