An Act To Create and Sustain Jobs through Development of Cooperatives and Employee-owned Businesses
Maine Legislature, Session 128, LD 1338
Committee Amendment CA_A_H767 (House)
Amends: 36 MRSA §191, 36 MRSA §199, 36 MRSA §5206, 36 MRSA §5206-D

COMMITTEE AMENDMENT "/J " to H.P. 932, L.D. 1338, Bill, "An Act To 
Create and Sustain Jobs through Development of Cooperatives and Employee-owned 
Businesses" 
Amend the bill by inserting after the enacting clause and before section 1 the 
following: 
'Sec. 1. 36 MRSA §191, sub-§2, 1EEE is enacted to read: 
EBE. 
The disclosure to the joint standing committee of the Legislature having 
jurisdiction over taxation matters of information necessary to make the report 
required under section 199-F, subsection 2. 
Sec. 2. 36 MRSA §199".'F is enacted to read: 
§199-F. Transfers to cooperatives and employee-owned businesses 
1. Information. The bureau shall require taxpayers claiming the exclusion for gain 
on sale of a business under section 5122, subsection 2, paragraph PP and section 5200-A, 
subsection 2, paragraph BB and the exclusion for interest on a loari financing acquisition 
of a business under section 5122, subsection 2. paragraph 00, section 5200-A, subsection 
2, paragraph CC and section 5206 to provide information that identifies the standard 
industrial classification of the business that is being transferred, the total value of the 
transaction to which the tax expenditure relates, the average number of full-time 
equivalent employees employed by the business being transferred during the calendar 
year preceding the transfer and the number of units ofhorising owned or controlled by the 
business in question. 
2. Report. By December 1st of each year beginning in 2021, the bureau shall submit 
a report to the Office of Program Evaluation and Government Accountability established 
in Title 3, section 991 and the committee identifying the United States Department of 
Commerce, Bureau of the Census, North American Industry Classification System code 
identification and location of each transaction for which a deduction was claimed under 
section 5122, subsection 2, paragraph 00, section 5200-A, subsection 2, paragraph CC 
and section 5206 during the previous calendar year, the aggregate number of full-time 
COMMITTEE,AMENDMENT 
COMMITTEE AMENDMENT"~" to H.P. 932, L.D. 1338 
equivalent employees employed by the businesses for which a deduction was claimed and 
the aggregate number of units of housing owned or controlled by the businesses for which 
a deduction was claimed. Notwithstanding any other provision oflaw to the contrary, the 
reports provided under this section are public records as defined in Title 1, section 402, 
subsection 3.' 
Amend the bill in section 1 in paragraph PP in the first line (page 1, line 3 in L.D.) by 
striking out the following: "201 T' and inserting the following: '2019 and before January 
1, 2027' 
Amend the bill in section 1 in paragraph PP in the 3rd line (page 1, line 5 in L.D.) by 
striking out the following: "taxpayer of an" and inserting the following: 'taxpayer of a 
majority' 
Amend the bill in section 1 in paragraph PP in subparagraph (2) in the first line (page 
1, line 9 in L.D.) by striking out the following: 
"of' and inserting the following: 
'organized in' 
Amend the bill in section 1 in paragraph PP in the blocked paragraph in the first line 
(page 1, line 17 in L.D.) by inserting after the following: 
"means a business" the 
following: 'that employs 100 or fewer full-time equivalent employees and' 
Amend the bill in section 1 in paragraph PP in the blocked paragraph in the last line 
(page 1, line 21 in L.D.) by striking out the following: 
"private entities related by 
common" and inserting the following: 'entities that are not publicly traded related by 
common majority' 
Amend the bill in section 1 in paragraph QQ in the first line (page 1, line 22 in L.D.) 
by striking out the following: 
"2017" and inserting the following: '2019 and before 
January 1, 2027' 
Amend the bill in section 1 in paragraph QQ in subparagraph (1) in the first line 
(page 1, line 26 in L.D.) by inserting after the following: 
"means a business" the 
following: 'that employs 100 or fewer full-time equivalent employees and' 
Amend the bill in section 1 in paragraph QQ in subparagraph (1) in the 5th line (page 
1, line 30 in L.D.) by striking out the following: "private entities related by common" and 
inserting the following: 'entities that are not publicly traded related by common majority' 
Amend the bill in section 1 in paragraph QQ in subparagraph (2) in division (a) in the 
2nd line (page 1, line 35 in L.D.) by inserting after the following: 
"majority" the 
following: '~' 
Amend the bill in section 1 in paragraph QQ in subparagraph (2) in division (a) in 
subdivision (ii) in the first line (page 1, line 39 in L.D.) by strildng out the following: 
"of' and inserting the following: 'organized in' 
Amend the bill in section 2 in paragraph BB in the first line (page 2, line 15 in L.D.) 
