An Act To Improve the Maine Tree Growth Tax Law Program
Maine Legislature, Session 127, LD 1691
Committee: Taxation
Sponsors: STANLEY
Amends: 36 MRSA §572, 36 MRSA §573, 36 MRSA §574-B, 36 MRSA §575-A, 36 MRSA §578, 36 MRSA §581, 36 MRSA §581-A, 36 MRSA §5219-O

Legislative Document 
No. 1691 
H.P. 1157 
House of Representatives, March 31, 2016 
An Act To Improve the Maine Tree Growth Tax Law Program 
Reference to the Committee on Taxation suggested and ordered printed. 
ROBERT B. HUNT 
Clerk 
Presented by Representative STANLEY of Medway.  (GOVERNOR'S BILL) 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1.  36 MRSA §572, last ¶, as enacted by PL 1971, c. 616, §8, is amended to 
read: 
Therefore, this subchapter is enacted for the purpose of taxing forest lands generally 
suitable for the planting, culture, harvesting and continuous growth of forest products on 
the basis of their potential for annual wood production in accordance with the following 
provisions. 
Sec. 2.  36 MRSA §573, sub-§3-B, as enacted by PL 1995, c. 236, §3, is amended 
to read: 
3-B.  Forest products that have commercial value.  "Forest products that have 
commercial value" means logs, pulpwood, veneer, bolt wood, wood chips, stud wood, 
poles, pilings, biomass, or fuel wood, Christmas trees, maple syrup, nursery products 
used for ornamental purposes, wreaths, bough material or cones or other seed products. 
Sec. 3.  36 MRSA §574-B, as amended by PL 2011, c. 618, §2, is further amended 
by adding at the beginning a new paragraph to read: 
The provisions of this subchapter do not apply to a parcel of land smaller than 25 
acres of forest land or to a parcel of land any part of which is located within 10 miles of 
the Atlantic Ocean; except that this subchapter applies to a parcel of land that is at least 
acres in size and that was enrolled under this subchapter prior to April 1, 2017 as long 
as no part of that parcel of land is located within 10 miles of the Atlantic Ocean. 
Sec. 4.  36 MRSA §574-B, first ¶, as amended by PL 2011, c. 618, §2, is further 
amended to read: 
An owner of a parcel containing forest land may apply at the landowner's election by 
filing with the assessor the schedule provided for in section 579, except that this 
subchapter does not apply to any parcel containing less than 10 acres of forest land. For 
purposes of this subchapter, a parcel is deemed to include a unit of real estate, 
notwithstanding that it is divided by a road, way, railroad or pipeline, or by a municipal 
or county line.  The election to apply requires the written consent of all owners of an 
interest in a parcel except for the State.  For applications submitted on or after August 1, 
2012, the size of the exclusion from classification under this subchapter for each structure 
located on the parcel and for each residential structure located on the parcel in shoreland 
areas is determined pursuant to section 574-C. 
Sec. 5.  36 MRSA §574-B, sub-§1, as amended by PL 2009, c. 434, §15, is 
further amended to read: 
1.  Forest management and harvest plan.  A forest management and harvest plan 
setting forth a description of the parcel and a schedule for the planting, culture, harvesting 
and continuous growth of forest products on the land must be prepared for each parcel 
and updated every 10 years.  The landowner shall file a sworn statement with the 
municipal assessor for a parcel in a municipality or with the State Tax Assessor for a 
parcel in the unorganized territory that a forest management and harvest plan has been 
prepared for the parcel. When requested by the municipal assessor, the State Tax 
Assessor or the Bureau of Forestry, the landowner shall provide a copy of the plan, and 
any plan that has expired within 2 years of the request, to facilitate review of and 
compliance with the plan; 
Sec. 6.  36 MRSA §574-B, sub-§2, as amended by PL 2011, c. 618, §2, is further 
amended to read: 
2.  Evidence of compliance with plan.  The landowner must comply with the plan 
developed under subsection 1, and must submit, every 10 years to the municipal assessor 
in a municipality or the State Tax Assessor for parcels in the unorganized territory, a 
sworn statement from a licensed professional forester that the landowner is making a 
reasonable effort in managing the parcel according to schedules in the plan required 
under subsection 1; 
Sec. 7.  36 MRSA §575-A, sub-§3 is enacted to read: 
3.  Review of forest management and harvest plan by Bureau of Forestry.  The 
Director of the Bureau of Forestry within the Department of Agriculture, Conservation 
and Forestry is authorized to review the forest management and harvest plan of any parcel 
enrolled under this subchapter to determine whether the plan complies with this 
subchapter and whether the landowner is making a reasonable effort to manage the parcel 
according to the schedules in that plan. 
