Income/Franchise:
Maine: New Law Addresses Late Filing and Payment Logistics When Legislature Hasn’t Yet Addressed State Response to Federal Tax Law Changes

L.D. 221 (H.P. 144), signed by gov. 6/17/25. Seeking to address situations when the Maine Legislature has not yet had the opportunity before Maine Revenue Services begins processing Maine income tax returns to conform or adjust Maine tax laws in response to any relevant federal income tax law changes, new law in Maine requires the Commissioner of the Maine Department of Administrative and Financial Services (DAFS) to:

1. Approve underlying extensions of time for tax payment or filing in some instances; and
2. Report in writing to the Maine Governor, copying certain Maine legislative leaders, a description of the relevant federal tax law changes and their potential effect on Maine income tax laws and the state budget.

After receiving such report, the bill permits the Maine Governor to direct the Maine State Tax Assessor to temporarily adjust its administration of the Maine income tax returns based on some or all of such federal income tax law changes. In turn, the Maine State Tax Assessor may provide taxpayers with the option of i) waiting to file their Maine tax returns until the Maine Legislature has enacted legislation to address the federal income tax law changes by filing for an extension, or ii) filing their Maine returns consistent with the issued tax returns, forms, instructions and other guidance. In the later instance, if, as a result of subsequent changes enacted into law by the Maine Legislature, there is an underpayment by or incorrect refund to a Maine taxpayer, the bill provides that underlying penalties and interest accruing before the date of enactment may not be imposed. Please contact us with any questions.