Coronavirus (COVID-19) FAQ

Who is eligible for the Maine tax filing and payment extension to May 17, 2021?
What if I am not able to file my Maine individual income tax return that was originally due April 15, 2021 by May 17, 2021?
I am a nonresident providing disaster relief in Maine during the COVID-19 pandemic. Will I be subject to Maine income tax?
I am a Maine resident, but I normally physically work for my employer located outside of Maine. Due to COVID-19, I am teleworking from my home in Maine. I did not pay estimated tax payments during Maine's civil state of emergency; will I be subject to the estimated tax penalty?
I am a Maine resident teleworking in Maine due to COVID-19. My employer is located in another state. Will I be subject to income tax in both states?
Due to COVID-19, Maine individuals who are domiciled outside of Maine but maintain a second home in the State may be spending more time at their Maine home this year. For purposes of the Maine statutory residence test, would such an individual qualify for an exception due to COVID-19?
I am an employer located outside of Maine. Due to COVID-19 one or more employees began teleworking in Maine. Do employees teleworking in Maine establish corporate income tax nexus?
Am I required to withhold Maine income tax for an employee(s) teleworking in Maine due to the COVID-19 state of emergency?
I received unemployment compensation during tax year 2020. Is my unemployment compensation subject to Maine income tax?
I received Paycheck Protection Program (“PPP”) loans and/or Economic Injury Disaster Loans (“EIDL”) due to COVID-19. I am qualified for loan forgiveness on the loans and the discharge of indebtedness is not subject to federal income tax and I have included deductions for the payment of eligible expenses on my federal income tax return. Is the discharge of indebtedness subject to Maine income tax? Are the deductions for the payment of eligible expenses allowed on my Maine income tax return?
My federal education loan payments were temporarily suspended beginning March 13, 2020 due to COVID-19. However, I have continued to pay my student loans during this time. Can I still claim the Maine Educational Opportunity tax credit (EOTC) for these payments when I file my 2020 income tax return?
I am a qualified individual under the EOTC. Can I still claim the credit for tax year 2020 even though I was temporarily laid off due to COVID-19?
Does Maine tax law provide any tax relief or incentives (e.g., exemptions, deductions, or credits) to companies that are providing supplies and resources to hospitals, non-profits, other businesses, and families?
Does Maine provide any exemptions from Maine's lodging tax (i.e., sales tax) for individuals living and working in Maine due to COVID-19?
Due to COVID-19, one or more employees began teleworking in Maine. Does this constitute substantial physical presence for Maine sales and use tax registration and collection duty purposes?

01. Who is eligible for the Maine tax filing and payment extension to May 17, 2021?

As previously announced in the March 2021 - #3 issue of the Maine Tax Alert, the filing and payment due date for 2020 Maine individual income tax returns (Form 1040ME) and annual payments originally due on April 15, 2021 is extended to May 17, 2021.

Filing and payment deadlines for all other Maine taxes, such as corporate income tax, sales tax, and income tax withholding, remain unchanged. Therefore, Maine estimated individual and corporate income tax payments remain due on April 15, 2021.

Taxpayers are encouraged to make payments and file by May 17, 2021 if they are able and prepared to do so.

Updated April 7, 2021

02. What if I am not able to file my Maine individual income tax return that was originally due April 15, 2021 by May 17, 2021?

If you are unable to file your return that was originally due April 15, 2021 by May 17, 2021, Maine will allow an automatic six-month filing extension, beginning with the original due date of the return. For example, with the six-month extension, your individual income tax return originally due April 15, 2021, would be due on October 15, 2021.

With a six-month extension to file, a penalty for failure to file will not be assessed if you file your return on or before the end of the six-month extended due date. However, to avoid penalties for late payment, you must pay at least 90 percent of the tax you owe by May 17, 2021. You may remit your estimated tax payment with the extension payment voucher available at www.maine.gov/revenue/tax-return-forms. Related interest will be charged on any unpaid tax balance remaining after May 17, 2021.

