Sec. AA-1. 36 MRSA §5250-B is enacted to read:
§5250-B. Withholding on pass-through entity income of nonresident partners and shareholders
1. Definitions. As used in this section, unless the context otherwise indicates, the following terms have the following meanings.
A. "Member" means an individual or other owner of a pass-through entity.
B. "Nonresident" means a nonresident individual, a business entity that does not have its commercial domicile in the State, or a nonresident estate or trust.
C. "Pass-through entity" means a corporation that for the applicable tax year is treated as an S corporation under the Code, and a general partnership, limited partnership, limited liability partnership, trust, limited liability company or similar entity that for the applicable tax year is not taxed as a C corporation for federal tax purposes.
2. Withholding required. Except as provided by subsection 3, every pass-through entity that does business in this State must withhold income tax at the highest tax rate provided in this Part on the proportionate quarterly share of Maine source income of each nonresident member. The method for determining the amount of the share of income and for determining the amount of withholding for each nonresident member under this section must be prescribed by rules adopted by the assessor. Rules adopted pursuant to this section are routine technical rules as defined in Title 5, chapter 375, subchapter 2-A.
3. Withholding exemptions. For purposes of this section, a pass-through entity is not required to withhold tax for a nonresident member if:
A. The member's share of annual entity income sourced to the State is less than $1,000; or
B. The bureau has determined by rule, ruling or instruction that the member's income is not subject to withholding.
Sec. AA-2. 36 MRSA §5251, as amended by PL 1985, c. 535, §23, is further amended to read:
Every person required to deduct and withhold tax under this Part, or who would have been required so to deduct and withhold tax if an employee had claimed no more than one withholding exemption, shall furnish to each such person in respect to the items of income subject to withholding paid by such person to such person during the calendar year on or before February 15th of the succeeding year, or, in the case of an employee who is terminated before the close of such calendar year, within 30 days from the date on which the last payment of wages is made, a written statement as prescribed by the assessor showing the amount of wages paid by the employer to the employee, or in the case of withholding pursuant to section sections 5250-B and 5255-B the total items of income which that were subject to withholding, the amount deducted and withheld as tax, and such other information as the assessor shall prescribe.
Sec. AA-3. 36 MRSA §5253, as amended by PL 1995, c. 657, §9 and affected by §10, is repealed and the following enacted in its place:
§5253. Return and payment of tax withheld
Every person required to deduct and withhold tax under this Part shall, for each calendar quarter, on or before the last day of the month following the close of the calendar quarter or such other reporting period as the assessor may require, file a withholding return and remit payment as prescribed by the assessor. The assessor shall prescribe the voucher required to be filed with the payments.
Sec. AA-4. 36 MRSA c. 914 is enacted to read:
CHAPTER 914
2003 TAX AMNESTY PROGRAM
§6571. 2003 Maine Tax Amnesty Program established
There is established the 2003 Maine Tax Amnesty Program. This program is intended to encourage delinquent taxpayers to comply with the State's tax law and to enable the assessor to identify and collect previously unreported taxes and to accelerate collection of certain delinquent tax liabilities. The long-term goal of this program is to improve taxpayer compliance with the State's tax law.
The assessor shall administer the 2003 Maine Tax Amnesty Program. The amnesty program applies to tax liabilities delinquent as of April 16, 2003, including tax due for which a return has not been filed. A taxpayer may participate in the tax amnesty program whether or not the taxpayer is under audit and without regard to whether the amount due is subject to a pending administrative or judicial proceeding, except that this does not include pending criminal action or debts for which the State has secured a warrant or civil judgment in its favor in Superior Court. A taxpayer may participate in the tax amnesty program to the extent of the uncontested portion of an assessed liability. Participation in the program is conditioned upon the taxpayer's agreement to forgo the right to protest or pursue an administrative or judicial proceeding with regard to returns filed under the tax amnesty program or to claim any refund of money paid under the tax amnesty program. A taxpayer with a tax liability within the limitations of this chapter is absolved from criminal or civil prosecution or civil penalties plus 1/2 of the interest associated with any such liability except as otherwise provided in this chapter if the taxpayer:
1. Return filed. Properly completes and files a 2003 amnesty tax return as described in section 6575 and as required by the assessor;
2. Tax and interest paid. Pays all tax and interest as determined on the 2003 amnesty tax return, described in section 6575, before the end of the amnesty period;
3. No criminal action pending. Is not currently charged with, and has not been accepted by the Attorney General for criminal prosecution arising from, a violation of the state tax law as provided in this Title or Title 17-A, or is not applying for relief on a debt that is the result of a criminal conviction; and
4. No collection by warrant or civil action. Is not applying for relief with respect to a tax liability for which the State has secured a warrant or civil judgment in its favor in Superior Court.
§6573. Undisclosed liabilities
Nothing in this chapter may be construed to prohibit the assessor from instituting civil or criminal proceedings against any taxpayer with respect to any amount of tax that is not disclosed either on the 2003 amnesty return, described in section 6575, or on any other return filed with the assessor.
The time period during which a 2003 amnesty return, described in section 6575, may be filed is September 1, 2003 to October 31, 2003.
The assessor shall prepare and make available the 2003 amnesty return. The return and associated guidelines prepared by the assessor, which govern participation in the 2003 Maine Tax Amnesty Program, are exempt from the Maine Administrative Procedure Act. The application requires the approval of the assessor. The assessor may deny any applications not consistent with the 2003 Maine Tax Amnesty Program.
Notwithstanding any other provision of this chapter, the assessor shall, during the period beginning on the effective date of this chapter to August 31, 2003, make a settlement offer that requires full payment of tax and 1/2 of the accrued interest to any taxpayer that has a recorded and recognized delinquent State tax liability as of the effective date of this chapter. The settlement offer authorized under this section does not apply to a taxpayer whose liability is the result of a criminal conviction or is currently charged with a criminal offense arising from a violation of the state tax law as provided in this Title or Title 17-A, or has been referred to the Attorney General for criminal prosecution.
Sec. AA-5. Preamnesty collections; legislative intent. The Legislature finds that it is in the best interest of the State and public welfare of the people of Maine to ensure that there is no delay in the payment of delinquent state tax liabilities as a result of the 2003 Maine Tax Amnesty Program. The Legislature further finds that many taxpayers are likely to defer payment of delinquent tax liabilities in order to take advantage of lower interest and penalty amounts available under the 2003 Maine Tax Amnesty Program. Therefore, to ensure the timely collection of state tax revenue prior to the effective date of the 2003 Maine Tax Amnesty Program, the Legislature encourages the State Tax Assessor to utilize the full extent of the State Tax Assessor's authority under the Maine Revised Statutes, Title 36, including the abatement of interest and penalty consistent with the provisions of the 2003 Maine Tax Amnesty Program.
Sec. AA-6. Application. Those sections of this Part that enact the Maine Revised Statutes, Title 36, section 5250-B, amend section 5251 and repeal and replace section 5253 apply to pass-through entity income of nonresidents sourced to Maine and earned on or after January 1, 2003.
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