Mainebiz

W W W. M A I N E B I Z . B I Z 11 JA N UA R Y 2 5 , 2 0 1 6 G ov. Paul LePage is crafting legislation to make sure Maine's income tax policies con- form to federal tax law, which underwent signifi - cant changes last month when Congress passed the $1.8 trillion Omnibus Bill that made a number of tax breaks permanent while extending others for specifi ed periods of time. Under current law, Maine conforms to the Internal Revenue Code through Dec. 31, 2014, with some exceptions specifi cally contained in Maine income tax law. e Maine Legislature must review the changes made to the code since that date, including the changes made by Congress in December to determine to what extent Maine will continue to conform to federal law. In a release explaining his intention to create tax conformity, the governor's offi ce reported that Richard W. Rosen, commissioner of the Maine Department of Administrative and Financial Services, is consulting with the presiding offi cers of the Maine Legislature "to gauge their inter- est in conforming to benefi t Maine taxpayers and small business." At the same time, the Offi ce of Tax Policy is preparing options for what to include in that bill and how any tax breaks will be paid for, since the state budget, unlike the fed- eral budget, must be balanced and must match any revenue reductions with corresponding cuts in spending. e governor's offi ce stated that Sen. Earle McCormick, R-Kennebec, and Rep. Adam Goode, D-Bangor, have agreed to sponsor a bill conforming Maine to the federal tax law changes and continuing Maine's Capital Investment Credit, which is tied to federal bonus deprecia- tion. Rosen said the Legislature has shown bipar- tisan support for tax conformity in the past. "Conformity with the federal tax code makes it easier for small businesses to comply with our tax laws and provides needed tax relief to Maine's teachers, college students, and homeowners," he said in the release. Among the provisions of the $650 billion federal tax extenders package identifi ed by the governor's offi ce as having an impact on Maine taxpayers: ¡ e above-the-line deduction of up to $250 for teacher classroom expenses, which Congress made permanent. ¡ e Section 179 business expense deduction, also made permanent, which allows small businesses to deduct the full purchase price of qualifying equipment and/or software purchased or fi nanced during the tax year. e annual cap, which had been set at $25,000 in prior federal legislation, has been increased and made permanent at $500,000 per year and is being indexed for infl ation. e federal package also extended federal tax items aff ecting itemized deductions for mortgage insurance and a deduction for higher education expenses, according to the governor's offi ce. e governor's offi ce indicated that Rosen has instructed the Maine State Tax Assessor to prepare for the adoption of the department's con- formity legislation. Assuming the tax conformity bill is adopted and signed into law, Maine tax forms and instructions for 2015 will be updated to be consistent with the legislation. On the other hand, if whatever legislation that's fi nally enacted diff ers from the department's proposal, the gov- ernor's offi ce stated, "Maine Revenue Services will inform taxpayers of those tax items and describe what taxpayers will need to do in order to correctly fi le their 2015 tax returns or to correct returns already fi led." In other words, stay tuned. P O L I T I C S & C O. B Y J A M E S M C C A R T H Y Governor to submit bill to conform with federal tax code

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