An Act To Clarify and Update the Maine Seed Capital Tax Credit Program
Maine Legislature, Session 130, LD 1941
Committee: Taxation
Sponsors: CURRY, BAILEY, CHIPMAN, LIBBY
Amends: 10 MRSA §1100-T, 36 MRSA §5216-B

Legislative Document
No. 1941
S.P. 682
In Senate, January 26, 2022
An Act To Clarify and Update the Maine Seed Capital Tax Credit 
Program
Approved for introduction by a majority of the Legislative Council pursuant to Joint Rule 
203.
Reference to the Committee on Taxation suggested and ordered printed.
DAREK M. GRANT
Secretary of the Senate
Presented by Senator CURRY of Waldo.
Cosponsored by Senators: BAILEY of York, CHIPMAN of Cumberland, LIBBY of 
Androscoggin.
Be it enacted by the People of the State of Maine as follows:
Sec. 1.  10 MRSA §1100-T, sub-§2, ¶A, as amended by PL 2019, c. 616, Pt. LL, 
§1, is further amended to read:
A.  For investments made in tax years beginning before January 1, 2012, a tax credit 
certificate may be issued in an amount not more than 40% of the amount of cash 
actually invested in an eligible Maine business in any calendar year or in an amount 
not more than 60% of the amount of cash actually invested in any one calendar year in 
an eligible Maine business located in a high-unemployment area, as determined by rule 
by the authority.  For investments made in tax years beginning on or after January 1, 
2012, a tax credit certificate may be issued to an investor other than a private venture 
capital fund in an amount not more than 60% of the amount of cash actually invested 
in an eligible Maine business in any calendar year.  For investments made in tax years 
beginning on or after January 1, 2014, a tax credit certificate may be issued to an 
investor other than a private venture capital fund in an amount not more than 50% of 
the amount of cash actually invested in an eligible Maine business in any calendar year.  
For investments made on or after April 1, 2020 and before October 1, 2022, a tax credit 
certificate may be issued to an investor other than a private venture capital fund in an 
amount not more than 40% of the amount of cash actually invested in an eligible Maine 
business in any calendar year. For investments made on or after October 1, 2022, a tax 
credit certificate may be issued to an investor other than a private venture capital fund 
in an amount not more than 30% of the amount of cash actually invested in an eligible 
Maine business in any calendar year. Rules adopted pursuant to this section are routine 
technical rules as defined in Title 5, chapter 375, subchapter 2‑A.
Sec. 2.  10 MRSA §1100-T, sub-§2, ¶B, as amended by PL 2013, c. 438, §3, is 
further amended to read:
B.  The Maine business must be determined by the authority to be a manufacturer or a 
value-added natural resource enterprise; must provide a product or service that is sold 
or rendered, or is projected to be sold or rendered, predominantly outside of the State; 
must be engaged in the development or application of advanced technologies; or must 
be certified as a visual media production company under Title 5, section 13090‑L. 
Beginning October 1, 2022, an investment in a visual media production company under 
Title 5, section 13090-L is not eligible for a tax credit certificate. The business must 
certify that the amount of the investment is necessary to allow the business to create or 
retain jobs in the State.
Sec. 3.  10 MRSA §1100-T, sub-§2, ¶C, as amended by PL 2021, c. 412, §1, is 
further amended to read:
C.  Aggregate investment eligible for tax credits may not be more than $5,000,000 for 
any one business as of the date of issuance of a tax credit certificate.  Beginning with 
For investments made on or after April 1, 2020 and before October 1, 2022, aggregate 
investment eligible for tax credits may not be more than $3,500,000 for any one 
business as of the date of issuance of a tax credit certificate and not more than 
$2,000,000 for any calendar year. Notwithstanding the other provisions of this 
paragraph, with respect to a business that was approved by the authority as an eligible 
business under this subsection before April 1, 2020, the aggregate investment eligible 
for tax credits may not be more than $5,000,000 for that any one business as of the date 
of the issuance of the tax credit certificate, and the $2,000,000 annual limitation does 
not apply. For investments made on or after October 1, 2022, aggregate investment 
eligible for tax credits under this subsection may not be more than $6,000,000 for any 
one business as of the date of issuance of a tax credit certificate and not more than 
$5,000,000 for any calendar year.
