An Act To Create and Sustain Jobs through Development of Cooperatives and Employee-owned Businesses
Maine Legislature, Session 129, LD 1520
Committee Amendment CA_A_S260 (Senate)
Amends: 5 MRSA §13062, 36 MRSA §5122, 36 MRSA §5200-A, 36 MRSA §5206, 36 MRSA §5206-D

COMMITTEE AMENDMENT "ft " to S.P. 469, L.D. 1520, Bill, "An Act To 
Create and Sustain Jobs through Development of Cooperatives and Employee-owned 
Businesses" 
Amend the bill by striking out the title and substituting the following: 
'An Act To Create and Sustain Jobs and Encourage Affordable Housing through 
Development of Cooperatives and Employee-owned Businesses' 
Amend the bill by striking out everything after the enacting clause and inserting the 
following: 
'Sec. 1. 5 MRSA §13062, 2nd ,r, as enacted by PL 1987, c. 534, Pt. A, §§17 and 
19, is amended to read: 
The Office of Business Development shall be lli responsible for the implementation 
of a program consisting of; 1 primary elements. 
Sec. 2. 5 MRSA §13062, sub-§4 is enacted to read: 
---
4. Encouragement of employee ownership of businesses. The office shall contract 
with a nonprofit economic development organization with relevant expertise to develop 
and manage an office, to be known as the Maine Employee Ownership Center, that shall: 
A. Develop educational programs, including convening an annual conference on 
employee ownership issues: 
B. 
Provide information about employee ownership and technical assistance to 
retiring business owners, employees of plants threatened with closure and 
entrepreneurs interested in creating businesses with broadly shared ownership: 
C. 
Link Maine businesses interested in implementing employee ownership to 
available financial, technical and legal resources: 
D. Assist firms and employee groups in performing preliminary feasibility studies to 
determine the initial feasibility of employee ownership and whether the business and 
employee group should perform a full feasibility study; 
COMMITTEE AMENDMENT 
COMMITTEE AMENDMENT"(\ "to S.P. 469, L.D. 1520 ( S ·Jw2.) 
E. Help businesses interested in implementing some form of employee ownership 
obtain financing; 
F. Promote best practices for operating employee-owned businesses; 
G. Recommend legislative or executive action to promote employee ownership; and 
H. Work with the Office of Program Evaluation and Government Accountability to 
define the scope of data collection and to collect data and other information to 
facilitate tax expenditure review under Title 3, chapter 37 including, but not limited 
to: 
(1) The number of business ownership conversions to employee or cooperative 
ownership; 
(2) The number of full-time equivalent jobs retained as a result of conversions to 
employee or cooperative ownership; 
(3) The number of housing units converted to cooperative ownership; and 
( 4) Data and information regarding other measures of the fiscal impact and 
overall economic development in the State as the result of conversions to 
employee or cooperative ownership. 
Sec. 3. 36 MRSA §5122, sub-§2, ,r,rQQ and RR are enacted to read: 
00. For taxable years beginning on or after January 1, 2020, to the extent included 
in federal adjusted gross income and to the extent otherwise subject to Maine income 
tax. an amount equal to any gain recognized on the sale by the taxpayer of an 
ownership interest greater than 50% in a qualified business if the business was 
transferred 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. 
The deduction allowed pursuant to this paragraph may not exceed $750,000. 
For purposes of this paragraph, "qualified business" means a business whose 
securities are not publicly traded on any stock exchange and that is registered with 
the Secretary of State or whose principal place of business is within the State 
including a corporation. an S corporation, a limited liability company, a limited 
COMMITTEE AMENDMENT 
COMMITTEEAMENDMENT"/t "to S.P. 469, L.D. 1520( ~ -2,l.Q0) 
liability partnership, a sole proprietorship and all entities that are not publicly traded 
and are related by common majority ownership or control. 
RR. For taxable years beginning on or after January 1, 2020, to the extent included in 
federal adjusted gross income and to the extent otherwise subject to Maine income 
tax, an amount equal to the interest received during the taxable year by the taxpayer 
with respect to a qualified business acquisition loan. For purposes of this paragraph: 
(1) "Qualified business" means a business whose securities are not publicly 
traded on any stock exchange and that is registered with the Secretary of 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 and are related by 
common majority ownership or control: and 
(2) "Qualified 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 subdivisions (i) to (v) and that is given to: 
(i) An employee stock ownership plan as defined in the Code, Section 
4975(e)(7): 
(ii) An S corporation organized in the State owned by an employee stock 
ownership plan: 
(iii) 
An eligible worker-owned cooperative as defined in the Code, 
Section 1042(c)(2): 
(iv) 
A consumer cooperative organized under Title 13, chapter 85, 
subchapter 1: or 
(v) 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 plan's repayment terms are substantially similar to the 
corporation's repayment terms: or 
(c) A loan used to refinance a qualified business acquisition loan. 
