An Act To Amend the State's Tax Laws
Maine Legislature, Session 126, LD 1707
Committee: Taxation
Sponsors: HASKELL
Amends: 25 MRSA §2399, 36 MRSA §653, 36 MRSA §1752, 36 MRSA §1754-B, 36 MRSA §4102, 36 MRSA §4109, 36 MRSA §5122, 36 MRSA §5251, 36 MRSA §6901

Legislative Document 
No. 1707 
S.P. 673 
In Senate, January 8, 2014 
An Act To Amend the State's Tax Laws 
Submitted by the Department of Administrative and Financial Services pursuant to Joint 
Rule 204. 
Reference to the Committee on Taxation suggested and ordered printed. 
DAREK M. GRANT 
Secretary of the Senate 
Presented by Senator HASKELL of Cumberland. 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1.  25 MRSA §2399, 2nd ¶, as amended by PL 2013, c. 95, §1, is further 
amended to read: 
Every fire insurance company or association that does business or collects premiums 
or assessments in the State shall pay to the State Tax Assessor, in addition to the taxes 
now imposed by law to be paid by those companies or associations, 1.4% of the gross 
direct premiums for fire risks written in the State, less the amount of all direct return 
premiums thereon and all dividends paid to policyholders on direct fire premiums.  The 
Beginning in 2013 and every 5 years thereafter, by October 1st the Department of 
Professional and Financial Regulation, Bureau of Insurance shall determine every for the 
subsequent 5 years the basis percentage of fire risk allocated to each line of insurance, 
and every fire insurance company or association shall pay the 1.4% tax based on that 
basis allocation.  That tax must be paid as provided for insurance premium taxes as 
specified in Title 36, section 2521-A, except that the tax prescribed by this section must 
be paid on an estimated basis at the end of each month starting July 31, 1998, with each 
installment equal to at least 1/12 of the estimated total tax to be paid for the current 
calendar year.  The State Tax Assessor shall pay over all receipts from that tax to the 
Treasurer of State daily.  Of these funds 75.7% must be used to defray the expenses 
incurred by the Commissioner of Public Safety in administering all fire preventive and 
investigative laws and rules and in educating the public in fire safety and is appropriated 
for those purposes and to carry out the administration and duties of the Office of the State 
Fire Marshal.  Of these funds 24.3% must be used to defray the expenses of the fire 
training and education program as established in Title 20-A, chapter 319. 
Sec. 2.  36 MRSA §653, sub-§1, ¶G, as amended by PL 2013, c. 222, §1, is 
further amended to read: 
G.  Any person who desires to secure exemption under this subsection shall make 
written application and file written proof of entitlement on or before the first day of 
April, in the year in which the exemption is first requested, with the assessors of the 
place in which the person resides.  Notwithstanding Title 1, chapter 13, an application 
and proof of entitlement filed pursuant to this paragraph is confidential and may not 
be made available for public inspection.  The application and proof of entitlement 
must be made available to the State Tax Assessor upon request.  The assessors shall 
thereafter grant the exemption to any person who is so qualified and remains a 
resident of that place or until they are notified of reason or desire for discontinuance. 
Sec. 3.  36 MRSA §1752, sub-§17, as amended by PL 1997, c. 557, Pt. B, §2 and 
affected by §14 and Pt. G, §1, is further amended to read: 
17.  Tangible personal property. "Tangible personal property" means personal 
property that may be seen, weighed, measured, felt, touched or in any other manner 
perceived by the senses, but does not include rights and credits, insurance policies, bills 
of exchange, stocks and bonds and similar evidences of indebtedness or ownership.  
"Tangible personal property" includes electricity.  "Tangible personal property" includes 
any computer software that is not a custom computer software program.  "Tangible 
personal property" includes any product transferred electronically. 
Sec. 4.  36 MRSA §1754-B, sub-§1-A, as enacted by PL 2013, c. 200, §4 and 
affected by §6, is amended to read: 
1-A.  Persons presumptively required to register.  This subsection creates a 
defines the basis for and obligations associated with the rebuttable presumption created 
by this subsection that a seller not subject to registered under subsection 1 is engaged in 
the business of selling tangible personal property or taxable services for use in this State 
and is required to register as a retailer with the assessor. 