Sec. 4.  10 MRSA §1100-T, sub-§2, ¶E, as amended by PL 2013, c. 438, §3, is 
further amended to read:
E.  For investments made in tax years beginning before January 1, 2014, the business 
receiving the investment must have annual gross sales of $3,000,000 or less.  For 
investments made in tax years beginning on or after January 1, 2014, the business 
receiving the investment must have annual gross sales of $5,000,000 or less.  The 
operation of the business must be a substantial professional activity of at least one of 
the principal owners, as determined by the authority.  The principal owner and the 
principal owner's spouse are not eligible for a credit for investment in that business.  A 
tax credit certificate may not be issued to a parent, brother, sister sibling or child of a 
principal owner if the parent, brother, sister sibling or child has any existing ownership 
interest in the business. Beginning with investments made on or after October 1, 2022, 
the principal owner or the principal owner's spouse, or a parent, sibling or child of a 
principal owner, is not eligible for a credit for investment in that business if that person 
owns 25% or more interest in the business.
Sec. 5.  10 MRSA §1100-T, sub-§2, ¶J is enacted to read:
J.  For investments made on or after October 1, 2022, an application for a tax credit 
certificate must be submitted to the authority within 60 days after the date of the 
investment on which the credit is based and within the same legislative biennium as 
the investment.
Sec. 6.  10 MRSA §1100-T, sub-§2-C, ¶A, as amended by PL 2019, c. 616, Pt. 
LL, §5, is further amended to read:
A.  For investments made in tax years beginning on or after January 1, 2012, a tax 
credit certificate may be issued to a private venture capital fund in an amount that is 
not more than 50% of the amount of cash actually invested in an eligible business.  For 
investments made on or after April 1, 2020 and before October 1, 2022, a tax credit 
certificate may be issued to a private venture capital fund in an amount that is not more 
than 40% of the amount of cash actually invested in an eligible business. For 
investments made on or after October 1, 2022, a tax credit certificate may be issued to 
a private venture capital fund in an amount that is not more than 30% of the amount of 
cash actually invested in an eligible Maine business. The tax credit certificate may be 
revoked and the credit recaptured pursuant to Title 36, section 5216‑B, subsection 5 to 
the extent that the authority determines that the eligible business for which the tax 
credit certificate was issued moves substantially all of its operations and assets outside 
of the State during the period ending 4 years after an investment, except in the case of 
an arm's length, fair value acquisition approved by the authority.  A private venture 
capital fund that received the 20% credit certificate under subsection 2‑A, paragraph 
A, subparagraph (2) for an investment is not eligible for a tax credit certificate under 
this subsection for that investment.
Sec. 7.  10 MRSA §1100-T, sub-§2-C, ¶B, as amended by PL 2019, c. 616, Pt. 
LL, §6, is further amended to read:
B.  As used in this subsection, unless the context otherwise indicates, "eligible 
business" means a business located in the State that has certified that the amount of the 
investment is necessary to allow the business to create or retain jobs in the State and 
that, as determined by the authority:
(1)  Is a manufacturer or a value-added natural resource enterprise;
(2)  Is engaged in the development or application of advanced technologies;
(3)  Provides a product or service that is sold or rendered, or is projected to be sold 
or rendered, predominantly outside of the State. For investments made on or after 
October 1, 2022, for the purposes of this subparagraph, the sale or rendering of a 
product or service is not considered to be a sale or rendering of a product or service 
outside of the State if the business is engaged primarily in the tourism or hospitality 
industry and the sale or rendering of the product or service is to a nonresident of 
the State; or
(5)  Is Prior to October 1, 2022, is certified as a visual media production company 
under Title 5, section 13090‑L. Beginning October 1, 2022, a visual media 
production company may not be certified as an eligible business.
Sec. 8.  10 MRSA §1100-T, sub-§2-C, ¶C, as amended by PL 2021, c. 412, §2, is 
further amended to read:
C.  Aggregate investment eligible for tax credit certificates, including investments 
under this subsection and under subsection 2, may not be more than $5,000,000 for any 
one eligible business.  Beginning with For investments made on or after April 1, 2020 
and before October 1, 2022, aggregate investment eligible for tax credit certificates, 
including investments under this subsection and under subsection 2, may not be more 
than $3,500,000 for any one eligible business in total and not more than $2,000,000 for 
any calendar year. Notwithstanding the other provisions of this paragraph, with respect 
to a business that was approved by the authority as an eligible business under this 
subsection before April 1, 2020, the aggregate investment eligible for tax credits may 
not be more than $5,000,000 for that business as of the date of the issuance of the tax 
credit certificate, and the $2,000,000 annual limitation does not apply. For investments 
made on or after October 1, 2022, aggregate investment eligible for tax credits under 
this subsection may not be more than $6,000,000 for any one business as of the date of 
the issuance of a tax credit certificate and not more than $5,000,000 for any calendar 
year.