Sec. 4. 36 MRSA §5200-A, sub-§2, 1,rFF and GG are enacted to read: 
FF. For taxable years beginning on or after January 1, 2020, to the extent included in 
federal taxable income and to the extent otherwise subject to Maine income tax, an 
amount equal to any gain recognized on the sale by the taxpayer of an ownership 
interest greater than 50% in a qualified business if the business was transferred to: 
COMMITTEE AMENDMENT 
COMMITTEE AMENDMENT"(\ "to S.P. 469, L.D. 1520 ( S-2.J-aG) 
(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 defmed 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. 
The deduction allowed pursuant to this paragraph may not exceed $750,000. 
For purposes of this paragraph, "qualified business" means a business whose 
securities are not publicly traded on any stock exchange and that is registered with 
the Secretary of 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 
and are related by common majority ownership or control. 
GG. For taxable years beginning on or after January 1, 2020, to the extent included 
in federal taxable income and to the extent otherwise subject to Maine income tax, an 
amount equal to the interest received during the taxable year by the taxpayer with 
respect to a qualified business acquisition loan. For purposes of this paragraph: 
(1) 
"Qualified business" means a business whose securities are not publicly 
traded on any stock exchange and that is registered with the Secretary of 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 and are related by 
common majority ownership or control: and 
(2) "Qualified 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 subdivisions (i) to (v) and that is given to: 
(i) An employee stock ownership plan as defmed in the Code, Section 
4975(e)(7): 
(ii) An S corporation organized in the State owned by an employee stock 
ownership plan; 
(iii) An eligible worker-owned cooperative as defmed in the Code, 
Section 1042(c)(2): 
COMMITTEE AMENDMENT 
COMMITTEE AMENDMENT"(-\ "to S.P. 469, L.D. 1520 ( S · 2loOJ 
(iv) 
A consumer cooperative organized under Title 13, chapter 85, 
subchapter 1: or 
(v) 
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 plan's repayment terms are substantially similar to the 
corporation's repayment terms: or 
(c) A loan used to refinance a qualified business acquisition loan. 
Sec. 5. 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, 2020, 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. 
Sec. 6. 36 MRSA §5206-D, sub-§13, as amended by PL 1999, c. 414, §43 and 
affected by §57, is further amended to read: 
13. Maine net income. "Maine net income" means, for any taxable year, a fmancial 
institution's net income or loss per books required to be reported pursuant to the laws of 
the United States on Internal Revenue Service Form 1120, 1120S, 1065 or any other 
Internal Revenue Service form used to report net income or loss per books or, in the case 
of an entity with a single owner that may be disregarded as an entity separate from its 
owner pursuant to Internal Revenue Service regulations, the financial institution's net 
income or loss per books determined as if the entity were required to file Internal 
Revenue Service Form 1065, adjusted in accordance with section 5206, and apportioned 
to this State under section 5206-E. In the case of a fmancial institution that is a qualified 
subchapter S subsidiary as defined by the Code, Section 1361, the financial institution's 
"Maine net income" means a fmancial institution's net income or loss per books 
determined as if the entity were required to file Internal Revenue Service Form 1120S 
and apportioned to this State under section 5206-E. 
To the extent that a financial institution derives income from a unitary business carried on 
by 2 or more members of an affiliated group, "Maine net income" is determined by 
apportioning, in accordance with section 5206-E, that part of the net income of the entire 
group that derives from the unitary business. 
Sec. 7. 36 MRSA §5206-D, sub-§§16-A and 16-B are enacted to read: 
16-A. Qualified business. "Qualified business" means a business whose securities 
are not publicly traded on any stock exchange and that is registered with the Secretary of 
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 
COMMITTEE AMENDMENT 
COMMITTEE AMENDMENT" /t "to S.P. 469, L.D. 1520 ( S, · JLQ6y 
proprietorship and all entities that are not publicly traded and are related by common 
majority ownership or control. 
16-B. Qualified business acquisition loan. "Qualified 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 0) to (5) and that is given to: 
(1) 
An employee stock ownership plan as defmed 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 plan's 
repayment terms are substantially similar to the corporation's repayment terms; or 
C. A loan used to refinance a qualified business acquisition loan. 
Sec. 8. 
