July 22, 2019

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Maine Revenue Services Alerts Taxpayers that Amended 2017 Returns may be Required

Maine Revenue Services (MRS) issued guidance late last week responding to the state’s recently-enacted tax conformity legislation. Of note, MRS explained that some taxpayers may be required to amend their 2017 Maine income tax return to comply with Maine’s new tax laws because some federal tax changes—to which Maine conformed in the recent legislation—apply to tax years beginning in 2017. MRS still expects to issue additional guidance for taxpayers who are required to file a 2017 Maine income tax return to reflect the effects of federal mandatory repatriation of deferred foreign income (also referred to as “deemed repatriated income” or “IRC Section 965 income”).

Maine generally requires that taxpayers file an amended Maine return within 180 days from the date of a change or correction affecting the taxpayer’s income tax liability. MRS will abate interest and penalties that would otherwise apply to 2017 amended Maine income tax returns to the extent that the interest and penalties are associated with the federal tax law changes addressed by the recently-enacted Maine tax conformity legislation, and if the amended return is filed no later than March 11, 2019. In addition, MRS will abate interest and penalties that would otherwise apply to 2017 original Maine income tax returns to the extent that the interest and penalties are associated with federal tax law changes addressed by the recently-enacted Maine tax conformity legislation, and if the return is filed no later than October 15, 2018. To qualify for abatement, affected taxpayers should write “TAX CONFORMITY” across the top of their return.

MRS followed-up this week with additional guidance urging taxpayers to review their Maine income tax withholding and estimated tax liability for 2018 in light of Maine’s recent conformity legislation. The most significant Maine tax law changes that taxpayers should be aware of as they review their expected 2018 tax liability include:

  • Increased Maine standard deduction (the Maine standard deduction is now equal to the federal standard deduction)
  • Elimination of the Maine personal exemption for dependent taxpayers
  • New Maine dependent exemption tax credit
  • Nonconformity with the $10,000 federal limitation on real and personal property taxes included in itemized deductions
  • New Maine employer credit for family and medical leave
  • Not allowing the federal business expense deduction under IRC § 199A
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Sarah H. Beard, Pierce Atwood, Litigation attorney
Partner

Sarah Beard litigates cases involving state and local tax issues at all levels, and offers transaction planning, regulatory and legislative experience to assist clients in reaching their financial goals.

Sarah has more than 25 years of experience advising businesses on state and local tax issues.  Her practice covers all state and local taxes but concentrates on assisting businesses with Maine income tax and sales and use tax issues.  Her practice includes state and local tax controversy work at administrative levels and in court, as well as counseling and...

(207) 791-1378
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 taxes. Jon also advises expanding and relocating companies on taking maximum advantage of available tax and economic development incentives. Jon's client base includes large, medium and small businesses as well as individuals.

Jon has been integrally involved with designing, drafting, and enacting many of Maine's tax exemptions and economic development programs, and works hard to keep many of these programs on the books. Jon is also the state's leading expert on domicile and residency issues involving individual taxpayers.

(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