It is officially crunch time in Augusta. With just days or even hours left in the Second Regular Session of the 128th Legislature, the House and Senate are working hard to process a sizable workload in a very short period of time. When this legislature ends, we will have managed nearly 2,000 separate bills, not including amendments, over the course of two years.
As always, there are a number of important matters yet to be decided: the Marijuana Legalization Committee’s second stab at correcting the flawed referendum law, ranked-choice voting, which is currently in the hands of the courts as they decide constitutional concerns, and funding for voter-approved Medicaid Expansion as well as the more than 150 bills that have passed and now sit on the Appropriations table.
Another very pressing matter that remains is an issue you may have heard very little about: tax conformity. Most states conform to the federal tax code automatically, but Maine is a bit different. We are a static conformity state, meaning the legislature must vote to adopt changes that happen at the federal level. Typically conformity is a minor issue, but this year is different in light of the federal tax reform package that recently passed and resulted in the largest overhaul of the federal tax code in more than 30 years.
While some people are more supportive of the federal tax reforms than others, it is incredibly important that we act this session to conform our state tax code in order to take advantage of the significant benefits that come with conformity. Failure to conform makes Maine an outlier state, placing us at a competitive disadvantage.
Tax conformity carries major advantages, for both filers and the state. When Maine conforms to the federal code, Maine Revenue Services is able to rely on the Internal Revenue Service to review returns and conduct audits. In the absence of conformity, the state would have to increase staffing at Maine Revenue Services to audit state returns. For filers, conformity streamlines the process and makes tax preparation more affordable. It also ensures that taxpayers have only to navigate one government bureaucracy rather than two.
If we fail to conform before we adjourn, there will be far-reaching impacts, not only for Maine businesses, but also for individual filers. Many tax filers in Maine use programs such as TurboTax to file their state and federal tax returns. Because of the amount of time required to develop state-specific software, delaying conformity decisions until next session would quite possibly mean these services would not be available for Maine filers next year.
Should the 128th Legislature fail to come to an agreement on conformity, the issue will be punted until the next legislature, which will not convene until January 2019, after the next tax season begins. If you realistically factor in the time required for an agreement to be reached and signed into law, in addition to the time needed for Maine Revenue Services to update, print and distribute forms, the majority of Maine filers would have to amend their returns and refile with the State.
Failure to conform in some fashion now will expose Maine filers to extra paperwork, additional costs and exasperation as well as the increased risk of a dreaded audit. Life in Maine can be challenging enough without these added hassles. Therefore, I intend to advocate for conformity until the 128th legislature adjourns “sine die.”
Senator Amy Volk is currently serving her second term in the Maine Senate where she serves as Assistant Majority Leader. She represents the people in District 30, which includes most of Buxton, most of Scarborough and all of Gorham.
(207) 287-1505 | (800) 423-6900 | amy.volk@legislature.maine.gov