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Governor Announces Maine Revenue Services Will Alert Tax Practitioners of Potential Need to Amend 2017 State Income Tax Returns

May 17, 2018

Legislature’s failure to pass conformity to federal tax code will require many Mainers to amend previously filed returns

For Immediate Release: Thursday, May 17, 2017
Contact: Julie Rabinowitz, Press Secretary, 207-287-2531

AUGUSTA – Governor Paul R. LePage is advising Mainers and businesses to pay attention to the new Tax Alert that is being issued this week by the State. Maine Revenue Services (MRS), a bureau of the Department of Administrative and Financial Services (DAFS), is issuing a tax alert because Maine taxpayers may need to amend their previously filed 2017 state income tax returns due to the failure of the Legislature to pass tax conformity.

Because the Maine Legislature failed to adopt Governor LePage’s Conformity and Family Tax Relief Act (CFTR), a proposal that would have conformed Maine’s income tax law to certain aspects of the new federal tax law, it is important that individual and business tax-filers understand how not conforming affects both previously filed taxes and future filings. Among the provisions included in the Governor’s bill were tax changes retroactive to 2017 included in the federal Tax Cuts and Jobs Act (TCJA) and the Bipartisan Budget Act.

“Today’s announcement from Maine Revenue Services was entirely avoidable,” stated Governor LePage. “Conformity proposals have historically received bipartisan support, due to the tax benefits they provide to Maine’s businesses and families. However, in more recent years, Maine Democrats have chosen to mirror the prior dysfunction of Congress on tax policy by using our administration’s proposals as a political bargaining chip. Shame on them for bringing Washington-style brinksmanship to Augusta.” MRS expects to issue formal guidance on both the specific tax items to which Maine failed to conform and the procedures that will be used to amend existing returns.

“For the last three months, our administration has been warning the Legislature of the consequences of not conforming to the new federal code,” added Governor LePage. “Their failure to act on my proposal has left Maine aligned to a federal tax code that no longer exists, placing an undue and preventable burden on both individuals and businesses.”

With the Legislature choosing to adjourn without acting on the CFTR, Maine’s tax code remains conformed to the Internal Revenue Code of 1986 as amended through December 31, 2016. For years 2017, 2018 and the foreseeable future, Maine no longer fully conforms to federal tax policy.

The lack of conformity also prevents the State from collecting its share of revenue from multinational corporations that are repatriating foreign income as a result of the TCJA; the State’s share is expected to total approximately $31 million.

While today’s announcement is the first readily identifiable consequence of the Legislature’s inaction and lack of leadership, in the coming months MRS will be working to develop the forms and applications necessary to independently administer portions of the federal code that no longer exist. DAFS estimates this work will require the hiring of 26 additional state employees and additional costs of $6 million.

Timeline

  • December 22, 2017 – Congress passes and President Donald J. Trump signs the TCJA, the first major reform to the federal tax code since 1986.
  • January 29, 2018 – Income tax filing season begins.
  • January 31, 2018 – Governor LePage announces the State of Maine will consider conformity options, provided support exists among legislative leadership to continue Maine’s conformity to the federal Code.
  • February 1, 2018 – DAFS presents a preliminary report on the impacts of the TCJA on Maine to the Joint Standing Committee on Appropriations and Financial Affairs (AFA) and the Joint Standing Committee on Taxation (Tax).
  • March 1, 2018 – DAFS Commissioner Alec Porteous announces plans to submit legislation that will continue to conform Maine’s income tax law to federal tax law to a joint meeting of the AFA and Tax Committees.
  • March 15, 2018 – Public hearing and work session held.
  • March 19, 2018 – Work session held.
  • March 22, 2018 – Work session held.
  • March 26-28, 2018 – Work sessions held.
  • April 4-5, 2018 – Work sessions held.
  • April 5, 2018 – Tax Committee votes.
  • April 17, 2018 – CFTR Reported out of Tax Committee; income tax filing season concludes.
  • April 19, 2018 – Statutory adjournment date for Second Regular Session of 128th Legislature.
  • May 2, 2018 – CFTR Carried over to any Special Session of the 128th Legislature.
  • May 17, 2018 – MRS informs tax practitioners and taxpayers of possible requirement to amend 2017 Maine income tax returns.

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