On July 4, 2018, Maine passed a law to extend the state’s Pine Tree Development Zone (PTDZ) program for three years. The PTDZ program is an incentive program designed to spur economic growth and job creation by making income and sales tax benefits (in addition to certain nontax benefits) available to new and expanding businesses. The original program, which began in 2003, was set to cease accepting new applicants on December 31, 2018, with the benefits for participants sunsetting on December 31, 2028.
The new law extends the date for new applicants by three years to December 31, 2021, with the benefits sunsetting on December 31, 2031. It also makes certain changes to the program, particularly with respect to accountability and performance standards.
For example, a new provision requires businesses that apply to the program after January 1, 2019, to supply a sworn statement that they have added at least one new qualified employee before becoming eligible for the program’s sales tax exemption. Once a business has met that requirement, it may then obtain reimbursement of sales taxes paid for tangible personal property and the transmission and distribution of electricity purchased after it became a qualified PTDZ business but before it was eligible for the sales tax exemption (with the reimbursement period limited to 2 years).
PTDZ businesses are also now subject to additional annual reporting requirements. The annual reports, which are due each year by April 15, must now include information on the number of Maine employees and their wages for the report year, the number of PTDZ employees and their wages for the report year, the number of PTDZ employees hired during the report year, investments made in the business during the report year, and the overall value of the PTDZ benefits claimed or received by the business in the report year.
The law also gives certain oversight and review powers to the legislature, requiring the Office of Program Evaluation and Government Accountability (OPEGA) to review and provide an assessment of the program by January 15, 2021.
Many of these changes were driven by a 2017 OPEGA report, which found that some companies had received the benefits of the PTDZ program without creating new jobs, a goal at the heart of the program.
If you have any questions about the PTDZ program, please contact firm tax partners Jonathan A. Block or Kris J. Eimicke. Jon can be reached at 207.791.1173 or email@example.com, and Kris at firstname.lastname@example.org or 207.791.1248.