by striking out the following: 
"2017" and inserting the following: '2019 and before 
January 1, 2027' 
Amend the bill in section 2 in paragraph BB in the 2nd line (page 2, line 16 in L.D.) 
by striking out the following: "adjusted gross" and inserting the following: 'taxable' 
COMMITTEE AMENDMENT 
COMMITTEEAMENDMENT"fi "to H.P. 932, L.D. 1338 
Amend the bill in section 2 in paragraph BB in the 3rd line (page 2, line 17 in L.D.) 
by striking out the following: "taxpayer of an" and inserting the following: 'taxpayer of a 
majority' 
Amend the bill in section 2 in paragraph BB in subparagraph (2) in the first line (page 
2, line 21 in L.D.) by striking out the following: 
"of" and inserting the following: 
'organized in' 
Amend the bill in section 2 in paragraph BB in the blocked paragraph in the first line 
(page 2, line 29 in L.D.) by i,nserting after the following: 
"means a business" the 
following: 'that employs 100 or fewer full-time equivalent employees and' 
Amend the bill in section 2 in paragraph BB in the blocked paragraph in the last line 
(page 2, line 33 in L.D.) by striking out the following: 
"private entities related by 
common" and inserting the following: 'entities that are not publicly traded related by 
common majority' 
Amend the bill in section 2 in paragraph CC in the first line (page 2, line 34 in L.D.) 
by striking out the following: 
112017
and inserting the following: '2019 and before 
January 1. 2027' 
Amend the bill in section 2 in paragraph CC in the 2nd line (page 2, line 35 in L.D.) 
by striking out the following: 
adjusted gross II and inserting the following: 'taxable' 
Amend the bill in section 2 in paragraph CC in subparagraph (1) in the first line (page 
2, line 38 in L.D.) by inserting after the following: "means a business" the following: 
'that employs 100 or fewer full-time equivalent employees and' 
Amend the bill in section 2 in paragraph CC in subparagraph (1) in the 5th line (page 
3, line 1 in L.D.) by striking out the following: "private entities related by common" and 
inserting the following: 'entities that are not publicly traded related by common majority' 
Amend the bill in section 2 in paragraph CC in subparagraph (2) in division (a) in the 
2nd line (page 3, line 6 in L.D.) by inserting after the following: 
"majority" the 
following: 'equity' 
Amend the bill in section 2 in paragraph CC in subparagraph (2) in .division (a) in 
subdivision (ii) in the first line (page 3, line 10 in L.D.) by striking out the following: 
"of' and inserting the following: 'organized in' 
Amend the bill by inserting after section 2 the following: 
'Sec. 3. 36 MRSA §5206, as repealed and replaced by PL 2005, c. 608, §1 and 
affected by §5, is amended by adding at the end a new paragraph to read: 
For taxable years beginning on or after January 1, 2019 and before January 1. 2027, 
the taxpayer may for the purposes of the tax under this section subtract from Maine net 
income an amount equal to the interest received during the taxable year by the taxpayer 
with respect to a qualified business acquisition loan.' 
Amend the bill in section 3 in subsection 13 in the 8th and 9th lines (page 3, lines 34 
and 35 in L.D.) by striking out the following: "5200-A, subsection 2, paragraph CC," and 
inserting the following: '5206,' 
Amend the bill by striking out all of section 4 and inserting the following: 
COMMITTEE AMENDMENT 
COMMITTEE AMENDMENT ·A "to H.P. 932, L.D. 1338 
1Sec. 4. 36 MRSA §5206-D, sub-§§16-A and 16-B are enacted to read: 
16-A. Qualified business. 
110ualified business
means a business that employs 100 
or fewer full-time equivalent employees and whose securities are not publicly traded on 
any stock exchange and that is organized in the State or whose principal place of business 
is within the State including a corporation, an S corporation, a limited liability company, 
a limited liability partnership, a sole proprietorship and all entities that are not publicly 
traded related by common majority ownership or control. 
16-B. Qualified business acquisition loan. 