A.  As used in this subsection, unless the context otherwise indicates, the following 
terms have the following meanings. 
(1)  "Affiliated person" means a person that is a member of the same controlled 
group of corporations as the seller or any other entity that, notwithstanding its 
form of organization, bears the same ownership relationship to the seller as a 
corporation that is a member of the same controlled group of corporations.  For 
purposes of this subparagraph, “controlled group of corporations” has the same 
meaning as in the Code, Section 1563(a). 
(2)  "Person" means an individual or entity that qualifies as a person under the 
Code, Section 7701(a)(1). 
(3)  "Seller" means a person that sells, other than in a casual sale, tangible 
personal property or taxable services. 
B.  A seller is presumed to be engaged in the business of selling tangible personal 
property or taxable services for use in this State if an affiliated person has a 
substantial physical presence in this State or if any person, other than a person acting 
in its capacity as a common carrier, that has a substantial physical presence in this 
State: 
(1)  Sells a similar line of products as the seller and does so under a business 
name that is the same as or similar to that of the seller; 
(2)  Maintains an office, distribution facility, warehouse or storage place or 
similar place of business in the State to facilitate the delivery of property or 
services sold by the seller to the seller's customers; 
(3)  Uses trademarks, service marks or trade names in the State that are the same 
as or substantially similar to those used by the seller; 
(4)  Delivers, installs, assembles or performs maintenance services for the seller's 
customers within the State; 
(5)  Facilitates the seller's delivery of property to customers in the State by 
allowing the seller's customers to pick up property sold by the seller at an office, 
distribution facility, warehouse, storage place or similar place of business 
maintained by the person in the State; or 
(6)  Conducts any activities in the State that are significantly associated with the 
seller's ability to establish and maintain a market in the State for the seller's sales. 
A seller who meets the requirements of this paragraph shall register with the assessor 
and collect and remit taxes in accordance with the provisions of this Part.  A seller 
may rebut the presumption created in this paragraph by demonstrating that the 
person's activities in the State are not significantly associated with the seller's ability 
to establish or maintain a market in this State for the seller's sales. 
C.  A seller that does not otherwise meet the requirements of paragraph B is 
presumed to be engaged in the business of selling tangible personal property or 
taxable services for use in this State if the seller enters into an agreement with a 
person under which the person, for a commission or other consideration, while within 
this State: 
(1)  Directly or indirectly refers potential customers, whether by a link on an 
Internet website, by telemarketing, by an in-person presentation or otherwise, to 
the seller; and 
(2)  The cumulative gross receipts from retail sales by the seller to customers in 
the State who are referred to the seller by all persons with this type of an 
agreement with the seller are in excess of $10,000 during the preceding 12 
months. 
A seller who meets the requirements of this paragraph shall register with the assessor 
and collect and remit taxes in accordance with the provisions of this Part. 
A seller may rebut the presumption created in this paragraph by submitting proof that 
the person with whom the seller has an agreement did not engage in any activity 
within the State that was significantly associated with the seller's ability to establish 
or maintain the seller's market in the State during the preceding 12 months.  Such 
proof may consist of sworn, written statements from all of the persons within this 
State with whom the seller has an agreement stating that they did not engage in any 
solicitation in the State on behalf of the seller during the preceding 12 months; these 
statements must be provided and obtained in good faith. 
A person who enters into an agreement with a seller under this paragraph to refer 
customers by a link on an Internet website is not required to register or collect taxes 
under this Part solely because of the existence of the agreement. 
Sec. 5.  36 MRSA §4102, sub-§6, ¶C, as enacted by PL 2011, c. 380, Pt. M, §9, 
is amended to read: 
C.  With respect to which an election is made, on a return timely filed with the 
assessor, to treat the property as Maine qualified terminable interest property for 
purposes of the tax imposed by this chapter.  The amount of property with respect to 
which the election is made may not be less than zero or greater than the amount by 
which the federal applicable exclusion amount under the Code, Section 2010 exceeds 
the Maine exclusion amount.  For the purposes of this paragraph, "federal applicable 
exclusion amount" does not include any deceased spousal unused exclusion amount 
under the Code, Section 2810 2010. 
