1. It imposes a failure-to-file penalty for pass-through entities required to file an information return.

2. It assesses a service fee on all pass-through entities required to file with Maine Revenue Services. The fee is assessed to cover processing, tax compliance, audit activities, handling, storage, other administrative costs and revenues lost because of noncompliance by members of pass-through entities. Revenue generated by the service fee is not subject to the calculation for determining the amount for the Local Government Fund.

PART JJ

Part JJ does the following.

1. It amends the law to provide for a calculation of Maine alternative minimum taxable income for purposes of imposing the Maine alternative minimum tax and removes the inequity of having artificially lower dividend and capital gains rates under the Maine alternative minimum tax, but not for regular tax.

2. It changes the rate structure for the Maine alternative minimum tax from a flat rate, 27%, applied to adjusted federal minimum tax to a graduated rate applied to Maine alternative minimum taxable income. The calculation maintains the exemption amounts provided by the federal Internal Revenue Code effective as of December 31, 2002.

PART KK

Part KK changes the calculation of the interest rate on payments as well as refunds to that of the prime rate plus 3 percentage points, rather than the current formula of the prime rate plus 2 percentage points. This change is effective July 1, 2004.

PART LL

Part LL does the following.

1. It implements the recommendations of a review of the functions of the ACE Service Center to place the center under the direct authority of the Commissioner of Environmental Protection.

2. It amends the law to increase the transfer from the Maine Environmental Protection Fund in the Department of