Break: Maine’s Recently Adopted Supplementary Budget Complies with PPP Loans | Pierce Atwood LLP
In the wee hours of the morning, the Maine Legislature passed a compromise Supplementary Budget for fiscal year 2021. Importantly, the budget fully conforms to Maine’s tax treatment of Paycheck Protection Program (PPP) loans in the early hours of the morning. federal processing tax-exempt loans.
As a result, Maine businesses will not face an increase in Maine income tax due to the cancellation of PPP loans or the taking of a federal deduction for business expenses paid with the. loan proceeds delivered. This compromise budget differs from the governor’s proposal, which would have been in accordance with federal treatment up to the first million dollars in canceled P3 loans. This is an important victory for Maine businesses.
As adopted, the Supplementary Budget also includes the following new tax provisions:
- FDII Addback Study. As part of the governor’s original proposal, the Supplementary Budget expanded an addition in Maine to apply to both the 50% block low tax intangible income deduction and the 37.5% low tax deduction. intangible income of foreign origin under § 250 (a) (1) of IRC. Additionally, the budget passed last night will force Maine Revenue Services to study the FDII addition change to determine its impact on Maine businesses.
- Unemployment benefit limits. The Supplementary Budget complies with the US federal bailout law of 2021 by exempting up to $ 10,200 in unemployment benefits received in 2020 from Maine income tax, for people with adjusted gross income federal is less than $ 150,000.
The supplementary estimates also adopt the tax provisions proposed by the governor and dissociate themselves from the federal treatment of excess business losses, interest charges and charitable deductions, while conforming to the federal treatment of net operating losses. Additional analysis on these and other tax changes in the budget is available in our recent alert, Supplementary Budget Proposed by the Governor of Maine – Summary of Federal (Non) Compliance.