Form 1120b-Me - Maine Franchise Tax Instructions

FORM 1120B-ME

MAINE

FRANCHISE TAX Instructions

2002

IMPORTANT CHANGES

LONG-TERM CARE INSURANCE.

36 M.R.S.A. § 5217-C. The

as determined by the Finance Authority of Maine (“FAME”), the

definition of a qualified long-term care insurance policy is expanded

credit percentage increases to 60% of investment. The credit is also

for purposes of the credit for employer-provided long-term care

expanded by increasing the eligible aggregate investment in any

insurance benefits. Qualified policies now include, in addition to

one business or for any private venture capital fund from $1,000,000

policies that meet the federal definition of a qualified long-term in-

to $5,000,000 and increasing the aggregate investment made by an

surance contract, policies certified by the Maine Bureau of Insur-

individual in any one business or any one business invested in by

ance that do not meet the federal definition for a qualified long-term

a private venture capital fund in any three consecutive calendar

care insurance contract under the Internal Revenue Code. Previ-

years from $200,000 to $500,000. In addition, the total aggregate

ously, only policies meeting the federal definition for a qualified

investment eligible for tax credit certificates is increased as follows:

long-term care insurance contract qualified for the tax benefits.

up to and including calendar year 2002, from $10,000,000 to

Applies to tax years beginning on or after January 1, 2002.

P.L.

$11,000,000; up to and including calendar year 2003, from $11,000,000

2001, c.679.

to $14,000,000; up to and including calendar year 2004, from

$12,000,000 to $17,000,000; up to and including calendar year 2005,

APPORTIONMENT FACTOR: PAYROLL FOR LEASED AND

the limit is $20,000,000; up to and including calendar year 2006, the

TEMPORARY EMPLOYEES.

36 M.R.S.A. § 5206-E. The payroll

limit is $23,000,000; up to and including calendar year 2007, the limit

factor for the apportionment calculation must now include 85% of

is $26,000,000; and thereafter, the limit is $30,000,000. The rate at

amounts paid to an employee-leasing company for leased employ-

which the credit must be claimed on the Maine income tax return of

ees and 100% of amounts paid for temporary employees. Employee-

the investor is accelerated from 15% each year for six years and 10%

leasing companies and temporary services companies will exclude

in the seventh year to 25% in each year for four years beginning

from the payroll factor compensation paid to leased or temporary

with the taxable year the investment is made. The credit program is

employees who are providing personal services for client compa-

added to the items included in the list of economic development

nies. However, amounts received for leased or temporary employ-

incentives (5 M.R.S.A. § 13070-J), requiring businesses with eligible

ees must still be included in the sales factor calculation. Applies to

investors to submit a report to FAME disclosing investment, em-

tax years beginning on or after January 1, 2002.

P.L. 2001, c. 439,

ployment, payroll and sales. Annually, the Department of Economic

Pt. D.

and Community Development must report aggregate information

regarding the credit to the legislature, using information provided

HISTORIC REHABILITATION CREDIT.

36 M.R.S.A. § 5219-R.

by FAME. Changes in determining credit amounts apply to credit

Clarifies that only expenditures for rehabilitation of certified historic

certificates issued on or after July 1, 2002 for investments made on

properties incurred after December 31, 1999 qualify for the credit.

or after July 1, 2002.

P.L. 2001, c. 642.

This means that federal carryovers from years prior to 2000 cannot

be used for Maine purposes. Applies to tax years beginning on or

APPEAL OF TAX ASSESSMENT.

36 M.R.S.A. § 151. A tax-

after January 1, 2001.

P.L. 2001, c.526.

payer that fails to request reconsideration of a tax assessment within

30 days of receipt is barred from later requesting reconsideration of,

SEED CAPITAL TAX CREDIT.

36 M.R.S.A. § 5216-B. The amount

or submitting appeal in Superior Court relating to, that assessment

of the Maine Seed Capital Tax Credit certificate available to inves-

even if the taxpayer subsequently pays the assessment and then

tors is 40% of investments in qualified businesses. For investments

requests a refund. Effective April 1, 2002.

P.L. 2001, c.583, Sec. 1.

in eligible businesses that are located in high-unemployment areas

Printed under Appropriation 010.18F.0002.07

Form 1120b-Me - Maine Franchise Tax Instructions - 2002

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