Sec. B-1. 36 MRSA §5111, sub-§4, as enacted by PL 1989, c. 596, Pt. J, §1, is amended to read:
4. Additional tax. Additionally, a tax is imposed for each taxable year beginning on or after January 1, 1989, on the Maine adjusted gross income of every nonresident individual. The amount of the tax shall equal equals the tax computed under this section and chapter 805, as if the nonresident were a resident, less applicable tax credits other than that provided by section 5217-A, and multiplied by the ratio of the individual's Maine adjusted gross income, as defined in section 5102, subsection 1-C, paragraph B, to the nonresident's entire federal adjusted gross income, as modified by section 5122.
Sec. B-2. 36 MRSA §5142, sub-§8 is enacted to read:
8. Minimum taxability threshold. Minimum taxability thresholds for nonresidents are as follows.
A. Compensation for personal services performed in Maine is Maine-source income, subject to taxation under this Part, if the nonresident taxpayer is present in Maine performing personal services for more than 20 days during the taxable year and directly earns or derives more than $6,000 in gross income during the taxable year in Maine from all sources.
B. A nonresident individual who is present for business in Maine on other than a systematic or regular basis, either directly or through agents or employees, has Maine-source income derived from or effectively connected with a trade or business in Maine and subject to taxation under this Part only if the nonresident individual earns or derives more than $6,000 of gross income during the taxable year from contractual or sales-related activities.
Sec. B-3. 36 MRSA §5200-A, sub-§2, ¶H, as amended by PL 1997, c. 746, §11 and affected by §24, is further amended to read:
H. For each taxable year subsequent to the year of the loss, an amount equal to the absolute value of the net operating loss arising from tax years beginning on or after January 1, 1989 but before January 1, 1993 and that, pursuant to the Code, Section 172, was carried back for federal income tax purposes, but only to the extent that:
(1) Maine taxable income is not reduced below zero;
(2) The taxable year is within the allowable federal period for carry-over; and
(3) The amount has not been previously used as a modification pursuant to this subsection; and
Sec. B-4. 36 MRSA §5200-A, sub-§2, ¶I, as enacted by PL 1997, c. 746, §12 and affected by §24, is amended to read:
I. For income tax years beginning on or after January 1, 1997, all items of income, gain, interest, dividends, royalties and other income of a financial institution subject to the tax imposed by section 5206, to the extent that those items are passed through to the taxpayer for federal income tax purposes, including, if the financial institution is an S corporation, the taxpayer's pro rata share and, if the financial institution is a partnership or limited liability company, the taxpayer's distributive share. A subtraction may not be made under this paragraph for:
(1) Income of the taxpayer earned on interest-bearing or similar accounts of the taxpayer at a financial institution as a customer of that financial institution;
(2) Any dividends or other distributions with respect to a taxpayer's ownership interest in a financial institution; and
(3) Any gain recognized on the disposition by the taxpayer of an ownership interest in a financial institution.; and
Sec. B-5. 36 MRSA §5200-A, sub-§2, ¶J is enacted to read:
J. An amount equal to an income tax refund to the taxpayer by this State or another state of the United States that is included in that taxpayer's federal taxable income for the taxable year under the Code, but only to the extent that:
(1) Maine net income is not reduced below zero; and
(2) The amount to be refunded from this State or another state of the United States has not been previously used as a modification pursuant to this subsection.
If this modification amount results in Maine net income that is less than zero for the taxable year, the negative modification amount may be carried back or forward in the same manner as a net operating loss deduction carry-back or carry-forward to a taxable year that is within the allowable federal period for a carry-back or carry-forward, subject to the above limitations.
Sec. B-6. 36 MRSA §5218, as amended by PL 1987, c. 772, §40, is repealed and the following enacted in its place:
§5218. Income tax credit for child care expenses
1. Resident taxpayer. A resident individual is allowed a credit against the tax otherwise due under this Part in the amount of 25% of the federal tax credit allowable for child and dependent care expenses in the same tax year. In no case may this credit reduce the Maine income tax to less than zero.
2. Nonresident or part-year resident taxpayer. A nonresident or part-year resident individual is allowed a credit against the tax otherwise due under this Part in the amount of 25% of the federal tax credit allowable for child and dependent care expenses multiplied by the ratio of the individual's Maine adjusted gross income, as defined in section 5102, subsection 1-C, paragraph B, to the nonresident's entire federal adjusted gross income, as modified by section 5122. In no case may this credit reduce the Maine income tax to less than zero.
