Sec. B-1. 36 MRSA §1752, sub-§1-E is enacted to read:
1-E. Custom computer software program. "Custom computer software program" means any computer software that is written or prepared exclusively for a particular customer. "Custom computer software program" does not include a "canned" or prewritten program that is held or exists for a general or repeated sale, lease or license, even if the program was initially developed on a custom basis or for in-house use. An existing prewritten program that has been modified to meet a particular customer's needs is a "custom computer software program" to the extent of the modification, and to the extent that the amount charged for the modification is separately stated.
Sec. B-2. 36 MRSA §1752, sub-§17, as amended by PL 1989, c. 871, §7, is further amended to read:
17. Tangible personal property. "Tangible personal property" means personal property which that may be seen, weighed, measured, felt, touched or in any other manner perceived by the senses, but does not include rights and credits, insurance policies, bills of exchange, stocks and bonds and similar evidences of indebtedness or ownership. "Tangible personal property" includes electricity. "Tangible personal property" includes any computer software that is not a custom computer software program.
Sec. B-3. 36 MRSA §1752, sub-§17-A, ¶F, as amended by PL 1993, c. 701, §3, is repealed.
Sec. B-4. 36 MRSA §5122, sub-§1, ¶G, as amended by PL 1995, c. 641, §1 and affected by §7, is further amended to read:
G. Pick-up contributions paid by the taxpayer's employer on the taxpayer's behalf to the Maine State Retirement System as defined in Title 5, section 17001, subsection 28-A; and
Sec. B-5. 36 MRSA §5122, sub-§1, ¶H, as amended by PL 1995, c. 641, §2 and affected by §7, is further amended to read:
H. The absolute value of the amount of any net operating loss arising from tax years beginning on or after January 1, 1989, but before January 1, 1993, that arises from an S Corporation with total assets for the year of at least $1,000,000 and that, pursuant to the United States Internal Revenue Code, Section 172, is being carried back for federal income tax purposes to the taxable year by the taxpayer.; and
Sec. B-6. 36 MRSA §5122, sub-§1, ¶J is enacted to read:
J. The amount claimed as a business expense that is included in the investment credit for the high-technology investment tax credit.
Sec. B-7. 36 MRSA §5200-A, sub-§1, ¶H, as amended by PL 1995, c. 641, §4 and affected by §7, is further amended to read:
H. The absolute value of the amount of any net operating loss arising from tax years beginning on or after January 1, 1989 but before January 1, 1993 that, pursuant to the United States Internal Revenue Code, Section 172, is being carried back for federal income tax purposes to the taxable year by the taxpayer; and
Sec. B-8. 36 MRSA §5200-A, sub-§1, ¶I, as amended by PL 1995, c. 641, §5 and affected by §7, is further amended to read:
I. Interest or dividends on obligations or securities of any state or of a political subdivision or authority, other than this State and its political subdivisions and authorities.; and
Sec. B-9. 36 MRSA §5200-A, sub-§1, ¶K is enacted to read:
K. The amount claimed as a business expense that is included in the investment credit for the high-technology investment tax credit.
Sec. B-10. 36 MRSA §§5219-L and 5219-M are enacted to read:
§5219-L. Super credit for substantially increased research and development
1. Super credit allowed for substantial expansions of research and development. A taxpayer qualifying for a research expense tax credit under section 5219-K is allowed an additional credit against the tax due equal to the excess, if any, of the qualified research expenses for the taxable year over the super credit base amount. For purposes of this section, "super credit base amount" means the average amount spent on qualified research expenses by the taxpayer in the 3 taxable years immediately preceding the effective date of this section, increased by 50%. The super credit allowed under this subsection applies only to the expenditures for research conducted in this State. The term "qualified research expenses" has the same meaning as under Section 41 of the Code, as amended and in effect on December 31, 1994.
2. Amount of super credit allowed. The credit allowed under this section is limited to 50% of the taxpayer's tax due after the allowance of any other credits taken pursuant to this chapter.
3. Carry over to succeeding years. A taxpayer entitled to a credit under this section for any taxable year may carry over and apply to the tax due for any one or more of the next succeeding 5 taxable years the portion, as reduced from year to year, of any unused credit, but in no event may the credit applied in any single year exceed 50% of the taxpayer's tax due after the allowance of any other credits taken pursuant to this chapter.
4. Limitation. The credit provided by this section may not be used to reduce the taxpayer's tax liability under this Part to less than the amount of the taxpayer's tax due in the preceding taxable year after the allowance of any credits taken pursuant to this chapter.
