An Act To Improve the Effectiveness of the Major Business Headquarters Expansion Tax Credit
Maine Legislature, Session 128, LD 1903
Committee: Taxation
Amends: 36 MRSA §5219-Q

Legislative Document
No. 1903
S.P. 733
In Senate, April 9, 2018
An Act To Improve the Effectiveness of the Major Business 
Headquarters Expansion Tax Credit
Reported by Senator DOW of Lincoln for the Joint Standing Committee on Taxation 
pursuant to Public Law 2017, chapter 297, section 3.
Reference to the Committee on Taxation suggested and ordered printed pursuant to Joint 
Rule 218.
HEATHER J.R. PRIEST
Secretary of the Senate
Be it enacted by the People of the State of Maine as follows:
Sec. 1.  36 MRSA §5219-QQ, as corrected by RR 2017, c. 1, §33, is amended to 
read:
§5219-QQ.  Credit for major business headquarters expansions
1.  Definitions.  As used in this section, unless the context otherwise indicates, the 
following terms have the following meanings.
A.  "Certified applicant" means a qualified applicant that has received a certificate of 
approval from the commissioner pursuant to this section.
A-1.  "Base level of employment" means either the total employment of a qualified 
applicant as of the March 31st, June 30th, September 30th and December 31st of the 
calendar year immediately preceding the application for a certificate of approval 
under subsection 2 divided by 4 or the qualified applicant's average employment 
during the base period, whichever is greater.
A-2.  "Base period" means the 3 calendar years prior to the year in which a qualified 
applicant's application for a certificate of approval under subsection 2 is approved by 
the commissioner.
B.  
"Commissioner" means the Commissioner of Economic and Community 
Development.
C.  "Employees based in the State" means employees that perform more than 50% of 
employee-related activities for the employer at the headquarters in the State.
D.  "Facility" means one or more buildings and includes the real and personal 
property located in those buildings.
E.  "Full-time" means an average of 36 hours weekly during the period of 
measurement.
F.  "Headquarters" means the principal facility from which the applicant directs its 
national or global business activities, as determined by the commissioner at the time 
of application.
G.  "Qualified applicant" means an applicant that, at the time an application for a 
certificate of approval is submitted, satisfies all of the following criteria:
(1)  The applicant's headquarters are or will be located in the State;
(2)  The applicant employs at least 5,000 full-time employees worldwide of 
which at least 25% are or will be based in this the State;
(3)  The applicant has business locations in at least 3 other states or foreign 
countries; and
(4)  The applicant intends to make a qualified investment in the State within 5 
years following the date of the application.
H.  "Qualified investment" means an investment of at least $35,000,000 to design, 
permit, construct, modify, equip or expand the applicant's headquarters in the State.  
The investments and activities of a qualified applicant and other entities that are 
members of the qualified applicant's unitary business must be aggregated to 
determine whether a qualified investment has been made.  A qualified investment 
does not include an investment made prior to the issuance of a certificate of approval 
or after December 31, 2022.
2.  Procedures for application; certificate of approval.  The provisions of this 
subsection govern the procedures for providing for and obtaining a certificate of 
approval.
A.  A qualified applicant may apply to the commissioner for a certificate of approval. 
An applicant shall submit to the commissioner information demonstrating that the 
applicant is a qualified applicant.  If a certified applicant undertakes to make an 
additional qualified investment, the certified applicant may apply to the 
commissioner for an additional certificate of approval.
B.  The commissioner, within 30 days of receipt of an application submitted pursuant 
to paragraph A, shall determine whether the applicant is a qualified applicant and 
shall issue either a certificate of approval or a written denial indicating why the 
applicant is not qualified. The certificate issued by the commissioner must describe 
the qualified investment and specify the total amount of qualified investment 
approved under the certificate.
C.  Upon issuance of a certificate of completion in accordance with paragraph F, the 
commissioner shall issue, on behalf of the State, a memorandum to the qualified 
applicant describing the benefits provided by this section at the time the certificate of 
completion is issued. The memorandum must provide that the certificate of 
completion does not prohibit the commissioner from revoking a certificate in 
accordance with paragraph E and does not prohibit the assessor from assessing and 
collecting an overpaid benefit in accordance with the provisions of this Title.
D.  A certified applicant shall obtain approval from the commissioner to transfer the 
certificate of approval or, if the certified applicant has obtained a certificate of 
completion, that certificate of completion to another person.  A certificate of approval 
or certificate of completion may be transferred only if all or substantially all of the 
assets of the certified applicant are, or will be, transferred to that person or if 50% or 
more of the certified applicant's voting stock is, or will be, acquired by that person. 
