An Act To Establish the Maine Work Tax Credit
Sec. 1. 36 MRSA §5219-S, sub-§5 is enacted to read:
Sec. 2. 36 MRSA §5219-TT is enacted to read:
§ 5219-TT. Maine work credit
(1) A qualifying child who has not attained 6 years of age; or
(2) A relative who has attained 70 years of age or who is permanently and totally disabled as defined in Section 22(e)(3) of the Code and who is claimed as a dependent on an eligible individual's tax return.
(1) An individual who is eligible for a federal earned income credit; or
(2) An individual who is at least 18 years of age and less than 25 years of age who does not have a qualifying child.
(1) Provides regular full-time education for children from kindergarten to grade 12;
(2) Is a college or university;
(3) Provides technical, trade or mechanical instruction; or
(4) Provides any program of instruction leading to an industry-recognized credential or certificate of value.
(1) Attends a school as a full-time student; or
(2) Participates full-time in a training course offered by a school or a state, county or municipal government.
A student attends or participates full-time if the student is enrolled for the number of hours or courses the school considers to be full-time attendance. Attendance or participation includes work in the public or private sector as part of a school's regular course of classroom and practical training.
Sec. 3. 36 MRSA §5403, sub-§§7 and 8, as enacted by PL 2017, c. 474, Pt. B, §24, are amended to read:
Sec. 4. 36 MRSA §5403, sub-§9 is enacted to read:
Sec. 5. Working Group to Study Consolidation of Payment of Cost-of-living Tax Credits established. The Working Group to Study Consolidation of Payment of Cost-of-living Tax Credits, referred to in this section as "the working group," is established to make recommendations to the Legislature regarding the most efficient and effective means to consolidate application and payment of cost-of-living tax credits, including recommendations for making such payments available on a periodic advance basis throughout the year. For the purposes of this section, "cost-of-living tax credits" means the following individual income tax credits under the Maine Revised Statutes, Title 36, chapter 822, which assist Maine taxpayers with basic living expenses: the sales tax fairness credit, the property tax fairness credit, the credit for child care expenses, the credit for adult dependent care expenses and the Maine work credit.
1. Membership. The working group consists of 9 members appointed by the Associate Commissioner for Tax Policy within the Department of Administrative and Financial Services, Bureau of Revenue Services, referred to in this section as "the associate commissioner":
2. First meeting; chair. The associate commissioner or the associate commissioner's designee shall convene the first meeting of the working group no later than October 15, 2019. At the first meeting the working group shall select a chair from among its membership. The working group may create subgroups to work on specific issues or initiatives and may include individuals who are not working group members.
3. Duties. The working group shall:
4. Report. By February 1, 2020, the associate commissioner shall provide a report describing the plan of the Department of Administrative and Financial Services to comply with the requirements of this section, including any suggested legislation necessary to implement the plan, to the Joint Standing Committee on Taxation and the Joint Standing Committee on Appropriations and Financial Affairs. Each committee may submit a bill to the Second Regular Session of the 129th Legislature related to the report.
5. Implementation. After reviewing recommendations of the working group, for tax years beginning on or after January 1, 2020 the Department of Administrative and Financial Services, Bureau of Revenue Services shall provide a single, simplified application for all cost-of-living tax credits recommended by the working group, and shall develop a process for making consolidated payments to an eligible individual for all credits for which the individual is eligible. The Bureau of Revenue Services shall implement a payment procedure that permits eligible individuals to choose to receive consolidated payments of cost-of-living tax credits as advance periodic payments to be made throughout the year. If federal requirements do not permit a credit to be consolidated or delivered in periodic payments, the bureau may not include that credit in the consolidated payment process.
6. Staff assistance. The Department of Administrative and Financial Services shall provide necessary staffing services to the working group.
This bill replaces the Maine earned income credit under the income tax with the Maine work credit. The Maine work credit is similar to the federal earned income tax credit but uses different factors for calculating the credit that are intended to produce a state credit for individuals with qualifying children that is approximately equal to 30% of the federal credit and for individuals with no qualifying children that is approximately equal to 100% of the federal credit. The bill also provides eligibility for individuals who are at least 18 years of age but less than 25 years of age who have no qualifying children and creates a minimum credit for students and eligible caregivers.
The bill also establishes a working group to study ways to streamline applications for tax credits intended to assist low to middle income taxpayers with the cost of basic necessities and to permit administration of those credits as advance consolidated payments.