Maine Revenue Services (“MRS”) Rulemaking Activity

Rule 205 amended.  Rule 205 (Certification of Assessors) has been updated to expand the levels of assessor certification to recognize advanced professional education and make other, housekeeping, changes.  Certification and the continuing education of property tax assessors in the State of Maine is the responsibility of the State Tax Assessor.  This rule governs the nature and content of the certification examinations as well as the enforcement of the continuing education requirements required under 36 M.R.S.  § 311.  A copy of the rule can be found on the MRS website at www.maine.gov/revenue/rules/homepage.html.

Rule 301 amended. MRS has amended Rule 301 (“Sales for Resale and Sales of Packaging Materials”).   This rule establishes procedures for making sales for resale, certain sales to lessors and service providers, and sales of packaging materials exempt from sales tax, and sets forth requirements for certification of exempt sales.  The amendments, which are minor, conform the rule to recent statutory changes and to current agency practice.   The changes will have no substantive impact on taxpayers.  A copy of the rule can be found on the MRS website at www.maine.gov/revenue/rules/homepage.html.

Rule 308 amended.  MRS has amended Rule 308 (“Direct Pay Permits”).  This rule establishes a system for combined reporting of purchases by manufacturers and utilities using a “direct payment permit” issued by the State Tax Assessor.  A minor amendment has been made to Section 4(1) to reflect that the transmission and distribution (“T&D”) of electricity may be purchased exempt from tax by a direct pay permit holder.  Former Section 6 of the Rule has also been deleted as unnecessary.  The changes will have no substantive impact on taxpayers.  A copy of the rule can be found on the MRS website at www.maine.gov/revenue/rules/homepage.html.

Rule 323 proposed amendments. MRS has proposed minor amendments to Rule 323 (“Commercial Agricultural Production, Commercial Aquacultural Production, Commercial Fishing and Commercial Wood Harvesting”) to update it to reflect recent statutory changes that apply to sales occurring on or after January 1, 2017.  The rule addresses the issuance of sales tax refunds and certificates of exemption to persons who are engaged in certain qualifying activities.  Current law provides that fuel is eligible for exemption or refund only when used in a commercial fishing vessel, but effective January 1, 2017, all fuel used by farmers, fishermen and wood harvesters in their business will be eligible for exemption or refund.  This is routine annual rulemaking.  Comments should be directed to David E. Bauer, Tax Policy Analyst, Maine Revenue Services, 24 State House Station, Augusta, Maine 04333 or via e-mail to david.e.bauer@maine.gov.  The deadline for comments is December 30, 2016.

Rule 504 repealed.  MRS has repealed Rule 504 “Shrinkage Allowance for Retail Gasoline Dealers.” The rule was unnecessary as everything addressed in the rule is covered by the relevant statute (36 M.R.S.  § 2906).  Repeal of the Rule will result in no change in Maine Revenue Services policy and practice regarding gasoline shrinkage allowances.

Rule 703 repealed.  MRS has repealed Rule 703 (“Exempt Sales of Cigarettes”), which was unnecessary and obsolete.  Repeal of the Rule will have no impact on cigarette distributors, cigarette wholesales, or any other Maine taxpayers.

 

Notice Regarding VOLKSWAGEN and AUDI DIESEL Class Action Settlement Buyouts

Maine Revenue Services is issuing this informational notice to make current owners of certain 2009-2015 Volkswagen and Audi diesel vehicles aware of the sales tax implications of the buyback option provided through the Class Action Settlement Agreement approved October 25, 2016.

This guidance applies to eligible owners of 2009-2015 Volkswagen and Audi diesel vehicles included as part of the settlement agreement.  Under the terms of the settlement, the owner of an affected Volkswagen or Audi vehicle is eligible for a cash payment depending on the model, the year, and the mileage of the vehicle.  In addition, the owner may elect to have Volkswagen buy back their vehicle, or they may keep the vehicle and Volkswagen will provide modifications to the vehicle’s emissions system.   

Under Maine law, when a motor vehicle is traded in towards the purchase of another motor vehicle, sales tax is computed on only the difference between the purchase price of the new vehicle and the trade-in allowance for the old vehicle.  However, owners that elect to have Volkswagen buy back their vehicle and then purchase a replacement vehicle should be aware that the buyback is a separate transaction and does not qualify as a trade-in allowance for Maine sales tax purposes.  Sales tax will be due on the full purchase price of the replacement vehicle.   
Additional questions should be directed to the Sales, Fuel and Special Tax Division at (207) 624-9693 or sales.tax@maine.gov.

