CHAPTER 495
H.P. 1329 - L.D. 1878
An Act to Provide Regulation of Payroll Processing Companies
Be it enacted by the People of the State of Maine as follows:
Sec. 1. 10 MRSA c. 222 is enacted to read:
CHAPTER 222
PAYROLL PROCESSORS
As used in this chapter, unless the context otherwise indicates, the following terms have the following meanings.
1. Employer. "Employer" means a person that maintains an office or otherwise transacts business in this State and makes payment of wages taxable under Title 36, Part 8 to a resident or nonresident individual.
2. Payroll processing services. "Payroll processing services" means preparing and issuing payroll checks; preparing and filing tax returns, including quarterly state income withholding tax reports or unemployment insurance contribution reports; and collecting, holding and turning over to the State Tax Assessor income withholding taxes pursuant to Title 36, chapter 827 or unemployment insurance contributions pursuant to Title 26, chapter 13, subchapter 7.
3. Payroll processor. "Payroll processor" means a person that provides payroll processing service for one or more employers.
§1495-A. Registration required
1. Generally. A payroll processor that conducts business in this State must register annually with the State Tax Assessor by January 30th on a form designed and furnished by the assessor.
2. Information required. The information required of a registrant must include the name and mailing address of the payroll processor, the physical location or locations where payroll processing services are performed, a list of the services performed for clients by the payroll processor and any other information the State Tax Assessor determines to be necessary.
§1495-B. Disclosure to employers
1. Generally. Except as provided by subsection 2, a payroll processor shall provide a disclosure statement at the time of contracting and by September 1st of each even-numbered year to each employer for which it provides payroll processing services. The statement must be made on a form designed jointly by the State Tax Assessor; the Department of Labor, Bureau of Employment Security; and the Department of Professional and Financial Regulation, Office of Consumer Credit Regulation. The disclosure statement form must be provided by the assessor to payroll processors and must include at a minimum the following:
A. The length of time in which the payroll processor has been in the business of providing payroll processing services; and
B. A statement as to whether any payroll processing services are contracted out to others and, if so, which services are contracted out and to whom.
2. Exception. A payroll processor that does not handle a client's funds is not subject to the disclosure requirement of subsection 1.
1. Civil violations. A payroll processor is subject to a civil penalty or a civil forfeiture in accordance with the following.
A. A payroll processor that fails to provide the disclosure statement required by section 1495-B to an employer for which it provides payroll processing services commits a civil violation for which a forfeiture of not less than $50 nor more than $250 may be adjudged. Each failure to notify a particular client constitutes a separate violation for the purposes of this section. An action for a civil violation under this subsection must be brought within 2 years after the date on which disclosure should have been made. An owner or operator of a payroll processor may not be held liable for a civil violation under this subsection if that person shows by a preponderance of the evidence that the violation was unintentional.
B. A payroll processor that conducts business in this State and fails to register with the State Tax Assessor as required by section 1495-A commits a civil violation for which a penalty of not less than $500 nor more than $2,500 may be adjudged.
2. Criminal violations. A payroll processor is a fiduciary for purposes of Title 17-A, section 903.
Sec. 2. 17-A MRSA §362, sub-§6 is enacted to read:
6. Theft by misapplication of property under section 358, when committed by a payroll processor, as defined by Title 10, section 1495, is classified one step higher than it would otherwise be classified under this section based upon the value of property or services involved, except that the offense may not be classified as a Class A crime.
Sec. 3. 36 MRSA §112, sub-§1, as amended by PL 1995, c. 281, §1, is further amended to read:
1. General powers and duties. The State Tax Assessor shall administer and enforce the tax laws enacted under this Title and under Title 29-A, and may adopt rules and require such information to be reported as necessary. The assessor may investigate, enforce and prosecute activities defined as crimes in this Title and in Title 17-A, sections 358, 751 and 903. The assessor shall provide, at the time of issuance, to one or more entities that publish a monthly state tax service all rules, bulletins, taxpayer notices or alerts, notices of rulemaking, any other taxpayer information issued by the assessor, and all substantive amendments or modifications of the same, for publication by that entity or entities. When a significant change has occurred in Bureau of Taxation policy or practice or in the interpretation by the bureau of any law, rule or instruction bulletin, the assessor shall, within 60 days of the change, provide to the same publishing entity or entities written notice, suitable for publication, of the change.
Sec. 4. 36 MRSA §112, sub-§4, as amended by PL 1991, c. 873, §2, is further amended to read:
4. Examination of records and premises. Whenever necessary to the administration of this Title, the State Tax Assessor may make, or cause to be made by an employee, an examination or investigation of the place of business, books and other documents and any other relevant personal property of any person who the State Tax Assessor assessor has reason to believe is liable for any tax imposed by this Title. The assessor may also examine the books and records of a payroll processor, as defined in Title 10, section 1495, and client books and records in the possession of a payroll processor.
At the conclusion of an audit, the State Tax Assessor assessor or an agent shall conduct an audit conference with the taxpayer and shall give the taxpayer a written summary of the audit findings, including the legal basis for the audit findings and adjustments, along with copies of relevant Bureau of Taxation audit workpapers.
Sec. 5. 36 MRSA §5255-A, first ¶, as amended by PL 1985, c. 535, §27, is further amended to read:
The State Tax Assessor may, by filing a complaint, apply for an injunction from doing business of any person required to deduct and withhold tax under this Part whenever any such person fails to deduct and withhold tax under this Part; or truthfully account for, or pay over, or make returns of the tax as required by section 5253. The assessor may also apply for an injunction from doing business of any payroll processor, as defined in Title 10, section 1495, whenever a payroll processor is responsible for truthfully accounting for, or paying over or making returns of the tax imposed by this Part and fails to do so. The existence of other civil or criminal remedies shall be no is not a defense to this proceeding.
Effective September 19, 1997, unless otherwise indicated.
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