5. Corporations filing combined returns. In the case of corporations filing a combined return, a credit generated by an individual member corporation under the provisions of this section must first be applied against the tax due attributable to that company under this Part. A member corporation with an excess research and development credit may apply its excess credit against the tax due of another group member to the extent that that other member corporation can use additional credits under the limitations of subsection 4. Unused, unexpired credits generated by a member corporation may be carried over from year to year by the individual corporation that generated the credit, subject to the limitation in subsection 3.
§5219-M. High-technology investment tax credit
1. Definitions. As used in this section, unless the context otherwise indicates, the following terms have the following meanings.
A. "High-technology activity" means:
(1) The design, creation and production of computer software, computer equipment, supporting communications components and other accessories that are directly associated with computer software and computer equipment; and
(2) The provision of Internet or electronic communications access services or support access to electronic media and data and associated communications support, or advanced telecommunications capability as that term is defined in the federal Telecommunications Act of 1996, Section 706 (c) (1).
B. "Investment credit base of equipment" means the total original basis of the eligible equipment for federal income tax purposes of the taxpayer for equipment that was placed into service for the first time in the State by the taxpayer or other person during the tax year for which the credit is claimed.
C. "Eligible equipment" means all computer equipment, electronics components and accessories, communications equipment, as defined in paragraph A, subparagraph (2), and computer software placed into service in the State.
2. Purchaser of eligible equipment; credit allowed. A taxpayer that purchases and uses eligible equipment or purchases and leases eligible equipment to a person for use by that person in the provision of high-technology activity may claim a credit in the amount of the investment credit base of the eligible equipment, net of any lease payments received for the eligible equipment in the taxable year.
3. Lessor of eligible equipment; credit allowed. A taxpayer that leases and uses eligible equipment or leases and subleases eligible equipment to a person for use by that person in the provision of high-technology activity may claim a credit in the amount of the lease payments made on the eligible equipment, net of sublease payments received in the taxable year.
4. Limitation. The credit provided by this section may not be used to reduce the taxpayer's tax liability under this Part to less than the amount of the taxpayer's tax due in the preceding taxable year after the allowance of any credits taken pursuant to this chapter. The credit allowed under this section for any taxable year may not reduce the tax due to less than zero.
5. Carry over to succeeding years. A taxpayer entitled to a credit under this section for any taxable year may carry over and apply to the tax due for any one or more of the next succeeding 5 taxable years the portion, as reduced from year to year, of any unused credits.
6. Corporations filing combined return. In the case of corporations filing a combined return, a credit generated by an individual member corporation under the provisions of this section must first be applied against the tax due attributable to that company under this Part. A member corporation with an excess high-technology investment tax credit may apply its excess credit against the tax due of another group member to the extent that that other member corporation can use additional credits under the limitations of subsection 4. Unused, unexpired credits generated by a member corporation may be carried over from year to year by the individual corporation that generated the credit, subject to the limitation in subsection 5.
Sec. B-11. 36 MRSA §6651, sub-§1, as amended by PL 1997, c. 24, Pt. C, §13 and affected by §17, is further amended to read:
1. Eligible property. "Eligible property" means qualified business property first placed in service in the State, or constituting construction in progress commenced in the State, after April 1, 1995. "Eligible property" includes, without limitation, repair parts, replacement parts, additions, accessions and accessories to other qualified business property placed in service on or before April 1, 1995 if the part, addition, accession or accessory is first placed in service, or constitutes construction in progress, in the State after April 1, 1995. "Eligible property" also includes inventory parts. "Eligible property" is subject to reimbursement pursuant to this chapter for up to 12 years, but the 12 years must be reduced by one year for each year during which a taxpayer included the same property in its investment credit base under section 5219-E or 5219-M and claimed the credit provided by that in either section on its income tax return.
Sec. B-12. Allocation. The following funds are allocated from the Tax Relief Fund for Maine Residents to carry out the purposes of this Part.
1997-98 1998-99
ADMINISTRATIVE AND FINANCIAL SERVICES, DEPARTMENT OF
Bureau of Taxation
Positions - Legislative Count (1.000) (1.000)
Personal Services $15,903 $32,904
All Other 26,600 6,500
Provides funds for one Revenue Agent position, effective January 1, 1998, computer programming and related administrative expenses to administer and enforce the high-technology investment tax credit.
DEPARTMENT OF ADMINISTRATIVE
AND FINANCIAL SERVICES ____________ ____________
TOTAL $42,503 $39,404
Sec. B-13. Transfer of funds. The State Controller shall transfer from the Tax Relief Fund for Maine Residents to the General Fund $2,629,512 in fiscal year 1997-98 to offset the revenue loss associated with the credits and exemptions established in this Part. An amount equal to $2,195,280 may not lapse but must be carried forward to fiscal year 1998-99 to be used for the same purpose.
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