The commissioner shall approve the transfer of the certificate of approval or the 
certificate of completion only if at least one of the following conditions is satisfied:
(1)  The transferee is a member of the applicant's unitary affiliated group at the 
time of the transfer; or
(2)  The commissioner finds that the transferee will, and has the capacity to, 
maintain operations of the headquarters in the State in a manner that meets the 
minimum qualifications for continued eligibility of benefits under this section 
after the transfer occurs. 
If the commissioner approves the transfer of the certificate, the transferee, from the 
date of the transfer, must be treated as the certified applicant and as eligible to claim 
any remaining benefit under the certificate of approval or the certificate of 
completion that has not been previously claimed by the transferor as long as the 
transferee meets the same eligibility requirements and conditions for the credit as 
applied to the original certified applicant.
E.  The commissioner must revoke a certificate of approval if the certified applicant 
or a person to whom a certificate of approval has been transferred pursuant to 
paragraph D fails to make a qualified investment within 5 years of the date of the 
certificate of approval.  The commissioner shall revoke a certificate of approval or a 
certificate of completion if the applicant ceases operations of the headquarters in the 
State or the certificate of approval or certificate of completion is transferred to 
another person without approval from the commissioner pursuant to paragraph D.  A 
certified applicant whose certificate of completion is revoked within 5 years after the 
date issued shall within 60 days following revocation of the certificate return to the 
State an amount equal to the total credits claimed under this section. A certified 
applicant whose certificate of completion is revoked during the period from 6 years 
after through 10 years after the date the certificate was issued shall within 60 days 
following revocation of the certificate return to the State an amount equal to the total 
credits claimed under this section for the period from 6 years after through 10 years 
after the date the certificate was issued.  If credit amounts are recaptured after a 
certificate of approval has been transferred as provided in paragraph D, the transferee 
is responsible for payment of any credit amounts that must be returned to the State.
F.  Upon making the qualified investment and completing the headquarters and 
employment criteria in subsection 1, paragraph G, a certified applicant shall submit 
an application to the commissioner for a certificate of completion.  
If the 
commissioner determines that a qualified investment has been made, the applicant's 
headquarters is located in the State and at least 25% of the applicant's full-time 
employees, as measured at the time of application for the certificate of approval, are 
based in the State, the commissioner shall issue a certificate of completion to the 
certified applicant as soon as is practical.  The certificate of completion must state the 
amount of qualified investment made by the certified applicant.
The commissioner may not issue certificates of approval under this subsection that total, 
in the aggregate, more than $100,000,000 of qualified investment or any individual 
certificate of approval for more than $40,000,000 of qualified investment.
3.  Refundable credit allowed.  A qualified certified applicant is allowed a credit as 
provided in this subsection.
A.  Subject to the limitations under paragraph B, beginning with the tax year during 
which the certificate of completion is issued or the tax year beginning in 2020, 
whichever is later, and for each of the following 19 tax years, a certified applicant is 
allowed a credit against the tax due under this Part for the taxable year in an amount 
equal to 2% of the certified applicant's qualified investment amount of actual 
qualified investment specified on the certified applicant's certificate of completion 
under subsection 2, paragraph F or the amount of qualified investment approved by 
the commissioner in the certificate of approval under subsection 2, paragraph B, 
whichever is less.  The credit allowed under this paragraph is refundable.
B.  The credit under this subsection is limited as follows:
(1)  A credit is not allowed for any tax year during which the taxpayer does not 
meet or exceed the following employment targets as measured on the last day of 
the tax year.
(a)  For each of the first 10 tax years for which the credit is claimed, there 
must be a total of at least 80 additional full-time employees based in the State 
above the certified applicant's base level of employment whose jobs were 
added since the first day of the first tax year for which the credit was claimed 
multiplied by the number of years for which the credit has been claimed.
(b) For each tax year after the 10th tax year for which the credit is claimed, 
the taxpayer must employ a total of at least 800 additional full-time 
employees based in the State above the certified applicant's base level of 
employment whose jobs were added since the first day of the first tax year 
for which the credit was claimed.
Jobs for additional full-time employees that are counted for determining 
eligibility for the credit under one certificate of completion may not be counted 
for determining eligibility for the credit under a separate certificate of 
completion.
(2)  Cumulative credits under this subsection may not exceed $16,000,000 under 
any one certificate.
4.  Reporting required.  A certified applicant and the commissioner are required to 
make reports pursuant to this subsection.
