An Act To Update Certain Provisions in the Income Tax and Service Provider Tax Laws
Maine Legislature, Session 129, LD 2011
Committee Amendment CA_A_H767 (House)
Amends: 36 MRSA §2556-A, 36 MRSA §1760, 36 MRSA §2557

COMMITTEE AMENDMENT 
" to H.P. 1432, L.D. 2011, Bill, "An Act To 
Update Certain Provisions in the Income Tax and Service Provider Tax Laws" 
Amend the bill in Part A in section 2 by striking out all of subsection 2-B (page 1, 
lines 26 to 33 in L.D.) and inserting the following: 
'2-B. Digital audio-visual and digital audio services. "Digital audio-visual and 
digital audio services" means the electronic transfer of digital audio-visual works and 
digital audio works to an end user with the right of less than permanent use granted by the 
seller, including when conditioned upon continued payment from the purchaser or a 
subscription. 
For pµrposes of this subsection: 
A. "End user" means a person other than a person who receives by contract a product 
transferred electronically for further commercial broadcast, rebroadcast, transmission, 
retransmissign, licensing, relicensing, distribution, redistribution or exhibition of the 
product, in whole or in part, to another person; 
B. "Permanent" means perpetual or for an indefinite or unspecified length of time: 
C. "Subscription" means an agreement with a seller that grants a purchaser the right 
to obtain products transferred electronically. in a fixed quantity or for a fixed period 
of time, or both; and 
D. 
"Transfer electronically" or "electronic transfer" means obtainment by the 
purchaser by means other than tangible storage media.' 
Amend the bill in Part A by striking out all of section 8 and inserting the following: 
'Sec. A-8. 36 MRSA §2556-A is enacted to read: 
§2556-A. Sourcing for sales of digital audio-visual and digital audio services 
The sale of digital audio-visual and digital audio services is sourced in this State 
pursuant to this section. 
COMMITTEE AMENDMENT 
COMMITTEE AMENDMENT 
"to H.P. 1432, L.D. 2011 
1. Sourced to address of purchaser in seller's business records. The sale is 
sourced to the location indicated by an address for the purchaser that is available from the 
business records of the seller that are maintained in the ordinary course of the seller's 
business when use of this address does not constitute bad faith. 
2. 
Sourced to address of purchaser not in seller's business records. For a sale 
when subsection 1 does not apply, the sale is sourced to the location indicated by an 
address for the purchaser obtained during the consummation of the sale, including the 
address of a purchaser's payment instrument, if no other address is available, when use of 
this address does not constitute bad faith. 
3. Sourced to address from which service provided. When subsections 1 and 2 do 
not apply, including the circumstance in which the seller is without sufficient information 
to apply subsection 1 or 2, the location is determined by the address from which the 
service was provided, disregarding for these purposes any location that was merely the 
site from which the digital transfer of the product sold was provided. 
4. Mobile telecommunications service providers. Notwithstanding subsections 1 
to 3, the sale of digital audio-visual and digital audio services by a provider of mobile 
telecommunications service is sourced in the same manner as mobile telecommunications 
services pursuant to section 2556.' 
Amend the bill in Part B in section 1 in subsection 10 on the 2nd line (page 3, line 26 
in L.D.) by striking out the following: "substantial" 
Amend the bill in Part B in section 2 in §5200-B in subsection 1 on the first line 
(page 3, line 33 in L.D.) by striking out the following: "substantial" 
Amend the bill irt Part Bin section 2 in §5200-B in subsection 3 on the 2nd line (page 
4, line 14 in L.D.) by striking out the following: "substantial" 
Amend the bill in Part B in section 2 in §5200-B by inserting at the end the 
following: 
'4. Federal protection. A state that is without jurisdiction to impose a tax on the net 
income of a taxpayer because that taxpayer comes under the protection of 15 United 
States Code, Sections 381 to 384, does not gain jurisdiction to impose such a tax because 
the taxpayer's property, payroll or sales in the State exceed a threshold established in 
subsection l.' 
Amend the bill by inserting after Part D the following: 
'PARTE 
Sec. E-1. 36 MRSA §1760, sub-§104 is enacted to read: 
104. Section 501(c)(3) nonprofit organizations. Sales to a nonprofit organization 
that has been determined by the United States Internal Revenue Service to be exempt 
from federal income taxation under Section 50l(c)(3) of the Code, if the tangible personal 
property or taxable services sold are to be used primarily for the purposes for which the 
nonprofit organization was organized. 