Sec. B-7. 36 MRSA §5219-A, as enacted by PL 1987, c. 504, §32, is repealed and the following enacted in its place:
§5219-A. Retirement and disability credit
1. Resident taxpayer. A resident individual is allowed a credit against the tax otherwise due under this Part equal to 20% of any credit the taxpayer received for the same taxable year under the Code, Section 22. In no case may this credit reduce the Maine income tax to less than zero.
2. Nonresident or part-year resident taxpayer. A nonresident or part-year resident individual is allowed a credit against the tax otherwise due under this Part equal to 20% of any credit the individual received for the same taxable year under the Code, Section 22 multiplied by the ratio of the individual's Maine adjusted gross income, as defined in section 5102, subsection 1-C, paragraph B, to the nonresident's entire federal adjusted gross income, as modified by section 5122. In no case may this credit reduce the Maine income tax to less than zero.
Sec. B-8. 36 MRSA §5219-G, as amended by PL 1997, c. 746, §20 and affected by §24, is repealed and the following enacted in its place:
§5219-G. Tax credits for partners, S corporation shareholders and beneficiaries of estates and trusts
1. Tax credits for partners and S corporation shareholders. Each partner of a partnership or shareholder of an S corporation is allowed a credit against the tax imposed by chapter 803 in an amount equal to the partner's or shareholder's pro rata share of the tax credits described in this chapter, except that in the case of credits attributable to a financial institution subject to tax under chapter 819, the credits are allowable only against the tax imposed by that chapter. A partner's pro rata share must equal the partner's percentage interest in the taxable income or loss of the partnership for federal income tax purposes for the taxable year. The pro rata share of a shareholder of an S corporation must equal the shareholder's percentage share of stock of the S corporation as of the end of the taxable year.
2. Tax credits for beneficiaries of estates and trusts. Each beneficiary of an estate or trust is allowed a credit against the tax imposed by this Part in an amount equal to the beneficiary's pro rata share of the tax credits described in this chapter. A beneficiary's pro rata share must equal the beneficiary's share of federal distributable net income of the estate or trust. If the estate or trust has no federal distributable net income for the taxable year, the share of each beneficiary in the applicable tax credits is in proportion to that beneficiary's share of the estate or trust income for that year, under local law or the terms of the instrument, which is required to be distributed currently, and any other amounts of income distributed in that year. Any balance of the applicable credits is allocated to the estate or trust.
Sec. B-9. 36 MRSA §5220, sub-§2, as repealed and replaced by PL 1987, c. 819, §11, is amended to read:
2. Nonresident individuals. Every nonresident individual who, pursuant to this Part, has a Maine individual income tax liability for the taxable year, except that an individual who does not exceed the threshold contained in section 5142, subsection 8 is not subject to taxation under this Part and need not file a return.
Sec. B-10. 36 MRSA §5278, sub-§§1 and 2, as enacted by P&SL 1969, c. 154, §F, are amended to read:
1. General. A claim for credit or refund of an overpayment of any tax imposed by this Part shall must be filed by the taxpayer within 3 years from the time the return was filed, whether or not the return was timely filed, or 2 3 years from the time the tax was paid, whichever of such periods expires the later; or if no return was filed by the taxpayer, within 2 years from the time the tax was paid. No A credit or refund shall be is not allowed or may not be made after the expiration of the period of limitation prescribed in this subsection for the filing of a claim for credit or refund, unless a claim for credit or refund is filed by the taxpayer within such a period.
2. Limit on amount of claim or refund. If the claim is filed by the taxpayer during the 3-year period prescribed in subsection 1, the amount of the credit or refund shall may not exceed the portion of the tax paid within the 3 years immediately preceding the filing of the claim plus the period of any extension of time for filing the return. If the claim is not filed within such 3-year period, but is filed within the 2-year period, the amount of the credit or refund shall not exceed the portion of the tax paid during the 2 years immediately preceding the filing of the claim. If no claim is filed, the any credit or refund shall allowed upon an audit of the taxpayer may not exceed the amount which that would be allowable under either of the preceding sentences, as the case may be, if a claim was filed this subsection, if a claim had been filed by the taxpayer on the date the credit or refund is allowed.
Sec. B-11. Application. This Part applies to tax years beginning on or after January 1, 1996.
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