MRS encourages all taxpayers to still pay and file as soon as possible.

Updated April 7, 2021

03. I am a nonresident providing disaster relief in Maine during the COVID-19 pandemic. Will I be subject to Maine income tax?

Maine law provides certain exemption from Maine income tax during a disaster period (see Eligibility requirements below). The COVID-19 disaster period began with a proclamation of the state of emergency on March 15, 2020 and extending to 30 days after the termination of the state of emergency. Since the state of emergency termination is June 30, 2021, the special disaster period designation for the COVID-19 pandemic expires July 30, 2021.

Eligibility for exemption from Maine income tax provides that certain compensation for personal services performed in Maine as an employee and certain income from a trade or business conducted in Maine are exempt from Maine income tax during a disaster period. Specifically, the taxpayer must be a nonresident whose presence in Maine during the tax year is for the sole purpose of performing services or conducting business during a disaster period and whose compensation or income is directly related to a declared state disaster or emergency at the request of either (1) the State; (2) a county, city, town, or political subdivision of the State; or (3) a registered business. See 36 M.R.S. § 5142(8-B)(D).

Updated July 21, 2021

04. I am a Maine resident, but I normally physically work for my employer located outside of Maine. Due to COVID-19, I am teleworking from my home in Maine. I did not pay estimated tax payments during Maine's civil state of emergency; will I be subject to the estimated tax penalty?

For tax years beginning in 2020 or 2021, MRS will, upon request by the taxpayer, abate the penalty for the underpayment of estimated tax that becomes due through June 30, 2021 as a result of the taxpayer suddenly working in Maine due to the COVID-19 state of emergency.

Note: Maine's COVID-19 civil state of emergency ended on June 30, 2021.

Updated July 21, 2021

05. I am a Maine resident teleworking in Maine due to COVID-19. My employer is located in another state. Will I be subject to income tax in both states?

For a tax year beginning in 2020 or 2021, a Maine resident who began teleworking in Maine due to the COVID-19 pandemic and was performing the same services from a location outside of Maine immediately prior to the COVID-19 state of emergency declared by the Governor, or declared by the jurisdiction where the employee was performing the services, is allowed to claim the tax credit for income tax paid to other jurisdictions to the extent that:

the services were performed during 2020 or 2021 during either jurisdiction's 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.

Note: Maine's COVID-19 civil state of emergency ended on June 30, 2021.

Updated July 21, 2021

06. Due to COVID-19, Maine individuals who are domiciled outside of Maine but maintain a second home in the State may be spending more time at their Maine home this year. For purposes of the Maine statutory residence test, would such an individual qualify for an exception due to COVID-19?

No. An individual is considered a statutory resident of Maine if the individual (1) is not domiciled in Maine but maintains a “permanent place of abode” in Maine and (2) spends more than 183 days of the year in the State (unless the individual is in the U.S. Armed Forces). See 36 M.R.S. § 5102(5)(B).

As an exception to the “permanent place of abode” requirement, above, MRS Rule 807 provides that a “place of abode” is not considered “permanent” if it is only maintained during (1) a “temporary stay in Maine” and (2) such temporary stay is for the “accomplishment of a particular purpose.” However, an individual who is domiciled outside of Maine but maintains a second home in Maine at which they stay during part of the year would not meet this exception in MRS Rule 807, even during COVID-19.

An individual living at their second home in Maine for more than 183 days during the tax year would be considered a Maine statutory resident, even during COVID-19.

Updated May 14, 2020

07. I am an employer located outside of Maine. Due to COVID-19 one or more employees began teleworking in Maine. Do employees teleworking in Maine establish corporate income tax nexus?

Tax years beginning in 2020: Previously, MRS announced that for tax years beginning in 2020, the presence of one or more employees in this State who commenced working remotely from Maine during the state of emergency and due to the COVID-19 pandemic was not sufficient, by itself, to establish corporate income tax nexus. With the end of the civil emergency, the presence of one or more employees who commence working in Maine after the end of the civil emergency, including those working remotely in Maine, will be considered in making a determination of whether a foreign corporation has nexus in Maine. However, the presence of employees who commenced working remotely in Maine during the state of emergency will continue to not be considered in determining nexus for tax years beginning in 2020.

