Maine Revenue issues additional COVID-19 income and sales tax guidance
On February 12, 2021, Maine Revenue Services (MRS) issued a tax alert with additional tax advice for taxpayers affected by the COVID-19 pandemic.
Maine Income Tax on COVID-19 Relief
Unemployment benefits, federal and state grants, and loan forgiveness are taxable in Maine to the extent that they are included in Federal Adjusted Gross Income and are not otherwise exempt under Maine law. Maine intends to tax additional unemployment benefits provided under the CARES Act, loan and grant programs permitted by the CARES Act, and grants received through the Department of Economic and Community Development of Canada. Maine. Our recent customer alert, Update: Governor of Maine proposes to comply with federal treatment for $ 1 million in P3 loans, discusses the governor’s most recent proposal to exempt 99% of PPP loan recipients from tax.
No legal residency exemption for COVID-19
MRS will not grant relief from Maine’s lawful residence law to people who have a permanent place of residence in Maine and who have unexpectedly spent more than 183 days in Maine due to the pandemic. MRS believes that a place of residence is only considered non-permanent if it is maintained during a temporary stay in Maine to serve a particular purpose. A second home in Maine does not meet this exception, even during the pandemic, according to MRS. Statutory residents will therefore be required to file Maine Resident Reports for 2020, even if the pandemic was their only reason for exceeding 183 days.
In an October tax alert, Maine Revenue announced that in 2020, employers with Maine resident employees working in Maine due to a COVID-19 state of emergency were allowed to treat those employees as if they still worked outside of the state of Maine. retention purposes. MRS has not yet extended this relief until 2021.
Nexus Sales Tax Relief Extended
Previously, MRS announced that an unrelated business in Maine would not link for sales and use tax purposes solely because of an employee working in Maine during the state of emergency and due to the pandemic. The guidance applied to sales made in 2020 has now been extended to also apply to sales in 2021. MRS has not yet issued a corresponding extension for the corporate tax link.
Study opportunity credit
MRS finalized revisions to Rule 812, which allow forborne or deferred student loan payments to qualify for the Education Opportunities Credit.