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Maine Governor Announces COVID-19 Tax Guidance

On October 16, 2020, Maine Governor Janet Mills issued a press release addressing several COVID-19-related tax issues, and Maine Revenue Services today issued guidance providing further details.

Proposed Legislation to Avoid Double-Taxation

Governor Mills has pledged to introduce legislation in January to ensure that Maine residents avoid double-taxation as a result of COVID-19-related telework in Maine. The proposed tax credit would apply to income tax paid to other taxing jurisdictions (such as Massachusetts) if that jurisdiction is asserting an income tax obligation for the same income despite the employee no longer physically working in that jurisdiction due to COVID-19. According to Maine Revenue Services, this legislation will apply to tax years beginning in 2020.

This proposal appears to be a reaction to a controversial Massachusetts emergency regulation that purports to allow the Commonwealth to continue imposing its income tax on nonresidents who worked in Massachusetts pre-COVID-19, if those nonresidents are physically working in another state due to the pandemic. New Hampshire is reportedly filing a suit in the United States Supreme Court challenging this Massachusetts regulation. Governor Mills’ legislative proposal will be taken up when Maine’s newly-elected 130th Legislature begins its work in January 2021.

Withholding, Estimated Tax Payments, Penalty Abatement

In the interim, Maine Revenue Services will allow Maine taxpayers affected by the above issue to maintain the same withholding and estimated tax payment status used prior to the state of emergency. Maine Revenue Services has announced that it will abate penalties, upon request, for any Maine resident taxpayer who owes an estimated income tax payment from suddenly working in Maine as a result of the COVID-19 state of emergency.

Nexus Guidance

Governor Mills has also indicated that businesses not otherwise subject to tax in Maine, but whose employees commenced telework from Maine as a result of the COVID-19 pandemic, is not by itself grounds for establishing corporate income tax and/or sales tax registration and collection nexus with the state of Maine. This policy applies to tax years beginning in 2020 for corporate income tax nexus purposes, and sales occurring in 2020 for sales tax nexus purposes.

No information on 183-Day Issue

Neither the governor nor Maine Revenue Services has addressed whether individuals who have a permanent place of residence in Maine and unexpectedly spent more than 183 days in Maine due to the pandemic will be granted any relief from the state's normal statutory requirement that such individuals are considered Maine residents for state income tax purposes.

Corporate Filing Deadlines

As previously announced, the October 15, 2020 filing deadlines for 2019 corporate income tax returns and franchise tax returns have been automatically extended to November 16, 2020.

Opportunity Maine

Finally, the governor has announced that Maine will relax some of its rules applicable to the Educational Opportunity Tax Credit, known as Opportunity Maine. For example, taxpayers will be allowed to claim the Opportunity Maine credit for completed student loan payments even if their student loans were subject to deferment of forbearance, including those federal student loans placed into automatic forbearance by the CARES Act, provided all other eligibility criteria are met. In addition, for Mainers who were employed in Maine prior to, or during, the pandemic, and who became unemployed as a result of the pandemic, Governor Mills has promised to introduce legislation in January to allow them to take advantage of the Opportunity Maine Tax Credit. Maine Revenue Services announced today that it is in the process of submitting emergency rulemaking to the Secretary of State to implement these Opportunity Maine changes.

©2020 Pierce Atwood LLP. All rights reserved.National Law Review, Volume X, Number 293
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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...

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Olga J. Goldberg, Pierce Atwood, tax lawyer
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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.

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Kris J. Eimicke, tax lawyer, Pierce Atwood
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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. 

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Robert Ravenelle, Pierce Atwood Law Firm, Portland, Tax Law Attorney
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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...

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