11Qualified business acquisition loan,
including a loan or part of a series of loans, means: 
A. A loan of which at least 90% of the proceeds are applied to the acquisition of 
majority equity ownership of a qualified business not owned by an entity under 
subparagraphs (1) to (5) and that is given to: 
(1) 
An employee stock ownership plan as defined in the Code, Section 
4975(e)(7): 
(2) 
An S corporation organized in the State owned by an employee stock 
ownership plan; 
(3) 
An eligible worker-owned cooperative as defined in the Code, Section 
1042(c)(2): 
(4) A consumer cooperative organized under Title 13, chapter 85, subchapter 1; 
or 
(5) If the business provides housing, a consumer cooperative or a cooperative 
affordable housing corporation organized under Title 13, chapter 85, subchapter 
1-A; 
B. A loan to a corporation that sponsors an employee stock ownership plan if all 
proceeds of the loan are loaned to the employee stock ownership plan to acquire for 
the plan all outstanding employer securities in a qualified business and the plan1s 
repayment tetms are substantially similar to the corporation1s repayment terms: or 
C. A loan used to refinance a qualified business acquisition loan. 
Sec. 5. 
Evaluation; specific public policy objective; performance 
measures. The deductions provided under this Act are subject to ongoing legislative 
review in accordance with the Maine Revised Statutes, Title 3, chapter 37. The Office of 
Program Evaluation and Government Accountability shall report on the first evaluation of 
the deductions provided under this Act by February 28, 2026. In developing evaluation 
parameters to perform the evaluation, the Office of Program Evaluation and Government 
Accountability, the Government Oversight Committee and the joint standing committee 
6 
of the Legislature having jurisdiction over taxation matters shall consider: 
1. Policy objective. That the specific public policy objective of the deductions 
provided under this Act is to retain jobs in qualifying small businesses that would 
otheiwise cease operations by reducing the tax impact to business owners from qualifying 
sales of ownership interests in order to encourage conversion of small businesses to 
COMMITTEE AMENDMENT 
COMMITTEE AMENDMENT •A "to H.P. 932, L.D. 1338 
employee and cooperative ownership and thereby allow the businesses to continue 
operations and retain jobs; and 
2. Performance measures. Performance measures, including, but not limited to: 
A. 
The number of qualifying business ownership conversions to employee or 
cooperative ownership; 
B. The number offulUime equivalent jobs retained; and 
C. Measures of fiscal impact and overall economic impact to the State.' 
Amend the bill by relettering or renumbering any nonconsecutive Part letter or 
section number to read consecutively. 
SUMMARY 
This amendment restricts the proposed income tax deduction to businesses with 100 
or fewer employees, limits the deduction to tax years from 2018 to 2025, provides a 
process for evaluation of the deduction and reporting of information and makes clarifying 
and technical changes. 
FISCAL NOTE REQUIRED 
(See attached) 
COMMITTEE AMENDMENT 
Revised: 04/12/18 ::Wac:. 
LD 1338 
LR 2069(02) 
An Act To Create and Sustain Jobs through Development of Cooperatives and Employee-owned 
Businesses 
Fiscal Note for Bill as Amended by Committee Amendment,~,{ /1-76?} 
Committee: Taxation 
Net Cost (Savings) 
General Fund 
Appropriations/ Allocations 
General Fund 
Revenue 
General Fund 
Other Special Revenue Funds 
Fiscal Detail and Notes 
Fiscal Note Required: Yes 
Fiscal Note 
FY 2017-18 
$0 
$0 
$0 
$0 
FY 2018-19 
$32,340 
$0 
($32,340) 
($660) 
Projections 
FY 2019-20 
$575,432 
$267,157 
($308,275) 
($16,225) 
Projections 
FY 2020-21 
$353,832 
$92, 107 
($261,725) 
($ 13,775) 
This bill would reduce General Fund revenue by $32,340 in fiscal year 2018-19 and reduce Local Government Fund 
revenue by $660 in fiscal year 2018-19. The Department of Administrative and Financial Services will require a 
General Fund appropriation of $267,157 in fiscal year 2019-20 for one Management Analyst II position and 
programming costs to process, review and analyze individual income tax returns that include a deduction by the 
business owner for gains recognized in transferring the business to an employee stock ownership plan, eligible worker-
owned cooperative, consumer cooperative or affordable housing cooperative. 
LR2069(02) - Fiscal Note - Page I of I