Sec. 1. 36 MRSA §5142, sub-§8, as repealed and replaced by PL 2003, c. 673, Pt. E, §1 and affected by §3, is repealed and the following enacted in its place:

8.__Minimum taxability threshold.__Minimum taxability thresholds for nonresidents are as follows.

A.__Compensation for personal services performed in the State as an employee is Maine-source income, subject to taxation under this Part, if the nonresident taxpayer was present in Maine performing personal services for more than 20 days during the taxable year and directly earns or derives more than $6,000 in gross income during the year in the State from all sources.

B.__A nonresident individual who is present for business in the State on other than a systematic or regular basis, either directly or through agents or employees, has Maine- source income derived from or effectively connected with a trade or business in Maine and subject to taxation under this Part only if the nonresident individual earns or derives more than $6,000 of gross income during the taxable year from contractual or sales-related activities.

Sec. 2. Application. That section of this Act that repeals and replaces the Maine Revised Statutes, Title 36, section 5142, subsection 8 applies to tax years beginning on or after January 1, 2005.

SUMMARY

This bill increases the minimum taxability thresholds that establish an income tax liability for nonresidents. It increases the number of days worked in Maine that trigger a nonresident income tax liability from 11 days per year to 21 days per year and establishes $6,000 as the amount of gross income that must be earned before the nonresidents' income is subject to taxation.