 

Changes to the Prepaid Wireless Fee Imposed on
Prepaid Wireless Card Transactions

The PUC has announced changes to the amount of the Prepaid Wireless fee, comprised of the E-911 surcharge, the Maine Universal Service Fund (MUSF) fee and the Maine Telecommunications Education Access Fund (MTEAF) fee. 

Effective January 1, 2017, the fee will increase from $1.01 per retail transaction to $1.16 per retail transaction. 

Sellers who are not a prepaid wireless provider are allowed to retain 3% of the total fee collected.

The components of the fee rounded to the nearest penny are:

E9-1-1  $  .45 (the current statutory surcharge amount);
MUSF  $  .53 ($25 times the current contribution (or assessment) rate of 2.1%); and
MTEAF  $  .18 ($25 times the contribution (or assessment) rate of .7%);
TOTAL  $ 1.16. These amounts are rounded to the nearest penny.

 

Maine Revenue Services Conforms to
Federal Tax Relief Provided to Taxpayers Affected by Hurricane Matthew

Maine Revenue Services has announced Maine Tax Filing Relief for those located in the federally declared disaster areas affected by Hurricane Matthew.

Taxpayers who reside or have a business located in the Hurricane Matthew disaster area will have until March 15, 2017 to file tax returns and submit tax payments that were due on or after October 4, 2016 and before March 15, 2017.  The relief applies to all taxes administered by Maine Revenue Services, including Sales and Use Taxes, Individual and Corporate Income Taxes, the Estate Tax and Financial Institution Franchise Tax.

Maine Revenue Services will abate interest and any late filing or late payment penalty that would otherwise apply.  However, the extended due dates do not automatically apply to Maine Form W-3ME and information returns, such as Forms W-2 and 1099.  Extensions for filing these forms will be granted on a case-by-case basis for reasonable cause.

To qualify for relief, affected taxpayers should write “HURRICANE MATTHEW” across the top of their return.  Businesses or individuals located in the federally declared disaster area who receive penalties and interest for filing returns or paying taxes late during the relief period should contact Maine Revenue Services at 207-626-8475 (Income Tax programs) or 207-624-9693 (Sales Tax programs)  for a waiver of the penalties and interest.

If the IRS grants relief to other areas affected by the hurricane or grants an additional relief period, Maine Revenue Services intends to grant similar relief to affected Maine taxpayers.

Taxpayers with questions about special federal tax relief associated with Hurricane Matthew should contact the IRS at 866-562-5227 or go to the IRS website at www.irs.gov for posted information.  Taxpayers with questions about their Maine taxes are encouraged to contact Maine Revenue Services at 207-626-8475 (Income Tax programs) or 207-624-9693 (Sales Tax programs), or visit the Maine Revenue Services website at www.maine.gov/revenue.

 

2017 State of Maine Individual Income Tax Rates

Below are the individual income tax rate schedules for tax years beginning in 2017.  The rate schedules for 2016 are found at: www.maine.gov/revenue/forms/1040/2016/1040 rate sched 2016.pdf.

Note:  For tax years beginning in 2017, an inflation adjustment is made by multiplying the cost-of-living adjustment, 1.0036, by the lowest dollar amounts of the tax rate tables specified in 36 M.R.S.  § 5111, sub- § § 1-F, 2-F and 3-F.  The Maine standard deduction amount is adjusted by multiplying the cost-of-living adjustment by the amounts specified in 36 M.R.S.  § 5124-B, sub- § 1, para. A. See 36 M.R.S.  § 5403.  The Maine personal exemption amount is equal to the federal personal exemption amount.

Do not use these tax rate schedules to determine income tax withholding from wages.

Tax Rate Schedule #1
For Single Individuals and Married Persons Filing Separate Returns
If the taxable income is:  The tax is:
Less than $21,100  5.8% of Maine taxable income
$21,100  but less than  $50,000  $1,224  plus  6.75%  of excess over  $21,100
$50,000  but less than   $200,001  $3,175  plus  7.15%  of excess over  $50,000
$200,001  or more  $13,900  plus  10.15%  of excess over  $200,000

Tax Rate Schedule #2
For Unmarried or Legally Separated Individuals who Qualify as Heads of Household
If the taxable income is:  The tax is:
Less than $31,650  5.8% of Maine taxable income
$31,650  but less than  $75,000  $1,836  plus  6.75%  of excess over  $31,650
$75,000  but less than  $200,001  $4,762  plus  7.15%  of excess over  $75,000
$200,001  or more  $13,700  plus  10.15%  of excess over  $200,000

Tax Rate Schedule #3
For Married Individuals and Surviving Spouses Filing Joint Returns
If the taxable income is:  The tax is:
Less than $42,250  5.8% of Maine taxable income
$42,250  but less than  $100,000  $2,451  plus  6.75%  of excess over  $42,250
$100,000  but less than  $200,001  $6,349  plus  7.15%  of excess over  $100,000
$200,001  or more  $13,499  plus  10.15%  of excess over  $200,000