Sec. 6.  36 MRSA §4109, sub-§1, as enacted by PL 2011, c. 380, Pt. M, §9, is 
amended to read: 
1.  Deferred payment arrangement.  If the United States Internal Revenue Service 
has approved a federal estate tax deferral and installment payment arrangement under the 
Code, Section 6166, the personal representative may elect a similar deferred payment 
arrangement under this section for payment of the tax imposed by this chapter, subject to 
acceptance by the assessor. The assessor may approve a deferral and installment 
arrangement under similar circumstances and on similar terms with respect to an estate of 
a decedent dying after December 31, 2011 2012 that does not incur a federal estate tax. 
Sec. 7.  36 MRSA §5122, sub-§2, ¶M-1, as enacted by PL 2011, c. 657, Pt. R, §2 
and affected by §3, is amended to read: 
M-1.  For tax years beginning on or after January 1, 2014, for each individual who is 
a primary recipient of retirement plan benefits under an employee retirement plan or 
an individual retirement account, an amount that is the lesser of the aggregate of 
retirement plan benefits under employee retirement plans or individual retirement 
accounts included in the individual's federal adjusted gross income and the pension 
deduction amount reduced by the total amount of the individual's social security 
benefits and railroad retirement benefits paid by the United States, but not less than 
$0.  The social security benefits and railroad retirement benefits reduction does not 
apply to benefits paid under a military retirement plan. 
For purposes of this paragraph, the following terms have the following meanings. 
(1)  "Employee retirement plan" means a state, federal or military retirement plan 
or any other retirement benefit plan established and maintained by an employer 
for the benefit of its employees under the Code, Section 401(a), Section 403 or 
Section 457(b), except that distributions made pursuant to a Section 457(b) plan 
are not eligible for the deduction provided by this paragraph if they are made 
prior to age 55 and are not part of a series of substantially equal periodic 
payments made for the life of the primary recipient or the joint lives of the 
primary recipient and that recipient's designated beneficiary.   
(2)  "Individual retirement account" means an individual retirement account 
under Section 408 of the Code, a Roth IRA under Section 408A of the Code, a 
simplified employee pension under Section 408(k) of the Code or a simple 
retirement account for employees under Section 408(p) of the Code. 
(3)  "Military retirement plan" means retirement plan benefits received as a result 
of service in the active or reserve components of the Army, Navy, Air Force, 
Marines or Coast Guard. 
(4)  "Pension deduction amount" means $10,000 for tax years beginning on or 
after January 1, 2014. 
(5)  "Primary recipient" means the individual upon whose earnings or 
contributions the retirement plan benefits are based or the surviving spouse of 
that individual. 
(6)  "Retirement plan benefits" means employee retirement plan benefits, except 
pick-up contributions for which a subtraction is allowed under paragraph E, 
reported as pension or annuity income for federal income tax purposes and 
individual retirement account benefits reported as individual retirement account 
distributions for federal income tax purposes.  "Retirement plan benefits" does 
not include distributions that are subject to the tax imposed by the Code, Section 
72(t); 
Sec. 8.  36 MRSA §5122, sub-§2, ¶X, as amended by PL 2007, c. 466, Pt. A, §67 
and affected by §70, is further amended to read: 
X.   The taxpayer's pro rata share of an amount that was previously added back to 
federal taxable income pursuant to section 5200-A, subsection 1, paragraph N; 
section 5200-A, subsection 1, paragraph T; section 5200-A, subsection 1, paragraph 
Y, subparagraph (2); or section 5200-A, subsection 1, paragraph AA, subparagraph 
(2) by an S a corporation of which the taxpayer is a shareholder and by which, absent 
the an S corporation election, the corporation could have reduced its federal taxable 
income for the taxable year pursuant to section 5200-A, subsection 2, paragraph M, 
R, V or Y; 
Sec. 9.  36 MRSA §5251, as amended by PL 2007, c. 437, §19 and affected by 
§22, is further amended to read: 
§5251.  Information statement 
Every person who is required to deduct and withhold tax under this Part, or who 
would have been required to deduct and withhold tax if an employee had claimed no 
more than one withholding exemption, shall furnish a written statement as prescribed by 
the assessor to each person in respect to the items of income subject to withholding paid 
to that person during the calendar year on or before January 31st of the succeeding year, 
or, in the case of an employee who is terminated before the close of the calendar year, 
within 30 days from the date of receipt of a written request from the employee if that 30-
day period ends before January 31st.  The assessor may establish an alternative due date 
for providing a written statement under this section that is consistent with the due date for 
the related federal statement.  The statement must show the amount of wages paid by the 
employer to the employee or, in the case of withholding pursuant to sections 5250-B and 
5255-B, the total items of income that were subject to withholding, the amount deducted 
and withheld as tax and such other information as the assessor requires. 