Sec. E-2. 36 MRSA §2557, sub-§40 is enacted to read: 
COMMITTEE AMENDMENT 
COMMITTEE AMENDMENT 
"to H.P. 1432, L,D, 2011 
40. Section 501(c)(3) nonprofit organizations. Sales to a nonprofit organization 
that has been determined by the United States Internal Revenue Service to be exempt 
from federal income taxation under Section 50l(c)(3) of the Code, if the services sold are 
to be used primarily for the purposes for which the nonprofit organization was organized. 
Sec. E-3. Study; additional legislation. The Department of Administrative and 
Financial Services, Bureau of Revenue Services, Office of Tax Policy shall study the 
entity-based exemptions provided to qualifying nonprofit organizations from sales tax 
pursuant to the Maine Revised Statutes, Title 36, section 1760 and from service provider 
tax pursuant to Title 36, section 2557. The department shall submit legislation repealing 
or otherwise modifying any of those exemptions that are found to be duplicative or 
unnecessary to the joint standing committee of the Legislature having jurisdiction over 
taxation matters by December 2, 2020. The joint standing committee may report out a 
bill to the First Regular Session of the 130th Legislature regarding that report. 
Notwithstanding Title 36, section 191, the Office of Tax Policy may disclose the number 
of nonprofit organizations not exempt under Section 50l(c)(3) of the federal Internal 
Revenue Code of 1986 that have active exemption certificates under each sales or service 
provider tax exemption, 
Sec. E-4. Effective date. This Part takes effect October 1, 2020. 
PART F 
Sec. F-1. 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 charges. 
GENERAL FUND 
All Other 
GENERAL FUND TOTAL 
2019-20 
$0 
$0 
2020-21 
$26,000 
$26,000 
Amend the bill by relettering or renumbering any nonconsecutive Part letter or 
section number to read consecutively. 
SUMMARY 
This amendment is the majority report of the committee. This amendment amends 
provisions of the bill relating to the taxation of digital audio-visual and digital audio 
services. The amendment clarifies the corporate income tax nexus provisions of the bill 
by referring to "nexus" instead of "substantial nexus." The amendment also exempts 
7 
from the sales and use tax and from the service provider tax sales to a nonprofit 
organization that has been determined by the United States Internal Revenue Service to 
be exempt from income taxation under Section 50l(c)(3) of the federal Internal Revenue 
COMMITTEE AMENDMENT 
COMMITTEE AMENDMENT "A" to H.P. 1432, L.D, 2011 
Code of 1986 if the property or services sold are to be used primarily for the purposes for 
which the nonprofit organization was organized. 
The amendment requires the 
Department of Administrative and Financial Services, Bureau of Revenue Services, 
Office of Tax Policy to review sales tax and service provider tax exemptions to identify 
provisions that should be repealed or amended because they are duplicative or otherwise 
unnecessary and to submit legislation repealing or modifying those exemptions. The 
amendment also adds an appropriations and allocations section. 
FISCAL NOTE REQUIRED 
(See attached) 
COMMITTEE AMENDMENT 
Approved: 03/12/20 feac:.. 
LD 2011 
LR 2993(02) 
An Act To Update Certain Provisions in the Income Tax and Service Provider Tax Laws 
Fiscal Note for Bill as Amended by Committee Amendment().( f/-Jb V 
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 
$0 
$0 
$0 
$0 
FY 2020-21 
($3,117,525) 
$26,000 
$3,143,525 
$122,475 
Projections 
FY 2021-22 
($1,668,200) 
$0 
$1,668,200 
$87,800 
Projections 
FY2022-23 
($844,550) 
$0 
$844,550 
$44,450 
This bill makes changes to the state tax laws and will increase General Fund revenue by $3,143,525 in fiscal year 
2020-21 and increase Other Special Revenue Funds revenue by $122,475 in fiscal year 2020-21. The bill includes a 
one-time General Fund appropriation to the Department of Administrative and Financial Services of $26,000 in fiscal 
year 2020-21 for computer programming costs. 
LR2993(02) - Fiscal Note - Page 1 of 1