Sec. 9.  10 MRSA §1100-T, sub-§2-C, ¶E, as amended by PL 2013, c. 438, §4, is 
further amended to read:
E.  For investments made in tax years beginning before January 1, 2014, an eligible 
business receiving an investment from a private venture capital fund, which investment 
is used as the basis for the issuance of a tax credit certificate, may not have annual 
gross sales of more than $3,000,000.  For investments made in tax years beginning on 
or after January 1, 2014, an eligible business receiving an investment from a private 
venture capital fund, which investment is used as the basis for the issuance of a tax 
credit certificate, may not have annual gross sales of more than $5,000,000.  The 
operation of the business must be a substantial professional activity of one or more 
individuals who are not managers of the private venture capital fund, as determined by 
the authority. A tax credit certificate may not be issued to a private venture capital fund 
if a manager of the fund is a principal owner of the eligible business or a spouse, parent, 
sibling or child of a principal owner and if the spouse, parent, sibling or child has any 
existing ownership interest in the business. Beginning with investments made on or 
after October 1, 2022, the principal owner or the principal owner's spouse, or a parent, 
sibling or child of a principal owner, is not eligible for a credit for investment in that 
business or for an investment by the private venture capital fund in that business if that 
person owns 25% or more interest in the business. A private venture capital fund must 
certify to the authority that it will be in compliance with these limitations.  The tax 
credit certificate issued to a private venture capital fund may be revoked and any credit 
taken recaptured pursuant to Title 36, section 5216‑B, subsection 5 if the fund is not in 
compliance with this paragraph.
Sec. 10.  10 MRSA §1100-T, sub-§2-C, ¶I is enacted to read:
I.  For investments made on or after October 1, 2022, an application for a tax credit 
certificate must be submitted to the authority within 60 days after the date of the 
investment on which the credit is based and within the same legislative biennium as 
the investment.
Sec. 11.  10 MRSA §1100-T, sub-§2-D is enacted to read:
2-D.  Consideration of applications by authority.  When considering an application 
for a tax credit certificate under subsection 2 or 2-C, the authority shall rate the application, 
using standard grant procurement rules, based on the strength of the applicant's business 
plan, the projected number and type of jobs to be created or retained, the projected increase 
in municipal taxes resulting from the investment, the potential of the applicant for rapid 
growth and the potential to advance a strategic economic sector through innovation. The 
authority shall adopt major substantive rules that provide that the 30% credit for investment 
is reduced to 20% for an applicant that qualifies for the credit but that receives a low rating 
based on standard grant procurement rules.
Sec. 12.  10 MRSA §1100-T, sub-§7, as enacted by PL 2019, c. 616, Pt. LL, §11, 
is amended to read:
7.  Reports.  The following reports are required regarding activities under this section.
A.  A business eligible to have investors receive a tax credit under this section shall 
report to the authority, in a manner determined by the authority, the following 
information regarding that business's activities in the State over the calendar year in 
which the investment occurred and for each additional year for which a credit is 
claimed:
(1)  The total amount of private investment received by the eligible business from 
each investor eligible to receive a tax credit;
(2)  The total number of persons employed by the eligible business as of December 
31st;
(3)  The total number and geographic location of jobs created and retained by the 
eligible business stated separately for all jobs in the State and for those jobs that 
would not have been created or retained in the absence of the credit;
(4)  Total annual payroll of the eligible business stated separately for all employees 
in the State and for those employees who would not have been employed in the 
absence of the credit; and
(5)  Total sales revenue of the eligible business stated separately within and outside 
the State.;
(6)  Total in-state direct spending;
(7)  Total municipal taxes paid within the State;
(8)  Other investments, incentives and grants received from the State, including but 
not limited to the Small Enterprise Growth Fund under chapter 13, the Maine 
Technology Institute under Title 5, chapter 407, Pine Tree Development Zone 
benefits as defined in Title 30-A, section 5250-I, subsection 14 and employment 
tax increment financing under Title 36, chapter 917; and
(9)  Federal grants received.
B.  An investor eligible for a tax credit under this section shall notify the authority 
when a business that received an investment from that investor eligible for a credit 
under this section ceases operations in the State and the likely reasons for the cessation 
of business.
