Sec. D-1. 36 MRSA §5102, sub-§6, as repealed and replaced by PL 1999, c. 708, §33 and affected by §51, is amended to read:
6. Corporation. "Corporation" means any business entity subject to income taxation as a corporation under the laws of the United States, except the following:
A. A corporation that is subject to tax under chapter 357 or that would be subject to tax under chapter 357 if the insurance business conducted by such corporation were conducted in this State;
B. A corporation subject to tax under section 5206; or
C. A business entity referred to in Title 24-A, section 1157, subsection 5, paragraph B, subparagraph (1).
For purposes of this subsection, a corporation described in paragraph A is an "insurance company," and a health maintenance organization to the extent operated under authority of a certificate issued by the Superintendent of Insurance pursuant to Title 24-A, section 4204 is a "Maine health maintenance organization." Notwithstanding paragraph A, an insurance company is subject to the tax imposed by this Part with respect to income it receives from a Maine health maintenance organization, except where the Maine health maintenance organization is separately organized and subject to income taxation. The provisions of this Part pertaining to the taxation and reporting obligations of a unitary business, including section 5200, section 5220, subsection 5 and section 5244, apply to the income, factors and affiliations of an insurance company arising from a Maine health maintenance organization as though the Maine health maintenance organization were a separate corporation, but do not otherwise apply to such insurance company.
Sec. D-2. 36 MRSA §5202-C is enacted to read:
§5202-C. Separate accounting required in certain cases
A corporation that is subject to tax under chapter 357 or that would be subject to tax under chapter 357 if the insurance business conducted by such corporation were conducted in this State shall separately account to the State Tax Assessor for income received from a health maintenance organization to the extent operated under authority of a certificate issued by the Superintendent of Insurance pursuant to Title 24-A, section 4204, except income from a health maintenance organization that is separately organized and subject to income taxation. The assessor may distribute, apportion or allocate gross income, deductions, credits, allowances or assets between or among related entities and operating divisions if the assessor determines such action to be necessary in order to prevent evasion of taxes or to properly reflect earned income.
Sec. D-3. 36 MRSA §5206-D, sub-§5, as enacted by PL 1997, c. 404, §5 and affected by §10, is amended to read:
5. Compensation. "Compensation" means wages, salaries, commissions and any other form of remuneration paid to employees for personal services. "Compensation" includes amounts paid to an employee-leasing company for leased employees and amounts paid to a temporary services company for temporary employees, pursuant to a contract between the taxpayer and an employee-leasing company or temporary services company.
Sec. D-4. 36 MRSA §5206-D, sub-§§7-A, 8-A, 20-A and 20-B are enacted to read:
7-A. Employee-leasing company. "Employee-leasing company" means a business that contracts with client companies to supply workers to perform services for client companies, except that the term "employee-leasing company" does not include private employment agencies that provide workers to client companies on a temporary help basis.
8-A. Leased employee. "Leased employee" means an individual who performs services for a client company pursuant to a contract between the client company and an employee-leasing company.
20-A. Temporary help. "Temporary help" means employee services provided to client companies for a contractual period of less than 12 months.
20-B. Temporary services company. "Temporary services company" means a private employment agency, other than an employee-leasing company, that provides workers to client companies on a temporary help basis.
Sec. D-5. 36 MRSA §5206-E, sub-§4, as enacted by PL 1997, c. 404, §5 and affected by §10, is amended to read:
4. Payroll factor. The payroll factor is a fraction, the numerator of which is the total amount paid in this State during the taxable year by the taxpayer for compensation and the denominator of which is the total compensation paid both in and outside this State during the taxable year. The payroll factor includes only that compensation that is included in the computation of the apportionable income tax base for the taxable year. Eighty-five percent of any amounts paid pursuant to a contract by the taxpayer to an employee-leasing company for leased employees, and 100% of the amount paid pursuant to a contract to a temporary services company for temporary employees, must be included in the taxpayer's payroll factor. The payroll factor of an employee-leasing company or a temporary services company must exclude compensation paid to leased or temporary employees who are providing personal services to client companies.
A. The compensation of any employee for services or activities that are connected with the production of income that is not includable in the apportionable income base and payments made to any independent contractor or any other person not properly classifiable as an employee are excluded from both the numerator and denominator of the factor.
B. Compensation is paid in this State if any one of the following tests, applied consecutively, is met.
(1) The employee's services are performed entirely in this State.
(2) The employee's services are performed both in and outside the State, but the service performed outside the State is incidental to the employee's service in the State. For the purposes of this subsection, "incidental" means any service that is temporary to transitory in nature or that is rendered in connection with an isolated transaction.
(3) If the employee's services are performed both in and outside the State, the employee's compensation is attributed to this State:
(a) If the employee's principal base of operations is in this State;
(b) If there is no principal base of operations in any state in which some part of the services are performed, but the place from which the services are directed or controlled is in this State; or
(c) If the principal base of operations and the place from which the services are directed or controlled are not in any state in which some part of the service is performed, but the employee's residence is in this State.
Sec. D-6. 36 MRSA §5210, sub-§3, as enacted by PL 1981, c. 698, §187, is amended to read:
3. Compensation. "Compensation" means wages, salaries, commissions and any other form of remuneration paid to employees for personal services. "Compensation" includes amounts paid to an employee-leasing company for leased employees and amounts paid to a temporary services company for temporary employees, pursuant to a contract between the taxpayer and an employee-leasing company or temporary services company.
Sec. D-7. 36 MRSA §5210, sub-§§3-A, 3-B, 7 and 8 are enacted to read:
3-A. Employee-leasing company. "Employee-leasing company" means a business that contracts with client companies to supply workers to perform services for the client companies, except that the term "employee-leasing company" does not include private employment agencies that provide workers to client companies on a temporary help basis.
3-B. Leased employee. "Leased employee" means an individual who performs services for a client company pursuant to a contract between the client company and an employee-leasing company.
7. Temporary help. "Temporary help" means employee services provided to client companies for a contractual period of less than 12 months.
8. Temporary services company. "Temporary services company" means a private employment agency, other than an employee-leasing company, that provides workers to client companies on a temporary help basis.
Sec. D-8. 36 MRSA §5211, sub-§12, as enacted by P&SL 1969, c. 154, §F, is amended to read:
12. Payroll factor. The payroll factor is a fraction, the numerator of which is the total amount paid in this State during the tax period by the taxpayer for compensation, and the denominator of which is the total compensation paid everywhere during the tax period. Eighty-five percent of any amounts paid pursuant to a contract by the taxpayer to an employee-leasing company for leased employees, and 100% of the amount paid pursuant to a contract to a temporary services company for temporary employees, must be included in the taxpayer's payroll factor. The payroll factor of an employee-leasing company or a temporary services company must exclude compensation paid to leased or temporary employees who are providing personal services to client companies.
Sec. D-9. Application date. Those sections of this Part that amend the Maine Revised Statutes, Title 36, section 5102, subsection 6 and enact Title 36, section 5202-C apply to tax years beginning on or after January 1, 2002. Those sections of this Part that amend Title 36, section 5206-D, subsection 5; section 5206-E, subsection 4; section 5210, subsection 3; and section 5211, subsection 12 and that enact Title 36, section 5206-D, subsections 7-A, 8-A, 20-A and 20-B and section 5210, subsections 3-A, 3-B, 7 and 8 apply to tax years beginning on or after January 1, 2002.
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