Sec. 10.  36 MRSA §6901, sub-§2, as amended by PL 2011, c. 240, §45 and 
affected by §47, is further amended to read: 
2.  Certified production wages.  "Certified production wages" means wages subject 
to withholding under section 5250, subsection 1 that are paid by a visual media 
production company for work on a certified visual media production.  "Certified 
production wages" includes, an amount paid to a temporary employee-leasing company 
for personal services rendered in this State by a leased employee in connection with a 
certified visual media production and, an amount paid for the services of a performing 
artist working in the State in connection with a certified visual media production and 
other contractual payments for the services of individuals working in the State in 
connection with a certified visual media production.  "Certified production wages" 
includes only the first $50,000 paid to or with respect to a particular individual for 
personal services rendered in connection with a particular certified visual media 
production. 
Sec. 11.  Retroactive application.  That section of this Act that amends the 
Maine Revised Statutes, Title 25, section 2399, 2nd paragraph applies retroactively to the 
fire risk allocation determination required for tax periods beginning on or after January 1, 
2014. 
SUMMARY 
This bill makes the following changes to the tax laws. 
It clarifies that the State Tax Assessor is allowed to review veterans' property tax 
exemption applications on file at the municipal assessor's office in order to determine that 
exemptions have been properly allowed and to be able to determine the amount of 
reimbursement a municipality is entitled to receive. 
It clarifies that the term "tangible personal property" includes any product transferred 
electronically as that term is defined in Maine sales and use tax law. 
It clarifies sales and use tax seller registration law as it relates to persons 
presumptively required to register. 
It clarifies that the updated allocation rates for the fire investigation and prevention 
tax apply for 5 years following the year of determination.  The Department of 
Professional and Financial Regulation, Bureau of Insurance is required to make the 
determination every 5 years.  The first such determination occurred in 2013 and applies to 
the subsequent 5 years. 
It corrects an erroneous reference to the United States Internal Revenue Code of 
1986, as amended, and an erroneous date reference. 
It clarifies that benefits paid under a military retirement plan are retirement plan 
benefits for purposes of modifying federal adjusted gross income. 
It corrects an oversight relating to the recapture of bonus depreciation add-back 
modifications.  In 2006, the Second Regular Session of the 122nd Legislature enacted the 
Maine Revised Statutes, Title 36, section 5122, subsection 2, paragraph X to allow 
shareholders of an electing S corporation to recapture the bonus depreciation add-back 
claimed by the entity as a C corporation under Title 36, section 5200-A, subsection 1, 
paragraph N.  The Federal Government extended the bonus depreciation deduction for tax 
years beginning in 2011, 2012 and 2013.  Maine has not conformed to those provisions 
but allows the recapture of the add-back modifications in years subsequent to the year of 
the add-back.  However, Title 36, section 5122, subsection 2, paragraph X has not been 
updated to allow shareholders of electing S corporations to recapture the add-back 
amounts required of C corporations in those years; this bill corrects the oversight.  Maine 
law provides similar treatment for electing S corporation shareholders with respect to the 
recapture of disallowed net operating loss carry-back deductions. 
It authorizes the State Tax Assessor to establish an alternative due date for an 
information statement with respect to tax withholding as long as the date established by 
the assessor is consistent with the due date of the related federal statement.  This 
authorization is needed because some federal information statements affecting the Maine 
filing requirement have due dates occurring after January 31st.  Current Maine law 
requires that all Maine information statements be provided no later than January 31st. 
It clarifies that the payments other than wages that qualify for the visual media 
production reimbursement do not need to be subject to withholding in order to qualify for 
the reimbursement.