Code of Maine Rules
18 - DEPARTMENT OF ADMINISTRATIVE AND FINANCIAL SERVICES
125 - BUREAU OF REVENUE SERVICES
Chapter 825 - TRIBAL MEMBER INCOME FROM SOURCES ON TRIBAL LAND
Section 125-825-01 - Definitions

Universal Citation: 18 ME Code Rules ยง 125-825-01

Current through 2024-38, September 18, 2024

A. Enrolled member. "Enrolled member" means an individual who is enrolled with, and appears on the tribal membership roll of, the Houlton Band of Maliseet Indians, the Passamaquoddy Tribe, or the Penobscot Nation. Membership rolls of enrolled members are in the possession of, and maintained by, the Houlton Band of Maliseet Indians, the Passamaquoddy Tribe, and the Penobscot Nation.

B. Houlton Band of Maliseet Indians. "Houlton Band of Maliseet Indians" has the same meaning as in 30 M.R.S. §6203(2).

C. Houlton Band Trust Land. "Houlton Band Trust Land" has the same meaning as in the federal Houlton Band of Maliseet Indians Supplementary Claims Settlement Act of 1986, Public Law 99-566, Section 2(2).

D. Intangible property. "Intangible property" means a right or possession of a nonphysical or abstract nature that has value, or a financial asset that has no intrinsic value but that represents value. Intangible property includes but is not limited to copyrights, patents, licenses, bills of exchange, trademarks, business books and records, business goodwill, covenants not to compete, securities, bonds, notes, insurance policies, and accounts receivable.

E. Original Cost. "Original cost" means the basis of the property for federal income tax purposes prior to any federal adjustments at the time of acquisition by the taxpayer and adjusted by subsequent capital additions or improvements thereto and partial disposition thereof by reason of sale, exchange, abandonment, or other disposition.

F. Passamaquoddy Indian territory. "Passamaquoddy Indian territory" has the same meaning as in 36 M.R.S. §111(2-A). The term as defined by 30 M.R.S. § 6203(6) means the territory as defined by 30 M.R.S. §6205(1).

G. Passamaquoddy Tribe. "Passamaquoddy Tribe" has the same meaning as in 30 M.R.S. § 6203(7).

H. Pass-through entity. "Pass-through entity" means a corporation that for the applicable tax year is treated as an S corporation under the Internal Revenue Code, or a general partnership, limited partnership, limited liability partnership, limited liability company, trust, or similar entity that for the applicable tax year is not taxed at the entity level for federal income tax purposes. "Pass-through entity" does not, for Maine income tax purposes, include a financial institution subject to tax under 36 M.R.S., chapter 819.

I. Payroll factor. "Payroll factor" means the ratio of compensation paid by the taxpayer to employees during the taxable year whose base of operations is on tribal land to compensation paid by the taxpayer to employees during the taxable year everywhere. The following apply only for purposes of determining the payroll factor:

1. Effect of accounting method. If a taxpayer has adopted the accrual method of accounting, all compensation properly accrued will be deemed to have been paid. However, compensation may be included in the payroll factor by use of the cash method if the taxpayer is required to report such compensation under that method for unemployment compensation purposes.

2. Base of operations. "Base of operations" means the taxpayer's place of business from which an employee customarily begins work or to which the employee customarily returns at some other time to receive instructions, direction and supervision from the taxpayer or communications from customers or other persons, to replenish stock or other materials, to repair equipment, or to perform any other function necessary to the exercise of the employee's trade or profession.

3. Compensation. "Compensation" means wages, salaries, commissions and any other form of remuneration paid to employees for personal services. Payments made pursuant to a contract to an employee-leasing company for leased employees are included at 85% as compensation or to a temporary service company for temporary employees are included at 100% as compensation. Payments made to an independent contractor, or any other person not properly classifiable as an employee, are excluded. Only amounts paid directly to employees are included in the payroll factor. Amounts considered paid directly include the value of board, rent, housing, lodging and other benefits or services furnished to an employee by the taxpayer in return for personal services provided that such amounts constitute income to the recipient under the Internal Revenue Code. In the case of employees not subject to the Internal Revenue Code (e.g., those employed in foreign countries), the determination of whether such benefits or services would constitute income to the employees is made as though such employees were subject to the Internal Revenue Code. Employer contributions under a retirement plan, qualified cash or deferred arrangement as defined in Internal Revenue Code §401(k), and employer contributions to nonqualified deferred compensation plans are generally included in the payroll factor.