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 include review of deductions 
provided under this Act in its regular schedule of tax expenditure reviews. 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 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 preserve and expand units of affordable housing in 
manufactured housing parks and apartment buildings and retain jobs in qualifying 
businesses that would otherwise cease operations by reducing the tax impact to business 
owners from qualifying sales of ownership interests in order to encourage conversion of 
7 
businesses to 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; 
COMMITTEE AMENDMENT 
COMMITTEE AMENDMENT "fr-- "to S.P. 469, L.D. 1520 (S ·J_ l.o_o) 
B. The number of full-time equivalent jobs retained and units of affordable housing 
created or retained; 
C. The number of housing units converted to cooperative housing; and 
D. Measures of fiscal impact and overall economic impact to the State. 
Sec. 9. Appropriations and allocations. The following appropriations and 
allocations are made. 
ADMINISTRATIVE AND FINANCIAL SERVICES, DEPARTMENT OF 
Revenue Services, Bureau of 0002 
Initiative: Provides one-time funding for computer programming to update income tax 
filing forms. 
GENERAL FUND 
All Other 
GENERAL FUND TOTAL 
ADMINISTRATIVE AND FINANCIAL 
SERVICES, DEPARTMENT OF 
DEPARTMENT TOTALS 
GENERAL FUND 
DEPARTMENT TOTAL-ALL FUNDS 
2019-20 
$77,000 
$77,000 
2019-20 
$77,000 
$77,000 
ECONOMIC AND COMMUNITY DEVELOPMENT, DEPARTMENT OF 
Business Development 0585 
2020-21 
$0 
$0 
2020-21 
$0 
$0 
Initiative: Provides funds to contract with a nonprofit economic development 
organization to develop and manage the Maine Employee Ownership Center. 
GENERAL FUND 
All Other 
GENERAL FUND TOTAL 
ECONOMIC AND COMMUNITY 
DEVELOPMENT,DEPARTMENTOF 
DEPARTMENT TOTALS 
2019-20 
$100,000 
$100,000 
2019-20 
COMMITTEE AMENDMENT 
2020-21 
$50,000 
$50,000 
2020-21 
COMMITTEE AMENDMENT" ft" to S.P. 469, L.D. 1520 ( S · ol.oD) 
GENERAL FUND 
DEPARTMENT TOTAL-ALL FUNDS 
SECTION TOTALS 
GENERAL FUND 
SECTION TOTAL - ALL FUNDS 
$100,000 
$50,000 
$100,000 
$50,000 
2019-20 
2020-21 
$177,000 
$50,000 
$177,000 
$50,000 
Amend the bill by relettering or renumbering any nonconsecutive Part letter or 
section number to read consecutively. 
SU1Vll\1ARY 
This amendment requires the Department of Economic and Community 
Development, Office of Business Development to contract with a nonprofit development 
organization with relevant expertise to develop and manage the Maine Employee 
Ownership Center to provide information and programs to assist businesses in the 
transition to employee or cooperative ownership, rather than requiring the office to 
provide those services. The amendment removes requirements that the Department of 
Administrative and Financial Services, Maine Revenue Services collect specified data 
and report annually to the Office of Program Evaluation and Government Accountability 
and that the Maine Public Employees Retirement System study investment of funds in 
employee-owned businesses. 
The amendment also makes changes to facilitate the 
administration and evaluation of the deductions provided in the bill. The amendment also 
adds an appropriations and allocations section. 
FISCAL NOTE REQUIRED 
(See attached) 
COMMITTEE AMENDMENT 
Approved: 06/01/19 .::Wac.. 
LD 1520 
LR 1028(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 'f1" l <;-JLrD) 
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 2019-20 
$177,000 
$177,000 
$0 
$0 
FY 2020-21 
$197,250 
$50,000 
($147,250) 
($7,750) 
Projections 
FY2021-22 
$206,750 
$50,000 
($156,750) 
($8,250) 
Projections 
FY2022-23 
$211,500 
$50,000 
($161,500) 
($8,500) 
The bill creates an income tax exclusion for employee stock ownership plans, eligible worker-owned cooperatives, 
consumer cooperatives and affordable housing cooperatives. It would result in a reduction in General Fund revenue 
of $147,250 in fiscal year 2020-21 and a reduction in Local Government Fund revenue of $7,750 in fiscal year 2020-
21. The bill includes a one-time General Fund appropriation of $77,000 in fiscal year 2019-20 to the Department of 
Administrative and Financial Services for computer programming to update income tax filing forms. 
This bill also includes ongoing General Fund appropriations of $100,000 in fiscal year 2019-20 and $50,000 per year 
beginning in fiscal year 2020-21 to the Business Development program within the Department of Economic and 
Community Development to contract with a nonprofit economic development organization to develop and manage a 
Maine Employee Ownership Center to assist businesses in the transition to employee or cooperative ownership. 
LRl 028(02) - Fiscal Note - Page 1 of 1