AUGUSTA (AP) – A bill that seeks to clarify who’s a Maine resident and who’s not when it comes time to pay state income taxes has picked up solid committee support, enhancing its chances of passage when it comes up for votes in the days ahead.
But questions lingered Friday about how much revenue the bill would drain away, and the answer could also influence the bill’s future.
The bill sponsored by House Majority Leader Glenn Cummings seeks to make Maine law spell out more clearly who is required, by their residency, to pay income taxes.
The Portland Democrat said his bill was prompted by a case in which a constituent who was transferred to Italy by her company was told she had to pay back taxes plus interest for the years she was gone, even though she had paid income taxes overseas.
“People should not be punished for failing to comply with a law that no one can accurately or predictably interpret,” said Cummings.
Maine law says a person who is “domiciled” in Maine must pay income taxes, but Cummings and others maintain that the definition of domiciled remains clouded. The committee is backing an amended version modeled on laws in Connecticut and several other states that creates a “safe harbor” provision.
The measure, which received unanimous support of the Taxation Committee, would exclude from tax liability people who have no permanent residence in Maine and spend less than 30 days a year in the state.
The amendment would also prohibit Maine Revenue Services from considering the location of a person’s legal, financial, medical and other professional advisers when determining whether that person is domiciled in Maine. Charitable and political contributions made in or out of Maine also could not be taken into account.
While the bill’s present wording has solid committee support, questions remain as to how much income the state would lose if it passed.
On Friday, the Senate chairman of the Taxation Committee, Sen. Joseph Perry, asked Maine Revenue Services for a refined analysis of the bill’s costs. Figures showing too great a loss could have an impact on whether the bill moves forward now or is held, said Perry.
“I just don’t want a (cost) that’s so big we can’t do anything,” said the Bangor Democrat.
Maine Revenue Services believed Cummings’ original proposal went too far, but is generally supportive of the amended version, David Bauer, tax policy analyst for the agency, said Friday.
Bauer, who represented the agency before the Taxation Committee in its review, said revenue services does not feel the section pertaining to professional advisers is necessary, but would not oppose the measure because of that stance.
“I told them we didn’t really have a problem with the bulk of the language,” said Bauer.
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