Sec. 2. 36 MRSA §5206-E, first ¶, as enacted by PL 1997, c. 404, §5 and affected by §10, is amended to read:

Except as otherwise specifically provided, a financial institution that is taxable both in and outside this State shall apportion its net income and end-of-year assets as provided in this section. A financial institution is considered taxable in a state if in that state the financial institution is subject to a net income tax, a franchise tax measured by net income, a franchise tax for the privilege of doing business or a corporate stock tax or that state has jurisdiction to subject the financial institution to a net income tax regardless of whether, in fact, the state does or does not tax the financial institution.

Sec. 3. 36 MRSA §5206-E, sub-§1, as amended by PL 1997, c. 746, §18 and affected by §24, is further amended to read:

1. Formula applicable. All of a financial institution's Maine net income is and end-of-year assets are apportioned to this State by multiplying the income and the assets by a fraction, the numerator of which is the property factor plus the payroll factor plus 2 times the receipts factor and the denominator of which is 4.

Sec. 4. 36 MRSA §5206-E, sub-§5, ¶D, as enacted by PL 1997, c. 404, §5 and affected by §10, is amended to read:

D. The employment of any other method to effectuate an equitable apportionment of the taxpayer's income or assets.

Sec. 5. Application. This Act applies to tax years ending after December 31, 2005.

SUMMARY

This bill provides an alternative tax calculation for purposes of the franchise tax for financial institutions based entirely on Maine assets. Current law determines the franchise tax on the basis of both Maine net income and Maine assets. The financial institution may choose either the current method or the alternative method for calculating the franchise tax. The method used is irrevocable for that tax year. The bill applies to tax years ending after December 31, 2005.