C.  The authority shall report annually to the joint standing committee of the Legislature 
having jurisdiction over taxation matters and to the Office of Program Evaluation and 
Government Accountability on all activity under this section during the prior calendar 
year.  The authority shall identify in its report businesses receiving investments eligible 
for a credit under this section and the authority's determination as to whether the 
investments would have been made in the absence of the credit.
Sec. 13.  36 MRSA §5216-B, sub-§2, as amended by PL 2017, c. 170, Pt. E, §3, is 
further amended to read:
2.  Credit.  An investor is entitled to a credit against the tax otherwise due under this 
Part equal to the amount of the tax credit certificate issued by the Finance Authority of 
Maine in accordance with Title 10, section 1100‑T and as limited by this section.  Except 
with respect to tax credit certificates issued under Title 10, section 1100‑T, subsection 2-C, 
in the case of partnerships, limited liability companies, S corporations, nontaxable trusts 
and any other entities that are treated as flow-through entities for tax purposes under the 
Code, the individual partners, members, stockholders, beneficiaries or equity owners of 
such entities must be treated as the investors under this section and are allowed a credit 
against the tax otherwise due from them under this Part in proportion to their respective 
interests in those partnerships, limited liability companies, S corporations, trusts or other 
flow-through entities.  Except as limited or authorized by subsection 3 or 4, 25% of the 
credit must be taken in the taxable year in which the investment is made and 25% per year 
must be taken in each of the next 3 taxable years.  With respect to tax credit certificates 
issued under Title 10, section 1100‑T, subsection 2-C, the credits are refundable and the 
investor shall file a return requesting a refund for an investment for which it has received 
a tax credit certificate in the calendar year following the calendar year during which the 
investment was made. With respect to tax credit certificates issued under Title 10, section 
1100-T, subsection 2, for investments certified for a tax credit on or after October 1, 2022, 
the credits are refundable and the investor shall file a return requesting a refund for an 
investment for which it has received a tax credit certificate in the calendar year following 
the calendar year during which the investment was made.
Sec. 14.  36 MRSA §5216-B, sub-§3, as amended by PL 2011, c. 454, §17, is 
further amended to read:
3.  Limitation.  With respect to tax credit certificates issued before October 1, 2022 
under Title 10, section 1100‑T, subsection 2 or 2-A, the amount of the credit allowed under 
this section for any one taxable year may not exceed 50% of the tax imposed by this Part 
on the investor for the taxable year before application of the credit.
Sec. 15. Review of Maine Seed Capital Tax Credit Program.  The Finance 
Authority of Maine, the Department of Economic and Community Development and the 
Department of Administrative and Financial Services, Maine Revenue Services shall 
establish a working group to review the final report of the Office of Program Evaluation 
and Government Accountability on the Maine Seed Capital Tax Credit dated August 2021.  
The working group shall review issues identified in the report regarding the administration 
of the program and the need to clarify aspects of the program relating to the goals of the 
credit, the improvement of data collection required to properly evaluate the program and 
the need for enhancement of business and authority reporting to the Legislature.  The 
working group shall solicit input from parties interested in the credit and shall submit a 
report to the joint standing committee of the Legislature having jurisdiction over taxation 
matters and to the Office of Program Evaluation and Government Accountability by 
December 1, 2022. 
SUMMARY
This bill makes changes to improve the effectiveness of the Maine Seed Capital Tax 
Credit Program based upon concerns raised in the 2021 tax expenditure evaluation report 
of the Office of Program Evaluation and Government Accountability. The bill makes the 
following changes.
It reduces the tax credit from 40% to 30% of the eligible investment.
It raises the aggregate investment limit from $3,500,000 to $6,000,000 with not more 
than $5,000,000 in a single calendar year.
It removes from eligibility investments in visual media production companies.
It defines export activities more narrowly.
It provides standards for review by the Finance Authority of Maine of applications for 
a tax credit certificate.
It increases the amount of information required to be provided in annual reports by 
eligible businesses to the Finance Authority of Maine and provides a financial penalty if a 
credit certificate is revoked for failure to report.
It requires an application for a tax credit certificate to be submitted within 60 days after 
the date of the investment.
It prohibits credits for investors and their family members who hold more than 25% 
interest in the business receiving the investment.
It provides that the tax credit for individual investors is refundable.
It requires the state agencies administering the seed capital tax credit to establish a 
working group to review issues identified by the Office of Program Evaluation and 
Government Accountability report relating to administration of the credit and submit a 
report making recommendations for improvements to the joint standing committee of the 
Legislature having jurisdiction over taxation matters and to the Office of Program 
Evaluation and Government Accountability by December 1, 2022.