An Act To Update Certain Provisions in the Income Tax and Service Provider Tax Laws
PART A
Sec. A-1. 30-A MRSA §5681, sub-§5, as amended by PL 2019, c. 343, Pt. H, §1, is further amended to read:
Sec. A-2. 36 MRSA §2551, sub-§2-B is enacted to read:
Sec. A-3. 36 MRSA §2551, sub-§2-C is enacted to read:
Sec. A-4. 36 MRSA §2551, sub-§2-D is enacted to read:
Sec. A-5. 36 MRSA §2552, sub-§1, ¶L, as amended by PL 2013, c. 368, Pt. OOOO, §3, is further amended to read:
Sec. A-6. 36 MRSA §2552, sub-§1, ¶M, as enacted by PL 2013, c. 368, Pt. OOOO, §4, is amended to read:
Sec. A-7. 36 MRSA §2552, sub-§1, ¶N is enacted to read:
Sec. A-8. 36 MRSA §2556-A is enacted to read:
§ 2556-A. Sourcing for sales of digital audio-visual and digital audio services
The sale of digital audio-visual and digital audio services is sourced in this State pursuant to this section.
Sec. A-9. 36 MRSA §2559, as amended by PL 2015, c. 300, Pt. A, §35, is further amended to read:
§ 2559. Application of revenues
Revenues derived by the tax imposed by this chapter must be credited to a General Fund suspense account. On or before the last day of each month, the State Controller shall transfer a percentage of the revenues received by the State Tax Assessor during the preceding month pursuant to the tax imposed by section 2552, subsection 1, paragraphs A to F and , L and N to the Local Government Fund as provided by Title 30-A, section 5681, subsection 5. The balance remaining in the General Fund suspense account must be transferred to service provider tax General Fund revenue. On or before the 15th day of each month, the State Controller shall transfer all revenues received by the assessor during the preceding month pursuant to the tax imposed by section 2552, subsection 1, paragraphs G to J and M to the Medical Care Services Other Special Revenue Funds account, the Other Special Revenue Funds Mental Health Services - Community Medicaid program, the Medicaid Services - Adult Developmental Services program and the Office of Substance Abuse - Medicaid Seed program within the Department of Health and Human Services.
Sec. A-10. Application date. This Part applies to sales occurring on or after October 1, 2020.
PART B
Sec. B-1. 36 MRSA §5102, sub-§10, as amended by PL 2011, c. 655, Pt. QQ, §4 and affected by §8, is further amended to read:
Sec. B-2. 36 MRSA §5200-B is enacted to read:
§ 5200-B. Corporate income tax nexus
(1) For property, $250,000;
(2) For payroll, $250,000;
(3) For sales, $500,000; or
(4) Twenty-five percent of the corporation's property, payroll or sales.
Sec. B-3. 36 MRSA §5211, sub-§14, as amended by PL 2009, c. 571, Pt. GG, §1 and affected by §2, is further amended to read:
Sec. B-4. Application. This Part applies to tax years beginning on or after January 1, 2021.
PART C
Sec. C-1. 36 MRSA §5403, sub-§1, as enacted by PL 2015, c. 267, Pt. DD, §33, is amended to read:
Sec. C-2. 36 MRSA §5403, sub-§7, as enacted by PL 2017, c. 474, Pt. B, §24, is amended to read:
Sec. C-3. 36 MRSA §5403, sub-§8, as enacted by PL 2017, c. 474, Pt. B, §24, is amended to read:
Sec. C-4. 36 MRSA §5403, sub-§9 is enacted to read:
Sec. C-5. 36 MRSA §5403, sub-§10 is enacted to read:
Sec. C-6. 36 MRSA §5403, 2nd ¶, as amended by PL 2017, c. 474, Pt. B, §25, is further amended to read:
Except for subsection 5, paragraph A and subsection 9, if the dollar amount of each item, adjusted by the application of the cost-of-living adjustment, is not a multiple of $50, any increase must be rounded to the next lowest multiple of $50.
PART D
Sec. D-1. 36 MRSA §5122, sub-§1, ¶LL, as enacted by PL 2017, c. 474, Pt. C, §2, is repealed.
Sec. D-2. 36 MRSA §5122, sub-§2, ¶TT, as reallocated by RR 2019, c. 1, Pt. A, §69, is repealed.
Sec. D-3. 36 MRSA §5200-A, sub-§1, ¶DD, as enacted by PL 2017, c. 474, Pt. C, §6, is repealed.
Sec. D-4. 36 MRSA §5200-A, sub-§2, ¶GG, as reallocated by RR 2019, c. 1, Pt. A, §73, is repealed.
Sec. D-5. Application; retroactivity. This Part applies retroactively to tax years beginning on or after January 1, 2018.
summary
This bill makes the following changes to the income tax and service provider tax laws.
Part A updates, clarifies and simplifies the service provider tax law regarding consumer purchases of digital media by equalizing the tax treatment between the various modes of purchase for sales occurring on or after October 1, 2020.
Part B clarifies and simplifies the corporate income tax law by establishing clearly defined, objective nexus thresholds as a practical structure for the current general "economic nexus" standard. These so-called factor presence thresholds clarify the minimum thresholds that, when exceeded by a corporation, subject that corporation to the Maine corporate income tax. In addition, the new thresholds create a safe harbor for corporations with little activity within the State that nonetheless have nexus under current law due to a small, but greater than de minimis, physical presence in the State. The new thresholds are $250,000 of property, $250,000 in payroll or $500,000 in sales in Maine, or 25% of total property, payroll or sales in Maine, as determined under the Maine Revised Statutes, Title 36, chapter 821. The thresholds apply to tax years beginning on or after January 1, 2021.
Part C updates the individual income tax law by extending and aligning inflation indexing provisions in 2 respects. First, the bill indexes the recently enacted dependent exemption tax credit for inflation. Second, the bill aligns inflation indexing for the lowest income tax brackets and the highest income tax brackets by allowing an additional one-year inflation adjustment for the highest income tax bracket, indexing the dollar amounts to the same inflation benchmark, the Chained Consumer Price Index for the 12-month period ending June 30, 2015. These changes apply to tax years beginning on or after January 1, 2021.
Part D updates and simplifies Maine income tax law by conforming the Maine income tax with the federal net operating loss limitation. This Part applies retroactively to tax years beginning on or after January 1, 2018.