Legislative Document No. 607 S.P. 194 In Senate, February 5, 2019
An Act To Provide Equitable Taxation for the Food and Beverage Industry
Reference to the Committee on Taxation suggested and ordered printed.
DAREK M. GRANT Secretary of the Senate
Presented by Senator GUERIN of Penobscot. Cosponsored by Senators: FOLEY of York, LUCHINI of Hancock, POULIOT of Kennebec, Representatives: AUSTIN of Gray, STANLEY of Medway.
Printed on recycled paper 1 Be it enacted by the People of the State of Maine as follows:
2 Sec. 1. 36 MRSA §5122, sub-§2, ¶B, as amended by PL 2005, c. 218, §52, is 3 further amended to read: 4 B. An amount equal to the reduction in salaries and wages expense for federal 5 income tax purposes associated with the taxpayer's federal credit for employer social 6 security tax on employee cash tips as determined under the Code, Section 45B, work 7 opportunity credit as determined under the Code, Section 51 or empowerment zone 8 employment credit as determined under the Code, Section 1396; 9 Sec. 2. 36 MRSA §5200-A, sub-§2, ¶C, as amended by PL 2005, c. 218, §55, is 10 further amended to read: 11 C. An amount equal to the reduction in salaries and wages expense for federal 12 income tax purposes associated with the taxpayer's federal credit for employer social 13 security tax on employee cash tips as determined under the Code, Section 45B, work 14 opportunity credit as determined under the Code, Section 51 or empowerment zone 15 employment credit as determined under the Code, Section 1396;
16 SUMMARY 17 This bill allows a deduction from Maine individual and corporate taxable income for 18 the federal tax credit allowed to an employer for the employer's share of federal social 19 security taxes paid on the portion of an employee's tips that cause the employee's wages 20 to exceed $5.15 per hour. Under federal tax law, the credit amount must be subtracted 21 from the taxpayer's otherwise deductible expenses, which increases federal taxable 22 income. Under current Maine law, when an employer takes the credit available under the 23 federal Internal Revenue Code, the employer receives neither a Maine credit nor a return 24 of the federal disallowed deduction for Maine taxable income purposes; such a deduction 25 is allowed from Maine taxable income for the work opportunity credit and empowerment 26 zone employment credit. This bill makes Maine's treatment consistent across the 3 27 federal credits.
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