Tax years beginning in 2021: Previously, MRS announced that for tax years beginning in 2021, MRS would not consider the presence of one or more employees in this State during the period January through June 2021 who commenced working remotely from Maine during the state of emergency and due to the COVID-19 pandemic to be sufficient, by itself, to establish corporate income tax nexus. With the end of the civil emergency, normal Maine corporate income tax nexus policies apply and the presence of one or more employees working in Maine, including those working remotely in Maine, will be considered in making a determination of whether a foreign corporation has nexus in Maine, regardless of when they commenced working in Maine.

Note: New “factor presence” nexus thresholds apply to tax years beginning on or after January 1, 2022. Taxable corporations that do not exceed the thresholds during the taxable year are deemed to not have nexus with Maine for Maine corporate income tax purposes. See L.D. 1216; P.L. 2021, c. 181, Part E.

For more information on Maine corporate income tax nexus, see MRS Rule 808.

Updated July 21, 2021

08. Am I required to withhold Maine income tax for an employee(s) teleworking in Maine due to the COVID-19 state of emergency?

Maine income tax withholding for wages paid in 2020 or 2021 to a Maine resident suddenly teleworking in Maine due to a state’s COVID-19 state of emergency, will continue to be calculated as if the Maine resident were still working outside the State.

Note: Maine income tax withholding rules relative to employees working in Maine, including employees teleworking in Maine for a non-Maine employer, will resume for services performed in Maine after June 30, 2021.

For more information on Maine income tax withholding, see MRS Rule 803, Section .04B.

Updated July 21, 2021

09. I received unemployment compensation during tax year 2020. Is my unemployment compensation subject to Maine income tax?

Yes, except that for tax year 2020, you can exclude up to $10,200 in unemployment compensation from income tax (or up to $20,400 if married filing jointly and each spouse received unemployment compensation) so long as the federal adjusted gross income is less than $150,000. For information on claiming this benefit on the Maine individual income tax return, see www.maine.gov/revenue/tax.

For information on filing a federal return, see www.irs.gov/.

For more information on claiming the exclusion of unemployment compensation on your Maine individual income tax return, see www.maine.gov/revenue/tax.

Updated July 21, 2021

10. I received Paycheck Protection Program (“PPP”) loans and/or Economic Injury Disaster Loans (“EIDL”) due to COVID-19. I am qualified for loan forgiveness on the loans and the discharge of indebtedness is not subject to federal income tax and I have included deductions for the payment of eligible expenses on my federal income tax return. Is the discharge of indebtedness subject to Maine income tax? Are the deductions for the payment of eligible expenses allowed on my Maine income tax return?

Yes. Maine conforms to the federal income tax treatment of discharge of indebtedness and allowable deductions relative to PPP and EIDL loans as enacted under section 1106 of the federal CARES Act and section 276 of the federal Consolidated Appropriations Act, 2021.

For more information on federal treatment of PPP and EIDL loans, see www.irs.gov/.

Updated April 7, 2021

Educational Opportunity Tax Credit

11. My federal education loan payments were temporarily suspended beginning March 13, 2020 due to COVID-19. However, I have continued to pay my student loans during this time. Can I still claim the Maine Educational Opportunity tax credit (EOTC) for these payments when I file my 2020 income tax return?

Yes. For tax years beginning on or after January 1, 2020, student loan payments made by individuals in deferment or forbearance, including those subject to a federal student loan administrative forbearance pursuant the federal Coronavirus Aid, Relief, and Economic Security ("CARES") Act or federal Executive Order, will qualify for the EOTC as long as all other eligibility criteria are met.

Note: Your required loan amount due will be the amount that would be otherwise due but for forbearance or deferment. If the amount cannot otherwise be determined, the amount considered due will be equal to the benchmark loan payment.

