An Act To Create the Small Business Capital Savings Account Program
Maine Legislature, Session 130, LD 1650
Committee: Innovation, Development, Economic Advancement and Business
Sponsors: STEWART, DUNPHY
Amends: 5 MRSA §13100-A, 36 MRSA §5122, 36 MRSA §5200-A

Legislative Document
No. 1650
S.P. 537
In Senate, May 5, 2021
An Act To Create the Small Business Capital Savings Account 
Program
Received by the Secretary of the Senate on May 3, 2021.  Referred to the Committee on 
Innovation, Development, Economic Advancement and Business pursuant to Joint Rule 308.2 
and ordered printed.
DAREK M. GRANT
Secretary of the Senate
Presented by Senator STEWART of Aroostook.
Cosponsored by Representative: DUNPHY of Old Town.
Be it enacted by the People of the State of Maine as follows:
Sec. 1.  5 MRSA §13100-A is enacted to read:
§13100-A.  Small Business Capital Savings Account Program
1.  Program established.  The Small Business Capital Savings Account Program is 
established within and administered by the department to certify businesses as eligible for 
a tax deduction under Title 36, section 5122, subsection 2, paragraph XX or Title 36, 
section 5200-A, subsection 2, paragraph JJ for contributions made to small business capital 
savings accounts. 
2.  Definitions.  As used in this section, unless the context otherwise indicates, the 
following terms have the following meanings.
A.  "Capital expenditure" means an expenditure for the acquisition of items that are 
depreciable under the United States Internal Revenue Code of 1986.
B.  "Eligible small business" means a business that:
(1)  Is subject to taxation under Title 36, Part 8;
(2)  Has its business headquarters in the State;
(3)  Is a C corporation, an S corporation or a sole proprietorship;
(4)  Has no more than 99 full-time equivalent employees;
(5)  Has its primary business activities in farming, fishing or forestry industries; 
(6)  Makes contributions in accordance with Title 26, section 1221; and 
(7) Is determined by the department to have established no more than one small 
business capital savings account. 
C.  "Program" means the Small Business Capital Saving Account Program established 
in subsection 1.
D.  "Small business capital savings account" means a savings account established in 
the State by an eligible small business at a financial institution as defined in Title 36, 
section 5206-D, subsection 8.
3. Certification of businesses.  The department shall certify up to 10 eligible small 
businesses in each of the following industry categories:
A.  Commercial agricultural production as defined in Title 36, section 2013, subsection 
1, paragraph A;
B.  Commercial fishing as defined in Title 36, section 2013, subsection 1, paragraph 
B; or
C.  Commercial wood harvesting as defined in Title 36, section 2013, subsection 1, 
paragraph B-1. 
If there are not 10 eligible small businesses in one of the industry categories specified in 
paragraphs A to C, the department may certify eligible small businesses in one of the other 
industry categories, but the total number of eligible small businesses certified may not 
exceed 30.  If there are more than 10 eligible small businesses in an industry category, the 
department shall give priority in the order in which the businesses are determined to be 
eligible.
4.  Requirements for small business capital savings accounts.  A small business 
capital savings account must:
A.  Have as its sole purpose the accumulation of capital to be used for capital 
expenditures by the eligible small business;
B.  Maintain a balance that does not exceed $250,000;
C.  Provide that withdrawals from the account may be used only for capital 
expenditures by the eligible small business; and
D.  Provide that all funds in the account must be withdrawn within one year of the 
dissolution of the business.
5.  Certification of withdrawals.  An eligible small business shall notify the 
department of all withdrawals from a small business capital savings account and provide 
information required by the department to verify the use of the funds withdrawn.  The 
department shall annually certify all withdrawals made by an eligible small business for 
capital expenditures.  
6.  Notification to the Bureau of Revenue Services.  The department shall notify the 
Department of Administrative and Financial Services, Bureau of Revenue Services 
annually of all eligible small businesses certified under subsection 3 that continue to meet 
the conditions of eligibility during the calendar year and withdrawals certified under 
subsection 5 for eligible small businesses and provide any other information necessary for 
the bureau to determine a taxpayer's eligibility for the tax deduction under Title 36, section 
5122, subsection 2, paragraph XX or Title 36, section 5200-A, subsection 2, paragraph JJ.  
7.  Rules; other requirements.  The department, in consultation with the Department 
of Administrative and Financial Services, Bureau of Revenue Services, shall adopt routine 
technical rules, as defined in Title 5, chapter 375, subchapter 2-A, to implement this 
section.  The department may establish any other guidelines or requirements necessary for 
the operation of the program.
8.  Report.  The department shall submit a report to the joint standing committee of 
the Legislature having jurisdiction over taxation matters by December 15, 2023 that 
includes data demonstrating the extent of business participation in the program, including 
the number of businesses certified as eligible for the tax deductions under Title 36, section 
5122, subsection 2, paragraph XX and Title 36, section 5200-A, subsection 2, paragraph 
JJ, the amount of savings contributed by eligible small businesses to small business capital 
savings accounts during each year and the amount of withdrawals by eligible small 
businesses each year for capital expenditures.  The report must contain the department's 
analysis of the success of the program and a recommendation regarding whether the 
program should be continued.  The committee may submit legislation related to the report 
to the Second Regular Session of the 131st Legislature.
9.  Application.  This section applies to tax years beginning on or after January 1, 
2021.
10.  Repeal.  This section is repealed December 31, 2024.  After that date no new 
contributions may be made to a small business capital savings account.
Sec. 2.  36 MRSA §5122, sub-§1, ¶PP is enacted to read:
PP.  The amount of funds withdrawn from a small business capital savings account 
established under Title 5, section 13100-A if the funds are not used during the tax year 
for capital expenditures.  This paragraph applies to tax years beginning on or after 
January 1, 2021.
This paragraph is repealed December 31, 2024.
Sec. 3.  36 MRSA §5122, sub-§2, ¶XX is enacted to read:
XX.  An amount up to $250,000 in the tax year contributed to a small business capital 
savings account by an eligible small business certified by the Department of Economic 
and Community Development under Title 5, section 13100-A, subsection 3 and used 
for capital expenditures.  This paragraph applies to tax years beginning on or after 
January 1, 2021.
This paragraph is repealed December 31, 2024.
Sec. 4.  36 MRSA §5200-A, sub-§1, ¶II is enacted to read:
II.  The amount of funds withdrawn from a small business capital savings account 
established under Title 5, section 13100-A if the funds are not used during the tax year 
for capital expenditures.  This paragraph applies to tax years beginning on or after 
January 1, 2021.
This paragraph is repealed December 31, 2024.
Sec. 5.  36 MRSA §5200-A, sub-§2, ¶JJ is enacted to read:
JJ.  An amount up to $250,000 in the tax year contributed to a small business capital 
savings account by an eligible small business certified by the Department of Economic 
and Community Development under Title 5, section 13100-A, subsection 3 and used 
for capital expenditures.  This paragraph applies to tax years beginning on or after 
January 1, 2021.
This paragraph is repealed December 31, 2024.
SUMMARY
This bill establishes the Small Business Capital Savings Account Program in the 
Department of Economic and Community Development to certify businesses eligible to 
claim a tax deduction for contributions made to qualifying small business capital savings 
accounts to be used for capital expenditures.  The bill creates the tax deduction and 
establishes that withdrawals from the savings accounts are taxable income if not used for 
capital expenditures.