Code of Maine Rules › 19 - DEPARTMENT OF ECONOMIC AND COMMUNITY DEVELOPMENT › 100 - ECONOMIC / COMMUNITY DEVELOPMENT › Chapter 100 - PINE TREE DEVELOPMENT ZONE PROGRAM › Section 100-100-3 - Pine Tree Development Zone Tax Benefits; tier classifications; application of Anti-Shifting Provisions

Current through 2024-29, July 17, 2024
Summary:
This section explains the tax benefits
				  available to certified businesses, and sets forth guidelines to ensure that
				  PTDZ tax benefits are not provided for the transfer of property, employees or
				  positions.
1.
Tax Benefits
				Generally
When a business is certified as a qualified PTDZ business,
				  the tax benefits described in
				  30-A M.R.S.
				  §5250-I(14) become
				  effective and available to that business at the certified location as of the
				  earliest date permitted by the applicable tax program statute. Generally, Maine
				  income tax, franchise tax, and insurance premiums tax credits are available in
				  the year in which the business commences qualified business activity, i.e.
				  first implements its approved development program by placing property in
				  service in an activity identified in the letter of certification or hiring
				  employees; sales and use tax exemptions and reimbursements are available to
				  certified businesses after the business hires at least one net new employee
				  above its base level of employment and receives a certificate of qualification
				  from the Commissioner; and employment tax increment financing is available in
				  the calendar year that the business hires at least five net new employees as
				  required under Title 36, Chapter 917.
PTDZ tax benefits are available to all businesses certified
				  by the Commissioner, regardless of their form of ownership (subchapter "C" or
				  "S" corporations, pass-through entity, or sole proprietorship).
PTDZ tax benefits are available only if the certified
				  business hires at least one qualified employee above its base level of
				  employment within the first two calendar years of certification. Upon written
				  request, the Commissioner may grant an extension of up to 12 months to the
				  two-year hiring period. An extension request must include information
				  sufficient to establish to the satisfaction of the Commissioner that the hiring
				  requirement was not met within the required period due to unforeseeable
				  circumstances which were beyond the control of the business. If a certified
				  business fails to hire one qualified employee above its base level within the
				  required period, including any extension, the letter of certification will be
				  terminated.
A certified business must maintain at least one qualified
				  employee above its base level of employment beginning on the date that the
				  first qualified employee was added. If a certified business fails to maintain
				  one qualified employee above its base employment level, it must notify the
				  Commissioner within 30 days of the lapse in employment level and the date the
				  lapse began. The certified business has up to 60 days from the date it first
				  failed to maintain one qualified employee above its base employment level to
				  regain a net new qualified employee, after which the letter of certification
				  and certificate of qualification will be terminated. Upon written request, the
				  Commissioner may allow a reasonable amount of additional time for a certified
				  business to return to its required level of employment. A request for
				  additional time must identify why the required employment level was not
				  maintained and must include information sufficient to establish to the
				  satisfaction of the Commissioner that the required employment level could not
				  be met within the 60-day period due to unforeseeable circumstances which are
				  beyond the control of the business. A certified business who fails to maintain
				  one qualified employee above its base employment level due to the effects of a
				  state of emergency as designated by the Governor will be granted a waiver to
				  return to its required employment level by the end of the next reported
				  calendar year without the need for specific written request by the business.
				  Affected businesses may be granted an additional one-year extension if the
				  state of emergency spans multiple calendar years or upon written request as
				  described in this subsection.
A business that is terminated must return any PTDZ benefits
				  received based on business activity occurring after the date it failed to
				  maintain one qualified employee above its base level.
2.
PTDZ Benefit Limitations
The following limitations will be applied to ensure that PTDZ
				  tax benefits provided to a business are based only on net new jobs and
				  investments in property:
(1)
Income Tax/Insurance Premiums Tax Credits
. In the case of
				businesses that engage in both qualified and non-qualified business activities
				in this State, the tax credit is limited only to that portion attributable to
				the qualified business activity described in the letter of certification. The
				limitation is calculated by an apportionment fraction, the numerator of which
				is the property value plus the payroll for the taxable year which is attributed
				to the qualified business activity of the business and denominator of which is
				the statewide property value plus the payroll for the taxable year. See
				36 MRSA
				sections2529 and
				5219-W.
The numerator of the apportionment fraction may not include
				  property, employees and positions transferred from a non-qualifying activity or
				  from an affiliated business. This ensures that the dollar values used to gauge
				  the level of qualified business activity are determined by net new investment
				  in the zone. Therefore, transferred employees and positions may not be
				  reflected in the numerator of the payroll portion of the apportionment
				  fraction, and the value of transferred property may not be reflected in the
				  property portion of the apportionment fraction. The value of property that has
				  been transferred physically to the zone may not be included in the numerator of
				  the apportionment fraction. The value of property that has been sold or
				  otherwise disposed of as part of the development project must be subtracted
				  from the value of the property investments in the zone to determine the net new
				  property value.
(2)
Sales Tax Exemptions and Reimbursements
. The sales tax exemption/
				reimbursement is allowed only for sales of tangible personal property directly
				and primarily related to the qualified business activity described in the
				letter of certification. See
				36 M.R.S.
				sections1760(87) and
				2016.
				Adjustments may be necessary with respect to certain purchases, such as bulk
				purchases, to determine the portion of the purchase that qualifies for the PTDZ
				sales tax exemption or related refund. Such adjustments must be made consistent
				with guidance issued by the Maine Bureau of Revenue Services.
(3)
Employment Tax Increment Financing
				(ETIF)
. In the case of businesses that engage in both qualified and
				non-qualified business activities in this State, the ETIF reimbursement is
				limited to those employees attributable to the qualified business activity
				described in the letter of certification. See
				36 M.R.S.
				sections6751 -
				6761.
				For a discussion of ETIF qualification requirements and limitations, see Me.
				Dep't of Economic and Community Development 19-100 C.M.R. 400.