For more information, see the October 2020 - #2 and the October 2020 - #3 issues of the Maine Tax Alert and Maine Rule 812.

Updated April 7, 2021

12. I am a qualified individual under the EOTC. Can I still claim the credit for tax year 2020 even though I was temporarily laid off due to COVID-19?

To the extent you are otherwise qualified, you may claim the EOTC for any eligible monthly payments you made directly to the lender during the tax year, subject to the credit limitations (e.g., benchmark, loan payment due, etc.). However, you are not a qualified individual unless you were employed at least part-time (at least 16 hours/week) in Maine, were deployed for military service in the U.S. Armed Forces, including the National Guard and the Reserves of the U.S. Armed Forces, or were employed at least part-time on a vessel at sea. See 36 M.R.S. § 5217-D(1)(G)(5).

Note: For tax years beginning in 2020, the work requirement is suspended. Maine residents who were employed in Maine prior to, or during, the COVID-19 pandemic and who are still making student loan payments may claim the EOTC, to the extent otherwise qualified.

Updated April 7, 2021

Maine Sales/Use Tax

13. Does Maine tax law provide any tax relief or incentives (e.g., exemptions, deductions, or credits) to companies that are providing supplies and resources to hospitals, non-profits, other businesses, and families?

Maine sales and use tax laws currently provide several exemptions that may be available to companies providing supplies and resources at this time for the COVID-19 pandemic. Specifically, 36 M.R.S. § 1760(45)(A-4) provides the following sales tax exemption for certain property brought into the State during the disaster period:

If the property is brought into this State solely to conduct activities directly related to a declared state disaster or emergency, at the request of the State, a county, city, town or political subdivision of the State or a registered business, the property is owned by a person not otherwise required to register as a seller under section 1754-B and the property is present in this State only during a disaster period.

Note: Maine's COVID-19 disaster period ends on July 30, 2021.

In addition, the following are specific current sales and use tax exemptions that may also apply to such companies:

Sales tax exemption for sales to certain hospitals, research centers, churches, and schools – 36 M.R.S. § 1760(16)
Use tax exemption on donations of merchandise to certain exempt organizations – 36 M.R.S. § 1864

For a full list of sales and use tax exemptions, please see Title 36, Chapters 211 and 215 of the Maine Revised Statutes.

Updated July 21, 2021

14. Does Maine provide any exemptions from Maine’s lodging tax (i.e., sales tax) for individuals living and working in Maine due to COVID-19?

Maine law provides two sales tax exemptions related to the rental of living quarters (lodging):

A rental charged to an individual who resides continuously for 28 days or more at any one hotel, rooming house, tourist camp, or trailer camp is exempt from sales tax if the individual does not maintain a primary residence at some other location or is residing away from the individual’s primary residence in connection with employment or education; and
A rental charged to a person that rents living quarters for 28 or more consecutive days is exempt from sales tax when the living quarters are used by the person’s employees in connection with their employment. 36 M.R.S. 1760(20). See Instructional Bulletin No. 32 (“Rental of Living Quarters”) for further details regarding qualifications and requirements.

An affidavit of exemption for 28-day continuous rental must be completed by (1) the tenant or employer and (2) the retailer for the exemption to apply. The affidavit is found on the Affidavits page.

Updated May 7, 2020

15. Due to COVID-19, one or more employees began teleworking in Maine. Does this constitute substantial physical presence for Maine sales and use tax registration and collection duty purposes?

For sales occurring in 2020 and 2021, MRS will not consider the presence of one or more employees in this State who commenced working remotely from Maine during the state of emergency and due to the COVID-19 pandemic, to constitute, by itself, substantial physical presence in this State for sales and use tax registration and collection duty purposes.

Note: The end of the civil emergency terminates the Maine sales and use tax COVID-19 pandemic nexus policy. The presence of one or more employees who commence working remotely in Maine after June 30, 2021, will be considered in determining substantial physical presence in this State for sales and use tax registration and collection duty purposes for sales occurring in 2021.

Updated July 21, 2021

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