Code of Maine Rules › 18 - DEPARTMENT OF ADMINISTRATIVE AND FINANCIAL SERVICES › 125 - BUREAU OF REVENUE SERVICES › Chapter 805 - COMPOSITE RETURN FILING › Section 125-805-.02 - FILING OF COMPOSITE RETURNS

Current through 2024-29, July 17, 2024
A.
Generally.
An entity may file a composite return on behalf of its
				partners, beneficiaries, or shareholders who are eligible persons and who elect
				to participate in the composite return by completing the required Nonresident
				Member Affidavit and Agreement to Participate in a Composite Filing of Maine
				Income Tax (Form 941CF-ME). Form 941CF-ME must be retained by the pass-through
				entity for at least six years after the filing of the composite return for the
				taxable year. A new affidavit must be submitted each year by each eligible
				person electing to participate in the composite return for the taxable year.
An entity otherwise not qualified to file a composite return
				  may nonetheless file a composite return if approved by the State Tax Assessor
				  ("Assessor").
Eligible persons who are included in the composite return
				  will be deemed to have filed a Maine income tax return for the period covered
				  by the composite return. Eligible persons who participate in the composite
				  return are personally liable for the tax amount reported on their behalf in the
				  composite return and any tax, interest, or penalty that may be assessed for
				  that period in the same way as if a composite return had not been filed. The
				  Assessor reserves the right to require the filing of a Maine nonresident income
				  tax return by any of the eligible persons included in the composite return.
				  Eligible persons are not jointly and severally liable for the tax, interest, or
				  penalty imposed on any other unrelated eligible person or the entity solely
				  because of that eligible person's membership interest in the entity.
B.
Information
				required.
The composite return's supporting information must include, at
				a minimum, the name and taxpayer identification number of each eligible person
				included in the return, the amount of each eligible person's distributive share
				of taxable entity income and the tax thereon, the amount of each eligible
				person's share of any business tax credit claimed under  36 M.R.S. §
										5219-G, the amount of any payments previously made and applied to each eligible
				person's tax liability, and the amount of payment included with the return and
				applied to each eligible person's tax liability. The composite return (Form
				1040C-ME for taxable years beginning on or after January 1, 2023; Form 1040ME
				and Schedule 1040C-ME for taxable years beginning prior to January 1, 2023)
				must be complete.
C.
ESBTs
				and QSSTs.
To be an eligible person, an ESBT must be a nonresident trust
				for Maine income tax purposes, in accordance with 36 M.R.S., Chapter 813. A
				beneficiary of a QSST must be a nonresident for Maine income tax purposes for
				the QSST to qualify as an eligible person. If an ESBT holds stock in more than
				one S corporation, each stock holding must be considered separately for
				determining eligibility and must be treated as a separate eligible person for
				the purposes of this rule.
D.
Composite returns for tiered entity structure.
An upper tier
				entity may file a single composite return on behalf of the non-resident members
				(including members, partners, shareholders, or beneficiaries) in a tiered
				entity structure, where the nonresident members are eligible persons. The
				following additional requirements must be met:
1. Each of the lower tier entities (including
				any related pass-through entity) with individual members that elect to
				participate must agree to have its electing members included in the composite
				return and each lower tier entity must not file a separate return;
2. A schedule must be attached to the
				composite return indicating each member's distributive share of Maine-source
				income from each tiered entity, and the total amount of Maine-source income
				received by each member from all tiered entities in the tiered entity
				structure; and
3. A statement must
				be attached to the composite return, including an organizational chart,
				disclosing the structure and identity, including the names, addresses and
				federal identification numbers, of all the related entities from which
				participating nonresident members directly or indirectly derived Maine-source
				income.