4. Employee. "Employee" means any officer of a corporation or any individual who would be considered an employee under the common law rules governing the employer-employee relationship. Generally, an individual is considered to be an employee if the individual is included by the taxpayer as an employee for purposes of the payroll taxes imposed by the Federal Insurance Contributions Act ("FICA"). This presumption may be overcome by evidence provided by a taxpayer that an individual who is included as an employee for purposes of FICA would not be an employee of the taxpayer under the usual common law rules. Generally, an independent contractor is not considered an employee.

5. Independent contractor. "Independent contractor" means any individual who performs services for a taxpayer, but who is not an employee of the taxpayer, and who is not otherwise subject to the supervision or control of the taxpayer in the performance of the services.

6. Payroll in states in which taxpayer is not taxable. Compensation paid to employees whose services are performed entirely in a state where the taxpayer is immune from taxation, for example, by 15 U.S.C. § 381 et seq. (P.L. 86-272), is included in the denominator of the payroll factor.

J. Penobscot Indian territory. "Penobscot Indian territory" has the same meaning as in 36 M.R.S. § 111(2-C). The term as defined by 30 M.R.S. §6203(9) means the territory as defined by 30 M.R.S. §6205(2).

K. Penobscot Nation. "Penobscot Nation" has the same meaning as in 30 M.R.S. §6203(10).

L. Permanent place of abode. "Permanent place of abode" means a house, apartment, residential care facility, dwelling place, or other residence that an individual maintains as a household for the entire tax year, whether or not that individual owns it. The term does not include a seasonal camp or cottage that is used only for vacations or a dormitory room used by a student during the school year. A place of abode is not considered "permanent" if it is maintained only during a temporary stay on tribal land for the accomplishment of a particular purpose.

M. Property factor. "Property factor" means the ratio of the average value of the taxpayer's real and tangible personal property owned or rented and used on tribal land during the taxable year to the average value of all of the taxpayer's real and tangible personal property owned or rented and used during the taxable year. The following apply only for purposes of determining the property factor:

1. Real and tangible personal property. The term "real and tangible personal property" includes land, buildings, machinery, stocks of goods, equipment, and other real and tangible personal property but does not include coin or currency.

2. Property used during the taxable year. Property is included in the property factor if it is actually used or is available for use or capable of being used during the tax period by the taxpayer. Property held in reserve or standby facilities or property held as a reserve source of materials must be included in the factor. For example, a plant temporarily idle or raw material reserves not currently being processed are includable in the factor. Property or equipment under construction during the tax period (except inventoriable goods in process) must be excluded from the factor until such property is actually used by the taxpayer. If the property is partially used by the taxpayer while under construction, the value of the property to the extent used must be included in the property factor. Property used by the taxpayer must remain in the property factor until its permanent withdrawal is established by an identifiable event such as its sale or the lapse of an extended period of time (normally, five years) during which the property is held for sale.

3. Property in transit; mobile property. Property in transit between locations of the taxpayer to which it belongs is considered to be located at the destination for purposes of the property factor. Property in transit between a buyer and seller that is included by a taxpayer in the denominator of its property factor in accordance with its regular accounting practices must be included in the numerator according to the destination. The value of mobile or movable property, such as construction equipment, trucks or leased electronic equipment, that is located both within and without of tribal land during the taxable year, is determined for purposes of the numerator of the property factor on the basis of total time within tribal land during the taxable year. Automobiles assigned to traveling employees are included in the numerator of the factor to the location to which the employee's compensation is assigned under the payroll factor.

4. Valuation of owned property. Property owned by the taxpayer is valued at its original cost. Capitalized intangible drilling and development costs are included in the factor whether or not they have been expensed for either federal or state tax purposes. If the original cost cannot be determined, the property must be included in the factor at its fair market value as of the date acquired by the taxpayer.

Generally, the average value of all property owned by the taxpayer is determined by averaging the values at the beginning and ending of the tax period. However, the assessor may require or allow averaging of monthly values if substantial fluctuations in the values of the property exist during the taxable year or if property is acquired after the beginning of the taxable year or disposed of before the end of the taxable year.

5. Valuation of rented property. Property rented by the taxpayer is valued at 8 times the net annual rental rate. Subrentals are not deducted.

