Instructions For Maine Franchise Tax Form 1120b-Me (Page 2 of 6) in pdf

GENERAL INSTRUCTIONS

1. FINANCIAL INSTITUTIONS SUBJECT TO FRANCHISE TAX:

more than 30 days after the receipt of a demand notice, the

Every financial institution that had Maine net income or Maine

failure-to-file penalty increases to 100% of the tax otherwise

assets during the taxable year must file Form 1120B-ME and

due.

pay Maine franchise tax,

even if the institution is established

For failure to pay a tax liability, the penalty is 1% of the tax

as a partnership, S corporation or entity disregarded as

liability for each month the payment is delinquent, up to 25%.

separate from its owner.

“Financial institution” means a bank,

c. Other penalties. The law also provides for penalties

bank holding company, thrift institution, savings association,

for substantial understatement of tax, negligence, fraud, and

insured institution, savings bank holding company, qualified

for payment of tax by check that is returned for insufficient

savings bank, insured depository institution, appropriate

funds.

federal banking agency or qualified family partnership (as

7. ACCOUNTING PERIOD COVERED:

Form 1120B-ME

defined in the Bank Holding Company Act of 1956, 12 U.S.

will cover the same period as the equivalent federal return.

Code § 1841), or any other financial institution (except a credit

8. ACCOUNTING METHODS:

A taxpayer’s method of

union) authorized to do business in Maine as defined in 9-B

accounting for Maine franchise tax purposes must be the same

M.R.S.A. § 131(17-A). “Financial institution” includes any

as that used for federal income tax purposes.

corporation of which more than 50% of the voting stock is

owned, directly or indirectly, by a financial institution or by a

9. FEDERAL RETURN MUST ACCOMPANY STATE RETURN:

credit union as defined in 9-B M.R.S.A. § 131.

Maine franchise tax return, Form 1120B-ME, must be

accompanied by a legible copy of pages 1 through 4 of the

2. DATE FOR FILING RETURN:

Financial institutions

financial institution’s federal return for the same taxable period.

reporting for calendar year 2005 are required to file with

You are not required to provide Maine with copies of supporting

payment on or before March 15, 2006. Fiscal year taxpayers

schedules attached to the federal form filed with the Internal

are required to file, with payment, on or before the 15th day of

Revenue Service unless specifically requested.

the third month following the close of the taxable year.

10. FEDERAL AUDIT CHANGES AND AMENDED RETURNS:

3. EXTENSION FOR FILING: A State of Maine extension

Taxpayers must file Maine amended returns for any change

request form is not required. If you are unable to file your

or correction by the Internal Revenue Service in federal net

return by the original due date of the return, Maine allows an

income per books or total end-of-year assets. The amended

automatic seven-month extension of time to file.

CAUTION:

return must be filed within 90 days after final determination of

AN EXTENSION TO FILE YOUR MAINE RETURN IS NOT

the federal change or correction. Attach a copy of the Internal

AN EXTENSION FOR PAYMENT OF TAX. If you owe money,

Revenue Agent’s report with all supporting schedules to your

you must pay at least 90% of that amount by the original due

Maine amended return.

date for filing your return and the remaining 10% must be paid

Taxpayers filing amended federal returns must, within 90

when the return is filed by the extended due date in order to

days, file amended Maine returns with copies of the federal

avoid the failure-to-pay penalty. However, interest is charged

amended return. When filing returns that reflect federal net

on any tax paid after the original due date of your return.

operating losses, a copy of federal Form 1139 must be

Remit your estimated tax payment with Form 1120B-EXT-

attached.

ME (Extension Payment Voucher) by the original due date for

In addition, an amended Maine franchise tax return is

filing your Maine return to: Maine Revenue Services, P.O. Box

required to correct errors on a previously filed return. The

9114, Augusta, ME 04332-9114. Form 1120B-EXT-ME is

amended return must be filed within 90 days of the discovery.

available at or by calling

Maine Revenue Services does not provide a form for

207-624-7894.

amended franchise tax returns. Use Form 1120B-ME for the

4. PAYMENT OF FRANCHISE TAX:

All financial institutions

year(s) you are amending and check the box marked “check

subject to franchise tax shall make payment of estimated tax

here if amended” in the upper right corner of the form.

unless the liability for the taxable year reduced by allowable

11. COMBINED REPORT FOR UNITARY MEMBERS:

credits is less than $1,000. See instructions for Form 1120B-

financial institution that is a member of an affiliated group and

ES/ME for details. Form 1120B-ES/ME vouchers and

operates in a unitary fashion must file a Maine Franchise Tax

instructions are available at

Combined Report For Unitary Members (Form CRB).

or by calling 207-624-7894.

Maine law defines affiliated group to mean a group of two

5. INTEREST:

Beginning January 1, 2006, interest at 10%

or more financial institutions in which more than 50% of the

per annum, compounded monthly, will be added to the balance

voting interest of each member financial institution is directly

of any tax due from the original due date to the date of payment

or indirectly owned by a common owner or owners, either

and should be included with any payment.

corporate or noncorporate, or by one or more of the member

6. PENALTIES:

financial institutions. Unitary is defined as a business activity

a. Underpayment of estimated tax penalty. Beginning

that is characterized by unity of ownership, functional

January 1, 2006, the penalty is 10% per annum, compounded

integration, centralization of management and economies of

monthly. The penalty rate for January 1, 2005 through

scale.

December 31, 2005 is 8% compounded monthly. The penalty

The State of Maine apportionment formula is used to

will be assessed if the sum of quarterly estimated tax payments

apportion net income of multi-state institutions. This formula

is not at least equal to the lesser of the previous year’s Maine

adopts many features of the financial institution apportionment

income tax liability or ninety percent (90%) of the tax liability

formula recommended by the Multistate Tax Commission.

for the current year. Exception: certain large corporations

The law provides that the apportionment formula is also

cannot use the previous year’s liability in determining the

used to compute Maine assets from the total end-of-year

required amount of estimated tax payments.

assets of the financial institution.

b. Late filing and late payment penalties. If a past due

return is filed before the receipt, or within 30 days of the receipt,

of a demand notice, the penalty for failure to file is the greater

of $25 or 10% of the amount of tax due. If the return is filed

REV. 12/05

Instructions For Maine Franchise Tax Form 1120b-Me Page 2

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