An Act To Amend the Maine Seed Capital Tax Credit Program
Emergency preamble. Whereas, acts and resolves of the Legislature do not become effective until 90 days after adjournment unless enacted as emergencies; and
Whereas, the Maine Seed Capital Tax Credit Program promotes the growth of new and existing small businesses in the State, which results in increased job opportunities for Maine residents, produces more spending in the State and increases municipal tax bases; and
Whereas, the total amount of tax credits available to investors is limited on a calendar year basis; and
Whereas, for calendar year 2019, the limit has already been reached; and
Whereas, without an immediate increase in the limit on available tax credits, investment in Maine businesses could suffer; and
Whereas, in the judgment of the Legislature, these facts create an emergency within the meaning of the Constitution of Maine and require the following legislation as immediately necessary for the preservation of the public peace, health and safety; now, therefore,
Be it enacted by the People of the State of Maine as follows:
Sec. 1. 10 MRSA §1100-T, sub-§2, ¶¶A and B, as amended by PL 2013, c. 438, §3, are further amended to read:
A. For investments made in tax years beginning before January 1, 2012, a tax credit certificate may be issued in an amount not more than 40% of the amount of cash actually invested in an eligible Maine business in any calendar year or in an amount not more than 60% of the amount of cash actually invested in any one calendar year in an eligible Maine business located in a high-unemployment area, as determined by rule by the authority. For investments made in tax years beginning on or after January 1, 2012, a tax credit certificate may be issued to an investor other than a private venture capital fund in an amount not more than 60% of the amount of cash actually invested in an eligible Maine business in any calendar year. For investments made in tax years beginning on or after January 1, 2014, a tax credit certificate may be issued to an investor other than a private venture capital fund in an amount not more than 50% of the amount of cash actually invested in an eligible Maine business in any calendar year. For investments made after April 1, 2019, a tax credit certificate may be issued to an investor other than a private venture capital fund in an amount not more than 40% of the amount of cash actually invested in an eligible Maine business in any calendar year. Rules adopted pursuant to this section are routine technical rules as defined in Title 5, chapter 375, subchapter 2-A.
B. The Maine business must be determined by the authority to be a manufacturer or a value-added natural resource enterprise; must provide a product or service that is sold or rendered, or is projected to be sold or rendered, predominantly outside of the State , while a majority of the employment associated with the creation and sale of the product or the provision of services is within the State; must be engaged in the development or application of advanced technologies; or must be certified as a visual media production company under Title 5, section 13090-L. The business must certify that the amount of the investment is necessary to allow the business to create or retain jobs in the State.
Sec. 2. 10 MRSA §1100-T, sub-§2, ¶C, as amended by PL 2003, c. 451, Pt. E, §2, is further amended to read:
C. Aggregate investment eligible for tax credits may not be more than $5,000,000 $3,500,000 for any one business as of the date of issuance of a tax credit certificate and not more than $2,000,000 for any calendar year.
Sec. 3. 10 MRSA §1100-T, sub-§2-C, ¶A, as enacted by PL 2011, c. 454, §6, is amended to read:
A. For investments made in tax years beginning on or after January 1, 2012, a tax credit certificate may be issued to a private venture capital fund in an amount that is not more than 50% of the amount of cash actually invested in an eligible business. For investments made after April 1, 2019, a tax credit certificate may be issued to a private venture capital fund in an amount that is not more than 40% of the amount of cash actually invested in an eligible business. The tax credit certificate may be revoked and the credit recaptured pursuant to Title 36, section 5216-B, subsection 5 to the extent that the authority determines that the eligible business for which the tax credit certificate was issued moves substantially all of its operations and assets outside of the State during the period ending 4 years after an investment, except in the case of an arm's length, fair value acquisition approved by the authority. A private venture capital fund that received the 20% credit certificate under subsection 2-A, paragraph A, subparagraph (2) for an investment is not eligible for a tax credit certificate under this subsection for that investment.
Sec. 4. 10 MRSA §1100-T, sub-§2-C, ¶B, as amended by PL 2013, c. 438, §4, is further amended to read:
B.
As used in this subsection, unless the context otherwise indicates, "eligible business" means a business located in the State that has certified that the amount of the investment is necessary to allow the business to create or retain jobs in the State and that, as determined by the authority:
(1) Is a manufacturer or a value-added natural resource enterprise;
(2) Is engaged in the development or application of advanced technologies;
(3) Provides a service that is sold or rendered, or is projected to be sold or rendered, predominantly outside of the State , while a majority of the employment associated with the creation and sale of the product or the provision of services is within the State; or
(5) Is certified as a visual media production company under Title 5, section 13090-L.
Sec. 5. 10 MRSA §1100-T, sub-§2-C, ¶C, as enacted by PL 2011, c. 454, §6, is amended to read:
C. Aggregate investment eligible for tax credit certificates, including investments under this subsection and under subsection 2, may not be more than $5,000,000 $3,500,000 for any one eligible business in total and not more than $2,000,000 per calendar year.
Sec. 6. 10 MRSA §1100-T, sub-§2-C, ¶D, as amended by PL 2013, c. 438, §4, is further amended to read:
D. The investment with respect to which any private venture capital fund is applying for a tax credit certificate may not be more than the lesser of an amount equal to $500,000 times the number of investors in the private venture capital fund and an aggregate of $4,000,000 $3,500,000 in any one eligible business invested in by a private venture capital fund in any 3 consecutive calendar years, except that this paragraph does not limit other investment by an applicant for which that applicant is not applying for a tax credit certificate. A private venture capital fund must certify to the authority that it will be in compliance with these limitations. The tax credit certificate issued to a private venture capital fund may be revoked and any credit taken recaptured pursuant to Title 36, section 5216-B, subsection 5 if the fund is not in compliance with this paragraph.
Sec. 7. 10 MRSA §1100-T, sub-§4, as amended by PL 2013, c. 438, §5, is further amended to read:
Emergency clause. In view of the emergency cited in the preamble, this legislation takes effect when approved.
SUMMARY
This bill amends the Maine Seed Capital Tax Credit Program by:
1. Reducing from 50% to 40% the maximum credit available to individual investors and private venture capital funds for investments made after April 1, 2019;
2. Requiring that eligible exporting businesses retain in Maine a majority of their employees;
3. Reducing from $5,000,000 to $3,500,000 the total aggregate investment eligible for tax credits for any one business;
4. Limiting to $2,000,000 the total aggregate investment eligible for any one business in any calendar year; and
5. Increasing from $5,000,000 to $15,000,000 the overall annual limit on total authorized credits.