A.  For the purposes of this subsection, the Director of the Bureau of Forestry or the 
director's designee may: 
(1)  With appropriate notification to the landowner, enter and examine forest land 
for the purpose of determining compliance with the forest management and 
harvest plan pursuant to section 574-B; 
(2)  Request and review a forest management and harvest plan required under 
section 574-B, which must be provided by a landowner or the landowner's agent 
upon request; and 
(3)  Request and review an expired forest management and harvest plan, which 
must be provided by a landowner or the landowner's agent upon request. 
B.  If the Bureau of Forestry determines that a landowner is not in substantial 
compliance with this subchapter or that a parcel is not being managed in substantial 
compliance with a plan developed under subsection 1, the Bureau of Forestry shall 
provide notice of its determination to that landowner and notice that the landowner 
has 120 days to come into substantial compliance with this subchapter and to bring 
the parcel into substantial compliance with the plan.  If the landowner fails to come 
into substantial compliance or to bring the parcel into substantial compliance by the 
end of the 120 days, the Bureau of Forestry shall report the noncompliance to the 
assessor for that parcel who, pursuant to section 581, shall withdraw the land from 
taxation under this subchapter. 
A forest management and harvest plan provided to the Director of the Bureau of Forestry 
or the director's designee under this subsection is confidential. Information collected 
pursuant to this subsection is confidential and is not a public record as defined in Title 1, 
section 402, subsection 3, except that the director may publish at least one summary 
report annually, which may not reveal the activities of any person and that is available as 
a public record. 
This subsection is repealed on March 31, 2020. 
Sec. 8.  36 MRSA §578, sub-§1, as amended by PL 2011, c. 404, §1, is further 
amended to read: 
1.  Organized areas.  The municipal assessors or chief assessor of a primary 
assessing area shall adjust the State Tax Assessor's 100% valuation per acre for each 
forest type of their county by whatever ratio, or percentage of current just value, is 
applied to other property within the municipality to obtain the assessed values.  Forest 
land in the organized areas, subject to taxation under this subchapter, must be taxed at the 
property tax rate applicable to other property in the municipality. 
The State Tax Assessor shall determine annually the amount of acreage in each 
municipality that is classified and taxed in accordance with this subchapter.  Each 
municipality is entitled to annual payments distributed in accordance with this section 
from money appropriated by the Legislature if it submits an annual return in accordance 
with section 383 and if it achieves the minimum assessment ratio established in section 
327.  The State Tax Assessor shall pay any municipal claim found to be in satisfactory 
form by August 1st of the year following the submission of the annual return.  The 
municipal reimbursement appropriation is calculated on the basis of 90% of the per acre 
tax revenue lost as a result of this subchapter.  For property tax years based on the status 
of property on April 1, 2008 and April 1, 2009, municipal reimbursement under this 
section is further limited to the amount appropriated by the Legislature and distributed on 
a pro rata basis by the State Tax Assessor for all timely filed claims.  For purposes of this 
section, "classified forest lands" means forest lands classified pursuant to this subchapter 
as well as all areas identified as forested land within farmland parcels that are transferred 
from tree growth classification pursuant to section 1112 on or after October 1, 2011. For 
the purposes of this section, the tax lost is the tax that would have been assessed, but for 
this subchapter, on the classified forest lands if they were assessed according to the 
undeveloped acreage valuations used in the state valuation then in effect, or according to 
the current local valuation on undeveloped acreage, whichever is less, minus the tax that 
was actually assessed on the same lands in accordance with this subchapter, and adjusted 
for the aggregate municipal savings in required educational costs attributable to reduced 
state valuation.  A municipality that fails to achieve the minimum assessment ratio 
established in section 327 loses 10% of the reimbursement provided by this section for 
each one percentage point the minimum assessment ratio falls below the ratio established 
in section 327.  The State Tax Assessor may not make payment pursuant to this 
subchapter to a municipality in the year following notification by the Bureau of Forestry 
that the municipality has failed to remove a parcel from enrollment under this subchapter 
pursuant to the requirements under section 575-A, subsection 3. 
