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Tax Conformity & the Payroll Protection Program:

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January 28, 2021

We need your help!
This week, the Joint Standing Committees on Appropriations and Financial Affairs and Taxation is holding public hearings this week on LD 42An Act Making Certain Supplemental Appropriations and Allocations and Changing Certain Provisions of the Law Necessary to the Proper Operations of State Government (Emergency).
Below please find talking points on tax conformity and contact information for the legislators on the Joint Standing Committees on Appropriations and Financial Affairs and Taxation.

The time to act is now! Please contact the Governor's Office, the AFA committee, and your Representatives and Senators TODAY and urge them to have Maine fully conform to the federal government. If you have further questions, please contact Linda Caprara, senior government relations specialist for the Maine State Chamber of Commerce, by emailing her or calling (207) 623-4568, ext. 106.
Thanks for your help!

Talking Points regarding Tax Conformity
  • As amended, LD 42 does not align with the federal government on various business provisions related to tax conformity. 
  • The federal government created several lifesaving financial programs during the COVID-19 pandemic to put more money in the hands of businesses – keeping their doors open, their people employed, and the economy afloat – all to just get them through this unprecedented time. 
  • Maine businesses had every expectation that the state would conform accordingly, especially since these programs were created specifically to keep people in business.

Payroll Protection Program (PPP) loans would be tax-free at federal level, but not at state level:

  • The federal government is providing an expense deduction for the PPP loans for businesses and is proposing to exempt the PPP loans from income tax.
  • Maine will allow only companies to deduct expenses associated with the PPP loans, but will require that taxpayers add back those expenses to taxable income. This means PPP loans will be taxed.
  • This inconsistency with the federal guidelines represents a lost benefit to Maine businesses of up to $100 million. The impact on struggling small businesses could be devastating – the last straw for many of them. 

Federal Derived Intangible Income (FDII) elimination will increase taxes on Maine manufacturers:

  • LD 42 is proposing to eliminate the FDII provision and will cost Maine-based manufacturers an estimated $10 million. This provision was placed in the Tax Cuts & Jobs Act by Congress to make it easier for U.S. manufacturers to compete internationally.
  • Elimination of this provision will mostly impact small- to medium-sized manufacturers that export overseas and invest here in Maine. We need to grow Maine’s economy – not shrink it!
  • LD 42 is also proposing to not conform with the federal government on the treatment of net operating losses, business interest expense deductions, and other business-related tax deductions that employers currently use to remain competitive.  

Key Contact Information

Governor’s Office:        (207) 287-3531

Senate Leadership:     President of the Senate: (207) 287-1500    
                                            Senate Majority Office: (207) 287-1515
                                            Senate Minority Office: (207) 287-1505

House Leadership:       Speaker of the House: (207)287-1300
                                            House Majority Office: (207)287-1430
                                            House Minority Office: (207)287-1440

Appropriations Committee:

Taxation Committee:

The time to act is now! Please contact the Governor's OfficeSenate and House Leadership, the AFA and Taxation committees, and your Representatives and Senators TODAY and urge them to have Maine fully conform to the federal government.

If you have further questions, please contact Linda Caprara, senior government relations specialist for the Maine State Chamber of Commerce, by calling (207) 623-4568, ext. 106. 

Thanks for your help!

Oxford Hills Chamber of Commerce

4 Western Avenue South Paris, ME 04281
207.743.2281
info@oxfordhillsmaine.com

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