An Act To Allow a Tax Credit for College Loan Repayments
PART A
Sec. A-1. 20-A MRSA c. 428-C is enacted to read:
CHAPTER 428-C
JOB CREATION THROUGH EDUCATIONAL OPPORTUNITY PROGRAM
§ 12541. Definitions
As used in this chapter, unless the context otherwise indicates, the following terms have the following meanings.
§ 12542. Program established
(1) The individual may claim the educational opportunity tax credit only with respect to loans that are part of that individual's financial aid package and that have a term of at least 8 years;
(2) If the individual in any way accelerates repayment, the individual forfeits any right to claim an educational opportunity tax credit for that taxable year or any future taxable year; and
(3) The individual may refinance said loans only if they remain separate from other debt and if the effect of the refinancing is to decrease both the annual repayment and the total remaining indebtedness.
In exchange for the consideration outlined in paragraphs B to E, the State shall agree to permit the individual to take advantage of the educational opportunity tax credit.
The opportunity contract must leave space for the accredited Maine junior college, college or university to certify that the individual has obtained the relevant degree, and to certify whether or not the loan principal that the individual incurs in pursuing the relevant degree exceeds the principal cap.
§ 12543. Effect on funding of higher education
It is the intent of the Legislature that neither the existence of the program nor the benefits provided under the educational opportunity tax credit serve as justification to decrease other funds appropriated or allocated to accredited Maine junior colleges, colleges or universities, including institutions in the Maine Community College System and the University of Maine System, or to other higher education programs.
§ 12544. Rules
The state board shall, in accordance with section 3, adopt rules, which are routine technical rules pursuant to Title 5, chapter 375, subchapter 2-A, as necessary to carry out the purposes of this chapter.
PART B
Sec. B-1. 36 MRSA §5217-D is enacted to read:
§ 5217-D. Credit for educational opportunity
The credit may not reduce the tax otherwise due under this Part to less than zero. A taxpayer entitled to the credit for any taxable year may carry over and apply to the tax liability for any one or more of the next succeeding 10 years the portion, as reduced from year to year, of any unused credits. More than one taxpayer may claim a credit based on loan payments actually made to a relevant lender or lenders to benefit a single opportunity program participant, but no 2 taxpayers may claim the credit based on the same payment.
The employer may claim a credit for the amount that the qualified employee could have claimed during any months when the qualified employee was employed, had the qualified employee made the partial or full loan payments instead, under conditions where the qualified employee had sufficient income to claim the full credit for the taxable year. If the qualified employee is employed only on a part-time basis, the employer may claim a credit only up to half of the total that the qualified employee could have claimed had the qualified employee made all payments and earned sufficient income to claim the full credit for the taxable year, but the amount the employer claims must still be based on amounts actually paid.
An employer claiming this credit on behalf of a qualified employee for a taxable year may not simultaneously claim a credit under section 5219-V on the behalf of the same employee.