Information current as of July 31, 2021.
COVID-19 has changed life across the globe. Many taxing jurisdictions are taking mitigating actions to create social distance and aid taxpayers. The following is a running list of actions by jurisdiction, which generally result in additional time to file and/or pay. Further, many jurisdictions have closed their offices to in-person use by taxpayers and suspended their audit and administrative functions. This alert doesn’t cover similar waivers from local-level taxing authorities. These developments continue to quickly evolve; check with your BKD Trusted Advisor™ or visit our COVID-19 Resource Center for current information as needed.
Information Specific to Maine
- Maine provided a number of tax clarifications and updates related to COVID-19. Federal economic impact payments, or “stimulus checks,” received in 2020 by individuals aren’t taxable under federal or Maine income tax laws. This also is true for payments issued as part of the recently enacted Coronavirus Response and Relief Supplemental Appropriations Act, 2021. Unemployment benefits received in 2020, including any increased benefits, are taxable in Maine to the extent included in federal adjusted gross income. Further, federal and state grants and loan forgiveness are, to the extent included in federal adjusted gross income and not otherwise exempt from taxation under Maine law, taxable to Maine. Maine income tax withholding for wages paid through June 30, 2021, to a Maine resident suddenly working in Maine due to a state’s COVID-19 state of emergency will continue to be calculated as if the Maine resident were still working outside Maine. For estimated income tax payments due between January and June 2021 by a Maine resident individual with respect to a tax year beginning in 2021, Maine Revenue Services (MRS) will, upon request, abate the penalty for the underpayment of estimated tax that becomes due as a result of the taxpayer suddenly working in Maine due to a state’s COVID-19 state of emergency. For the period January 1, 2021, through June 30, 2021, with respect to a tax year that begins in 2021, Maine Revenue Services won’t consider the presence of one or more employees in Maine who commenced working remotely from Maine during the state of emergency and due to the COVID-19 pandemic to establish, by itself, corporate income tax nexus.
- Maine DOR, Notice to Maine Income Taxpayers; January 26, 2021.
- As a result of teleworking due to the COVID-19 pandemic, MRS announced that for sales occurring in 2021, MRS won’t consider the presence of one or more employees in Maine who commenced working remotely from Maine during the state of emergency and due to the COVID-19 pandemic to constitute substantial physical presence in Maine for sales and use tax registration and collection duty purposes. This particular tax relief had been provided for sales occurring in 2020.
- Maine Tax Alert No. 3, February 1, 2021.
- Maine extended the individual income tax filing and payment deadline to May 17 from April 15 to align with the federal filing and payment deadlines. Taxpayers don’t have to file anything or call to claim the deadline extension, and no penalty or interest will be applied for taxpayers who file 2020 Form 1040ME during the extended deadline period. Taxpayers with an annual income less than $150,000 may claim a maximum income tax exemption of $10,200 for unemployment benefits. Neither the federal nor state extensions apply to corporate income tax returns and payments or to individual and corporate estimated payments.
- Maine Governor’s Office, News Release; March 18, 2021.
- Maine emergency legislation conforms various state corporate income and individual income tax laws to the Internal Revenue Code (IRC) and makes amendments related to the federal Coronavirus Aid, Relief, and Economic Security Act (CARES Act). The law includes these measures: 1) updating references to the federal IRC to mean the IRC as amended on December 31, 2020, and applying this update to tax years beginning on or after January 1, 2018, and to previous tax years as specified in the IRC, as amended; 2) for corporate income tax purposes, modifying the addition for the global intangible low-taxed income deduction by providing for the addition of an amount equal to a taxpayer’s deduction claimed under IRC Section 250(a) for tax years beginning on or after January 1, 2020; 3) for taxable years beginning after January 1, 2019, and before January 1, 2020, providing for an addition of the difference between a taxpayer’s charitable deduction as determined under IRC §170 excluding application of the amendments under the CARES Act and certain charitable deductions; and 4) making amendments regarding the state’s treatment of CARES Act provisions related to qualified improvement property and net operating loss deductions.
- Maine L.D. 220, effective March 17, 2021.
- Maine issued instructions for claiming an exemption from Maine personal income tax for unemployment compensation benefits received in 2020. Taxpayers with an annual income of less than $150,000, regardless of filing status, may exempt up to $10,200 in unemployment benefits from both federal and state income tax for tax year 2020. For taxpayers who have already filed their 2020 Maine return, an amended return is required to claim any missed exclusion.
- Maine Revenue Services, Unemployment Compensation Instructions, April 1, 2021.
- Maine legislation clarifies the sourcing rules to determine whether compensation for personal services performed as an employee working remotely from a location in Maine is derived from sources in another jurisdiction for purposes of the credit for income tax paid to other taxing jurisdictions. The compensation is sourced to the other jurisdiction if 1) the employee was engaged in performing services from a location outside of Maine immediately prior to a state of emergency declared by the governor due to the pandemic related to COVID-19 or declared by the jurisdiction where the employee was engaged in performing those services; 2) the employee commenced working remotely from Maine due to the COVID-19 pandemic and during either Maine’s or the other jurisdiction’s state of emergency related to the COVID-19 pandemic; 3) the services were performed prior to January 1, 2022, and during either Maine’s or the other jurisdiction’s state of emergency; 4) the compensation is sourced by that jurisdiction as derived from or connected with sources in that jurisdiction under the law of that jurisdiction; and 5) the employee doesn’t qualify for an income tax credit in that jurisdiction for Maine income taxes paid as a result of the compensation.
- Maine L.D. 1216 (H.P. 891), effective for services provided prior to January 1, 2022, and during a declared COVID-19 pandemic emergency.
- Maine published an alert on the expiration of COVID-19-related tax provisions upon the June 30 termination of the state of civil emergency. This includes the following: 1) the 2021 filing deadline for property tax exemptions and current land use programs will be the municipality’s commitment date or July 30, whichever occurs first; 2) the presence of at least one employee working in Maine, including working remotely in the state, who starts working in Maine after June 30 will be considered in determining whether a foreign corporation has corporate income tax nexus; 3) the end of the civil emergency on June 30 terminates the state’s sales and use tax COVID-19 pandemic nexus policy; 4) Maine income tax withholding rules related to employees working in Maine, including those teleworking in Maine for an out-of-state employer, will resume for services performed in Maine after June 30; and 5) certain relief related to the credit for income tax paid to another jurisdiction is extended to tax years beginning in 2021.
- Maine Revenue Services, Tax Alert No. 14; June 30, 2021.
- Maine issued updated COVID-19 guidance, clarifying that 1) nonresidents providing disaster relief and receiving income in Maine for the period March 15, 2020, through July 31, 2021, are exempt from Maine income tax; 2) for tax years beginning in 2020 or 2021, Maine will, upon request by a taxpayer, abate the estimated tax underpayment penalty that becomes due through June 30 due to the pandemic; 3) Maine income tax withholding for wages paid in 2020 or 2021 to a resident suddenly teleworking in Maine due to the pandemic will continue to be calculated as if the resident was still working out-of-state; and 4) for sales occurring in 2020 and 2021, Maine will not consider the presence of employees in Maine who commenced working remotely to constitute substantial physical presence for sales tax purposes.
- Maine Revenue Services, Coronavirus FAQs; July 21, 2021.