If property is used at no charge or rented for a rate other than a reasonable market rate, the property must be included in the property factor on the basis of a reasonable market rental rate.

The "annual rental rate" is the amount paid as rent for the property for a twelvemonth period. When property is rented for less than a twelve-month period, the net rent paid for the actual period of rental constitutes the "annual rental rate" for the tax period. However, when a taxpayer has rented property for a term of 12 or more months and the current tax period covers a period of less than 12 months, the net rent paid for the short tax period must be annualized. If the rental term is for less than 12 months, the rent must not be annualized beyond its term. Rent will not be annualized because of the uncertain duration when the rental term is on a month-to-month basis.

"Rent" is the actual sum of money or other consideration payable, directly or indirectly, by the taxpayer or for its benefit for the use of the property and includes:

a. Any amount payable for the use of real or tangible personal property, or any part thereof, whether designated as a fixed sum of money or as a percentage of sales, profits or otherwise;

b. Any amount payable as additional rent or in lieu of rents, such as interest, taxes, insurance, repairs or any other items required to be paid by the terms of the lease or other arrangement but does not include amounts paid as service charges, such as utilities, janitor services, etc. If a payment includes rent and other charges unsegregated, the amount of rent must be determined by consideration of the relative values of the rent and the other items.

"Rent" does not include incidental day-to-day expenses such as hotel or motel accommodations, daily rental of automobiles, etc. "Rent" does not include royalties based on extraction of natural resources, whether represented by delivery or purchase. For this purpose, a royalty includes any consideration conveyed or credited to a holder of an interest in property that constitutes a sharing of current or future production of natural resources from such property, irrespective of the method of payment or how such consideration may be characterized, whether as a royalty, advance royalty, rental or otherwise.

Leasehold improvements are treated as property owned by the taxpayer regardless of whether the taxpayer is entitled to remove the improvements or of whether the improvements revert to the lessor upon expiration of the lease.

N. Tangible personal property. "Tangible personal property" means personal property that has physical existence. It can be seen, weighed, measured, felt, touched or in any other manner perceived by the senses, but does not include anything that constitutes intangible property as defined in section .01(D) above.

O. Tribal land. "Tribal land" means land within the Houlton Band Trust Land, the Passamaquoddy Indian territory, or the Penobscot Indian territory.

P. Tribal member. "Tribal member" means an enrolled member of the Houlton Band of Maliseet Indians, the Passamaquoddy Tribe, or the Penobscot Nation.

Q. Tribal member residing on tribal land. "Tribal member residing on tribal land" means an individual who is a tribal member and:

1. Who is domiciled on tribal land, unless:
a. The tribal member does not maintain a permanent place of abode on tribal land, maintains a permanent place of abode off of tribal land and spends in the aggregate not more than 30 days of the taxable year on tribal land; or

b. Within any period of 548 consecutive days, the tribal member:
i. Is present in a foreign country or countries for at least 450 days;

ii. Is not present on tribal land for more than 90 days;

iii. Does not maintain a permanent place of abode on tribal land at which a minor child of the tribal member or the tribal member's spouse is present for more than 90 days, unless the tribal member and the tribal member's spouse are legally separated; and

iv. During the nonresident portion of the taxable year with which, or within which, such period of 548 consecutive days begins and the nonresident portion of the taxable year with which, or within which, such period ends, is present on tribal land for a number of days that does not exceed an amount that bears the same ratio to 90 as the number of days contained in such portion of the taxable year bears to 548; or

2. Who is not domiciled on tribal land, but maintains a permanent place of abode on tribal land and spends in the aggregate more than 183 days of the taxable year on tribal land, unless the tribal member is in the Armed Forces of the United States ("U.S.").

The geographic location of a political organization or political candidate that receives one or more contributions from the tribal member is not in and of itself determinative on the question of whether the tribal member is domiciled on tribal land. The geographic location of a professional advisor retained by a tribal member or the geographic location of a financial institution with an active account or loan of a tribal member may not be used to determine whether or not a tribal member is domiciled on tribal land. For purposes of this subsection, "professional advisor" includes, but is not limited to, a person that renders medical, financial, legal, accounting, insurance, fiduciary or investment services. Charitable contributions may not be used to determine whether or not a tribal member is domiciled on tribal land.

Disclaimer: These regulations may not be the most recent version. Maine may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
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