The State Tax Assessor shall adopt rules necessary to implement the provisions of this 
section.  Rules adopted pursuant to this subsection are routine technical rules for the 
purposes of Title 5, chapter 375, subchapter 2-A. 
C.  The State Tax Assessor shall distribute reimbursement under this section to each 
municipality in proportion to the product of the reduced tree growth valuation of the 
municipality multiplied by the property tax burden of the municipality.  For purposes 
of this paragraph, unless the context otherwise indicates, the following terms have the 
following meanings. 
(1)  "Property tax burden" means the total real and personal property taxes 
assessed in the most recently completed municipal fiscal year, except the taxes 
assessed on captured value within a tax increment financing district, divided by 
the latest state valuation certified to the Secretary of State. 
(2)  "Undeveloped land" means rear acreage and unimproved nonwaterfront 
acreage that is not: 
(a)  Classified under the laws governing current use valuation set forth in 
chapter 105, subchapter 2-A, 10 or 10-A; 
(b)  A base lot; or 
(c)  Waste land. 
(3)  "Average value of undeveloped land" means the per acre undeveloped land 
valuations used in the state valuation then in effect, or according to the current 
local valuation on undeveloped land as determined for state valuation purposes, 
whichever is less. 
(4)  "Reduced tree growth valuation" means the difference between the average 
value of undeveloped land and the average value of tree growth land times the 
total number of acres classified as forest land under this subchapter plus the total 
number of acres of forest land that is transferred from tree growth classification 
to farmland classification pursuant to section 1112 on or after October 1, 2011. 
Sec. 9.  36 MRSA §581, sub-§2-A is enacted to read: 
2-A.  Parcels smaller than 25 acres.  A landowner of a parcel of land smaller than 
acres that was taxed pursuant to this subchapter for a property tax year beginning 
before April 1, 2017 may: 
A.  Following withdrawal of that parcel from classification under this subchapter, by 
April 1, 2017 apply for classification of that parcel under the open space land laws 
pursuant to section 1106-A; or 
B.  Notwithstanding subsection 3, withdraw that parcel from tree growth 
classification under this subchapter for the 2017 tax year.  A landowner who elects to 
withdraw the parcel pursuant to this paragraph shall: 
(1)  Withdraw the entire parcel subject to tree growth classification in 2016 from 
classification under this subchapter for the 2017 tax year; 
(2)  Notify the assessor for that parcel before April 1, 2017 of the intent to 
withdraw the parcel; and 
(3)  Pay a penalty equal to the taxes that would have been assessed on the first 
day of April for the 5 tax years, or the number of tax years starting with the year 
in which the property was first classified, whichever is less, preceding the 
withdrawal had that parcel been assessed in each of those years at its fair market 
value on the date of withdrawal, less all taxes paid on that parcel over the 
preceding 5 years or the number of tax years starting with the year in which the 
property was first classified, whichever is less, and interest at the legal rate from 
the date or dates on which those amounts would have been payable. 
Sec. 10.  36 MRSA §581, sub-§2-B is enacted to read: 
2-B.  Parcels within 10 miles of the Atlantic Ocean.  A landowner of a parcel of 
land, any part of which is within 10 miles of the Atlantic Ocean, that was taxed pursuant 
to this subchapter for a property tax year beginning before April 1, 2017 shall: 
A.  By April 1, 2017, withdraw that parcel from classification under this subchapter 
and apply for classification of that parcel under the open space land laws pursuant to 
section 1106-A; or 
B.  Notwithstanding subsection 3, withdraw that parcel from tree growth 
classification under this subchapter for the 2017 tax year.  A landowner who elects to 
withdraw the parcel pursuant to this paragraph shall: 
(1)  Withdraw the entire parcel subject to tree growth classification in 2016 from 
classification under this subchapter for the 2017 tax year; 
(2)  Notify the assessor for that parcel before April 1, 2017 of the intent to 
withdraw the parcel; and 
(3)  Pay a penalty equal to the taxes that would have been assessed on the first 
day of April for the 5 tax years, or the number of tax years starting with the year 
in which the property was first classified, whichever is less, preceding the 
withdrawal had that parcel been assessed in each of those years at its fair market 
value on the date of withdrawal, less all taxes paid on that parcel over the 
preceding 5 years or the number of tax years starting with the year in which the 
property was first classified, whichever is less, and interest at the legal rate from 
the date or dates on which those amounts would have been payable. 
