Income/Franchise:
Maine: Guidance Addresses Pandemic-Related Telework Credit Intended to Prevent Double Taxation

Tax Alert, Vol. 31, Issue 10, Me. Rev. Serv. (4/21). Following up on earlier guidance addressing the potential state tax-related ramifications arising from employee teleworking arrangements due to the COVID-19 pandemic, Maine Revenue Services (MRS) now explains that for tax years beginning in 2020, Maine residents may be eligible for an income tax credit that seeks to prevent double taxation as a result of some pandemic-related telework arrangements. Specifically, MRS explains that a Maine resident who began teleworking in Maine due to the COVID-19 pandemic and who was performing the same services from a location outside of Maine immediately prior to the COVID-19 state of emergency declared by the Maine Governor, or declared by the jurisdiction where the employee was performing the services, is allowed to claim a Maine tax credit for income tax paid to other jurisdictions to the extent that:

• The services were performed during 2020 during the state of emergency period;
• The other jurisdiction is asserting the income is sourced to that jurisdiction; and
• The employee does not qualify for an income tax credit in that jurisdiction for income taxes paid as a result of the compensation.

MRS also addresses provisions under recently enacted legislation [see LD 220 / HP 155 (2021), and State Tax Matters, Issue 2021-12, for more details on this new law] that generally conforms Maine’s income tax to the federal Internal Revenue Code as amended through December 31, 2020 – including highlighting federal tax law changes enacted during 2020 to which Maine does not conform. Please contact us with any questions.