19-100-100 Me. Code R. § 3
Summary: This section explains the tax benefits available to certified businesses, and sets forth guidelines to ensure that PTDZ tax benefits are not provided for the transfer of property, employees or positions.
When a business is certified as a qualified PTDZ business, the tax benefits described in 30-A M.R.S. §5250-I(14) become effective and available to that business at the certified location as of the earliest date permitted by the applicable tax program statute. Generally, Maine income tax, franchise tax, and insurance premiums tax credits are available in the year in which the business commences qualified business activity, i.e. first implements its approved development program by placing property in service in an activity identified in the letter of certification or hiring employees; sales and use tax exemptions and reimbursements are available to certified businesses after the business hires at least one net new employee above its base level of employment and receives a certificate of qualification from the Commissioner; and employment tax increment financing is available in the calendar year that the business hires at least five net new employees as required under Title 36, Chapter 917.
PTDZ tax benefits are available to all businesses certified by the Commissioner, regardless of their form of ownership (subchapter "C" or "S" corporations, pass-through entity, or sole proprietorship).
PTDZ tax benefits are available only if the certified business hires at least one qualified employee above its base level of employment within the first two calendar years of certification. Upon written request, the Commissioner may grant an extension of up to 12 months to the two-year hiring period. An extension request must include information sufficient to establish to the satisfaction of the Commissioner that the hiring requirement was not met within the required period due to unforeseeable circumstances which were beyond the control of the business. If a certified business fails to hire one qualified employee above its base level within the required period, including any extension, the letter of certification will be terminated.
A certified business must maintain at least one qualified employee above its base level of employment beginning on the date that the first qualified employee was added. If a certified business fails to maintain one qualified employee above its base employment level, it must notify the Commissioner within 30 days of the lapse in employment level and the date the lapse began. The certified business has up to 60 days from the date it first failed to maintain one qualified employee above its base employment level to regain a net new qualified employee, after which the letter of certification and certificate of qualification will be terminated. Upon written request, the Commissioner may allow a reasonable amount of additional time for a certified business to return to its required level of employment. A request for additional time must identify why the required employment level was not maintained and must include information sufficient to establish to the satisfaction of the Commissioner that the required employment level could not be met within the 60-day period due to unforeseeable circumstances which are beyond the control of the business. A certified business who fails to maintain one qualified employee above its base employment level due to the effects of a state of emergency as designated by the Governor will be granted a waiver to return to its required employment level by the end of the next reported calendar year without the need for specific written request by the business. Affected businesses may be granted an additional one-year extension if the state of emergency spans multiple calendar years or upon written request as described in this subsection.
A business that is terminated must return any PTDZ benefits received based on business activity occurring after the date it failed to maintain one qualified employee above its base level.
The following limitations will be applied to ensure that PTDZ tax benefits provided to a business are based only on net new jobs and investments in property:
The numerator of the apportionment fraction may not include property, employees and positions transferred from a non-qualifying activity or from an affiliated business. This ensures that the dollar values used to gauge the level of qualified business activity are determined by net new investment in the zone. Therefore, transferred employees and positions may not be reflected in the numerator of the payroll portion of the apportionment fraction, and the value of transferred property may not be reflected in the property portion of the apportionment fraction. The value of property that has been transferred physically to the zone may not be included in the numerator of the apportionment fraction. The value of property that has been sold or otherwise disposed of as part of the development project must be subtracted from the value of the property investments in the zone to determine the net new property value.
19-100 C.M.R. ch. 100, § 3