Sec. 11.  36 MRSA §581-A, as amended by PL 2001, c. 305, §1 and affected by 
§2, is repealed and the following enacted in its place: 
§581-A.  Sale of portion of parcel of forest land 
1.  Sales before April 1, 2017.  For sales occurring before April 1, 2017, the sale of a 
portion of a parcel of forest land subject to taxation under this subchapter does not affect 
the taxation under this subchapter of the resulting parcels, unless any is less than 10 
forested acres in area.  Each resulting parcel must be taxed to the owners under this 
subchapter until the parcel is withdrawn from taxation under this subchapter, in which 
case the penalties provided for in sections 579 and 581 apply only to the owner of that 
parcel.  If a parcel resulting from that sale is less than 10 forested acres in area, that parcel 
must be considered withdrawn from taxation under this subchapter as a result of the sale 
and the penalty assessed against the transferor of the resulting parcel of less than 10 
forested acres. 
2.  Sales or transfers occurring on or after April 1, 2017.  For sales or other 
transfers occurring on or after April 1, 2017, the sale or transfer of a portion of a parcel of 
forest land subject to taxation under this subchapter does not affect the taxation under this 
subchapter of the resulting parcels, unless any is less than 25 forested acres in area. Each 
resulting parcel must be taxed to the owners under this subchapter until the parcel is 
withdrawn from taxation under this subchapter, in which case the penalties provided for 
in sections 579 and 581 apply only to the owner of that parcel. If a parcel resulting from 
that sale or transfer is less than 25 forested acres in area, that parcel must be considered 
withdrawn from taxation under this subchapter as a result of the sale or transfer and the 
penalty assessed against the transferor of the resulting parcel of less than 25 forested 
acres. 
Sec. 12.  36 MRSA §5219-OO is enacted to read: 
§5219-OO.  Credit for timber harvesting 
For taxable years beginning on or after January 1, 2016, an individual who directly 
owns more than 25 acres but less than 100 acres of land in the aggregate in this State is 
allowed a credit against the tax imposed by this Part.  The credit is equal to 8% of the 
amount constituting the gain, if any, associated with the cutting of timber on that 
taxpayer's land in this State that is included in the taxpayer's federal adjusted gross 
income for the taxable year as farm income or as a capital gain.  The credit allowed under 
this section may not reduce the tax otherwise due under this Part to less than zero. 
SUMMARY 
This bill makes the following changes to the Maine Tree Growth Tax Law. 
1.  It includes harvesting as an expressly stated activity for land in the Maine Tree 
Growth Tax Law program. 
2.  It removes certain items from the definition of "forest products that have 
commercial value" under the Maine Tree Growth Tax Law program. 
3.  It increases the minimum parcel size from 10 acres to 25 acres for the Maine Tree 
Growth Tax Law program for parcels enrolled on or after April 1, 2017.  It disqualifies 
from participation in the program any parcel of land that is located within 10 miles of the 
Atlantic Ocean, beginning April 1, 2017.  In the case of a sale or other transfer of 
qualifying parcels occurring on or after April 1, 2017, it requires the withdrawal of any 
resulting parcels of less than 25 acres. It provides an alternative method for withdrawal 
from the program for parcels smaller than 25 acres for the 2017 tax year and allows for 
the owners of parcels to apply for classification under the open space land laws. 
4. It authorizes the Bureau of Forestry in the Department of Agriculture, 
Conservation and Forestry to audit parcels of land enrolled in the Maine Tree Growth Tax 
Law program to ensure compliance of the landowner with the requirements of the 
program and that the parcel is being managed in substantial compliance with the forest 
management and harvest plan for that parcel.  The bureau is required to order the removal 
from the program of any parcel that is not substantially compliant with the requirements 
of the program. 
5.  It requires the State Tax Assessor to deny reimbursement to a municipality if any 
parcel of land enrolled in the Maine Tree Growth Tax Law program is not compliant with 
the program. 
This bill also enacts a credit for certain individuals that harvest trees on Maine land.  
An individual who owns 25 acres or less or 100 acres or more of Maine land does not 
qualify for the credit.  The harvesting of trees on Maine land owned by a corporation or a 
pass-through entity does not qualify for the credit.  The credit is equal to 8% of the gain 
associated with the harvesting of the trees to the extent the gain is included in the 
taxpayer's federal adjusted gross income.  The credit is not refundable and any unused 
credit amount may not be carried to any other tax year.  The credit applies to tax years 
beginning on or after January 1, 2016.