September 22, 2021

Volume XI, Number 265

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Breaking: Maine’s Just-Passed Supplemental Budget Conforms on PPP Loans

In the wee hours of the morning, the Maine Legislature passed a compromise FY 2021 supplemental budget. Importantly, the budget fully conforms Maine’s tax treatment of Paycheck Protection Program (PPP) loans to the federal tax-exempt treatment of the loans.

As a result, Maine businesses will not face increased Maine income tax as a result of either PPP loan forgiveness or taking a federal deduction for business expenses paid with forgiven loan proceeds. This compromise budget differs from the governor’s proposal, which would have conformed to the federal treatment up to the first $1 million of forgiven PPP loan proceeds. This is a significant win for Maine businesses.

As passed, the supplemental budget also includes the following new tax-related provisions:

  • FDII Addback Study. As part of the governor’s original proposal, the supplemental budget expanded a Maine addback to apply to both the 50% global intangible low-taxed income deduction and the 37.5% foreign-derived intangible income deduction under IRC § 250(a)(1). In addition, the budget passed last night will require Maine Revenue Services to study the FDII addition modification to determine its impact on Maine-based businesses.

  • Unemployment Compensation Limits. The supplemental budget conforms to the federal American Rescue Plan Act of 2021 by exempting up to $10,200 of unemployment compensation received during 2020 from Maine income tax, for individuals whose federal adjusted gross income is less than $150,000.

The supplemental budget otherwise adopts the governor’s proposed tax provisions and decouples from the federal treatment of excess business losses, interest expenses, and charitable deductions, while conforming to the federal treatment of net operating losses. Additional analysis on these and other tax changes in the budget is available in our recent alert, Maine Governor’s Proposed Supplemental Budget – Federal (Non)Conformity Summarized.

©2021 Pierce Atwood LLP. All rights reserved.National Law Review, Volume XI, Number 71
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About this Author

Jonathan Block tax lawyer Pierce Atwood Law Firm
Partner

Jon Block represents and advises clients with Maine, New Hampshire, and Massachusetts tax problems. Jon litigates tax cases at the administrative level and through all levels of the court system, advises clients on transactional and multistate tax issues, obtains advance rulings for clients, and does a substantial amount of legislative and government relations work in the tax area. Jon's substantive expertise in state and local tax encompasses corporate and individual income tax, business profits tax, sales and use tax, property tax, excise tax, transfer tax, and other state and local...

(207) 791-1173
Kris J. Eimicke, tax lawyer, Pierce Atwood
Partner

Kris Eimicke concentrates his practice on tax issues and economic development programs, with a special emphasis on state and federal new markets tax credit (NMTC) programs, renewable energy tax credits, historic rehabilitation tax credits, and the newly created opportunity zone program. Kris also regularly advises businesses, tax-exempt organizations, and individuals on tax issues related to a variety of business transactions, as well as representation before the Internal Revenue Service, state revenue agencies, and the courts on tax matters. 

(207) 791-1248
Olga J. Goldberg, Pierce Atwood, tax lawyer
Counsel

Olga J. Goldberg advises clients in complex state and local tax matters, including transaction planning and tax compliance. She represents clients on tax controversy matters from the administrative level through litigation and appeal or settlement. Olga’s practice covers all types of state and local taxes, including corporate income, business profits, franchise, sales and use, and property tax, with a focus on New England and Texas taxes.

Olga regularly speaks and writes on a wide range of state and local tax matters, and is actively involved in IPT and COST.

...
(207) 791-1180
Robert Ravenelle, Pierce Atwood Law Firm, Portland, Tax Law Attorney
Partner

As head of Pierce Atwood's Federal Income Tax practice, Rob Ravenelle has extensive experience in the planning, negotiation and tax structuring for mergers and acquisitions. He works closely with members of our Business Practice Group to ensure that clients obtain the most economic and tax efficient transaction results possible. Rob's prior experience practicing as a Certified Public Accountant brings unique skills that enhance the value of our services in deal transactions, from mergers to renewable energy tax equity financing to succession planning of closely held...

207-791-1294
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