A.  On or before March 1st of each year, a certified applicant shall file a report with 
the commissioner for the tax year ending during the immediately preceding calendar 
year, referred to in this paragraph as "the report year," containing the following 
information: 
(1)  The number of all full-time employees based in this the State of the certified 
applicant on the last day of the tax year ending during the calendar year 
immediately preceding the report year; and
(2)  The incremental amount of qualified investment made in the report year.;
(3)  The total number of additional full-time employees added in the State by the 
certified applicant above the certified applicant's base level of employment since 
the date a certificate of approval was issued;
(4) The incremental number of additional full-time employees added in the State 
by the certified applicant above the certified applicant's base level of employment 
during the report year;
(5)  The average and median wages of all additional full-time employees above 
the certified applicant's base level of employment in the State whose jobs were 
added since the first day of the first tax year for which the credit was claimed; 
and
(6) The percentage and number of all additional full-time employees above the 
certified applicant's base level of employment who have access to retirement 
benefits and health benefits.
The commissioner may prescribe forms for the annual report described in this 
paragraph.  The commissioner shall provide copies of the report to the State Tax 
Assessor and to the joint standing committee of the Legislature having jurisdiction 
over taxation matters at the time the report is received.
B.  By April 1st of each year, the commissioner shall report to the joint standing 
committee of the Legislature having jurisdiction over taxation matters aggregate data 
on employment levels and qualified investment amounts of certified applicants for 
each year that the certified applicant claimed a credit under this section, and the State 
Tax Assessor shall report to the committee the revenue loss during the previous 
calendar year, including the loss due to refundable credits, as a result of this section 
for each taxpayer claiming the credit.
Notwithstanding any other provision of law to the contrary, the reports provided under 
this subsection are public records as defined in Title 1, section 402, subsection 3.
5.  Evaluation; specific public policy objective; performance measures.  The 
credit provided under this section is subject to ongoing legislative review in accordance 
with Title 3, chapter 37. In developing evaluation parameters to perform the review, the 
Office of Program Evaluation and Government Accountability, the joint legislative 
committee established to oversee program evaluation and government accountability 
matters and the joint standing committee of the Legislature having jurisdiction over 
taxation matters shall consider:
A.  That the specific public policy objective of the credit provided under this section 
is to create and retain high-quality jobs in the State by encouraging major businesses 
to locate their headquarters in the State or to expand their headquarters in the State.  
For purposes of this subsection, "high-quality jobs" means jobs for which health 
insurance benefits and retirement benefits are available; and
B.  Performance measures, including, but not limited to:
(1)  The number of additional full-time employees added during a period being 
reviewed and how employment during that period compares to the minimum 
employment requirements set forth in subsection 3, paragraph B;
(2)  The amount of qualified investment during a period being reviewed, and how 
expenditures compare to the minimum level of expenditure set forth in subsection 
1, paragraph H;
(3)  The change in the number of major business headquarters located in the State 
and the number of expansions of those headquarters during a period being 
reviewed;
(4)  Measures of fiscal impact and overall economic impact to the State; and
(5)  The number of new employees for whom health benefits and retirement 
benefits are available.
SUMMARY
This bill makes the following changes to improve the effectiveness of the income tax 
credit for major business expansions.
1.  It provides that the number of additional employees that must be added by a 
certified applicant must be determined based on the number of qualifying employees 
above the certified applicant's base level of employment.
2.  It provides that a certificate of completion issued by the Commissioner of 
Economic and Community Development must state the amount of the qualified 
investment  made by the certified applicant, and it clarifies that the credit is 2% of the 
lesser of the amount of actual qualified investment specified in the certified applicant's 
certificate of completion and the amount of qualified investment approved in the 
certificate of approval.
3.  It amends  reporting requirements and establishes evaluation guidance to improve 
the future review of the credit under the Maine Revised Statutes, Title 3, chapter 37 by 
the Office of Program Evaluation and Government Accountability, the joint legislative 
committee established to oversee program evaluation and government accountability 
matters and the joint standing committee of the Legislature having jurisdiction over 
taxation matters.
4.  It clarifies that, if a certificate of approval has been transferred, the transferee is 
responsible for any repayment obligations if there is a recapture of credit amounts.
FISCAL NOTE REQUIRED
(See attached)
Approved: 04/05/18
LD     
LR 2996(01)
Fiscal Detail and Notes
Additional costs to the Legislature's Office of Program Evaluation and Government Accountability and the 
Departments of Administrative and Financial Services and  Economic and Community Development can be absorbed 
within existing budgeted resources.
Fiscal Note Required: Yes
Fiscal Note
Minor cost increase - General Fund
An Act To Improve the Effectiveness of the Major Business Headquarters Expansion Tax Credit
Fiscal Note for Original Bill
Committee: Taxation
LR2996(01) - Fiscal Note - Page 1 of 1