Personal Exemption:  $4,050

Standard Deduction:  Single - $11,600  Married Filing Jointly - $23,200
Head of Household - $17,400  Married Filing Separately - $11,600

Additional Amount for Age or Blindness:
$1,250 if married (whether filing jointly or separately) or a qualified surviving spouse.  The additional amount is $2,500 if one spouse is 65 or over and blind, $2,500* if both spouses are 65 or over, $5,000* if both spouses are 65 or over and blind, etc.
*If married filing separately, these amounts apply only if you can claim an exemption for your spouse.

  $1,550 if unmarried (single or head of household).  The additional amount is $3,100 if the individual is both 65 or over and blind.

Clarification of Annual Due Date Change for Maine
Pass-Through Entity Withholding (Form 941P-ME)

As noted in the October 2016 issue of the Maine Tax Alert, Maine generally conforms to the federal changes to the original and extension due dates for corporate and partnership returns for tax years beginning on or after January 1, 2016. See the chart as provided in that article for the corresponding Maine original and extension due dates.

Note however, that for tax years 2016 and later, Form 941P-ME is due by March 15th each year, even if the entity operates on a fiscal year basis. If an entity has an extension from the Internal Revenue Service (IRS) for filing its federal information return (Form 1065 or 1120S), the due date for filing Form 941P-ME is automatically extended for an equivalent period of time, generally up to 6 months, but no longer than 8 months.  If any pass-through entity withholding is due, that amount must be paid by March 15, 2016; no extension to pay is allowed.

Fiscal year entities must complete Form 941P-ME on the basis of entity information for the fiscal year that ends during the calendar year for which the form is filed. For example, an entity with a fiscal year ending June 30, 2016 would complete the 2016 Form 941P-ME by March 15, 2017 on the basis of the entity’s information for the fiscal year that ends June 30, 2016.

Fraud Alert If you believe you are a victim of identity theft or that a breach of personally identifiable information has occurred, contact MRS at (207) 626-8475 or email fraudalert.mrs@maine.gov as soon as possible. Timely notification assists MRS in preventing fraudulent tax refunds.

 

Department	Telephone Numbers	FAX Numbers	Email Addresses
Taxpayer Service Center	(207) 626-8475	(207) 287-5855
Central Registration	(207) 624-5644	(207) 287-6975	taxregistration@maine.gov
Collections & Compliance	(207) 624-9595	(207) 287-6627	compliance.tax@maine.gov
Corporate Tax	(207) 624-9670	(207) 624-9694	corporate.tax@maine.gov
E-file Help Desk (1040 ONLY)	(207) 624-9730	(207) 287-6628	efile.helpdesk@maine.gov
Electronic Funds Transfer	(207) 624-5625	(207) 287-3618	efunds.transfer@maine.gov
Estate & Fiduciary Income Tax	(207) 626-8480	(207) 624-9694	estatetax@maine.gov
Fuel Tax	(207) 624-9609	(207) 287-6628	fuel.tax@maine.gov
Forms Request Line	(207) 624-7894
Individual Income Tax Assistance	(207) 626-8475	(207) 624-9694	income.tax@maine.gov
Insurance Premium Tax	(207) 624-9753	(207) 624-9694
Payment Plan/Income Tax	(207) 621-4300	(207) 621-4328	compliance.tax@maine.gov
Payment Plan/Other	(207) 624-9595	(207) 287-6627	compliance.tax@maine.gov
Practitioners’ Hotline	(207) 626-8458	(207) 624-9694
Property Tax	(207) 624-5600	(207) 287-6396	prop.tax@maine.gov
Sales Tax	(207) 624-9693	(207) 287-6628	sales.tax@maine.gov
Tax Clearance Letters	(207) 624-9628	(207) 287-6627
Office of Tax Policy	(207) 624-9677	(207) 287-3618
Taxpayer Advocate	(207) 624-9649	(207) 287-3618	taxpayer.advocate@maine.gov
Withholding Tax	(207) 626-8475	(207) 624-9694	withholding.tax@maine.gov
Tax Violations Hot Line	(207) 624-9600

This publication is designed to keep taxpayers, tax practitioners and the general public informed of developments, problems, questions and matters of general interest concerning Maine tax law, policy and procedure. The articles in this newsletter are not designed to address complex issues in detail, and they are not a substitute for Maine tax laws and/or regulations.
Suggestions for the Tax Alert? Please contact:: Maine Revenue Services PO Box 1060 Augusta, Maine 04332-1060