1120B-ME Instructions — Franchise Tax (Financial Institutions)

# preamble

Maine Franchise Tax 2025 Form 1120B-ME

Instructions

# General Instructions

1. Financial institutions subject to franchise tax: Every financial institution that had Maine net income or Maine assets during the taxable year must file Form 1120B- ME and pay Maine franchise tax, even if the institution is established as a partnership, S corporation, or entity disregarded as separate from its owner. "Financial institution" means a bank, bank holding company, thrift institution, savings association, insured institution, savings bank holding company, qualified savings bank, insured depository institution, appropriate federal banking agency or qualified family partnership (as defined in the Bank Holding Company Act of 1956, 12 U.S. Code § 1841), or any other financial institution (except a credit union) authorized to do business in Maine as defined in 9-B M.R.S. § 131(17-A). A financial institution includes any corporation or other entity of which more than 50% of the voting stock is owned, directly or indirectly, by a financial institution or by a credit union authorized to do business in Maine as defined in 9-B M.R.S. § 131(12-A). Note: Two or more financial institutions that are required to file Maine franchise tax returns, that are members of an affiliated group and that are engaged in a unitary business must file a single return on which the aggregate state tax liability of all those financial institutions is reported, in which case intercompany eliminations must be made as necessary to avoid the duplication of income or assets. See 36 M.R.S. § 5220(6). 2. Date for filing return: Financial institutions reporting for calendar year 2025 are required to file with payment on or before April 15, 2026. Fiscal year taxpayers are required to file, with payment, on or before the 15th day of the fourth month following the close of the taxable year. 3. Extension for filing: A Maine extension request form is not required. If a taxpayer is unable to file by the original due date of the return, Maine allows an automatic extension of time to file equal to any federal extension plus 30 days, or 7 months, whichever expires later. Caution: An extension to file the Maine return is not an extension for payment of tax. If tax is due, the taxpayer must pay at least 90% of that amount by the original due date for filing the return. The remaining amount due must be remitted with the return by the extended due date to avoid the failure to pay penalty. Interest will be charged on any tax paid after the original due date of the return. Payments may be made electronically using the Maine Tax Portal (MTP) at revenue.maine.gov , or by filing Form 1120B-EXT/ME (Extension Payment Voucher) by the original due date for filing the Maine return. Form 1120B-EXT/ME can be downloaded at maine.gov/ revenue/tax-return-forms. 4. Payment of franchise tax: All financial institutions subject to franchise tax must make periodic payments of estimated tax unless the liability for the taxable year reduced by allowable credits is less than $1,000. Payments may be made electronically using the MTP at revenue.maine. gov, or by filing Form 1120B-ES/ME vouchers, available at maine.gov/revenue/tax-return-forms. If the financial institution is part of a unitary group and will file a combined return (see instructions for Combined Reporting below), estimated payments must be made under the corporate name and FEIN of the entity that will be filing Form 1120B-ME. 5. Electronic filing and payment requirements. Beginning in 2025, MRS Rule 104 (Filing of Maine Tax Returns) requires Form 1120B-ME to be filed electronically. MRS Rule 102 (Electronic Funds Transfer) requires taxpayers with a combined annual tax liability for all Maine taxes that is $10,000 or more to pay all Maine tax electronically. Taxpayers unable to meet the electronic filing or payment requirement because of undue hardship may submit a written waiver request to the State Tax Assessor. The request must include the name, address, and account numbers of the entity, a detailed explanation of why filing Use the Maine Tax Portal to File and Pay Electronically Revised: December 2025 For general information and downloadable forms, visit: maine.gov/revenue. For additional information on Maine franchise tax, email corporate.tax@maine.gov. Note: Electronic filing and payment requirements apply. See below for more information.

General Instructions, continued electronically poses a significant hardship, and the length of time for which the entity is requesting a waiver. Mail waiver requests to: Maine Revenue Services, Corporate Tax Unit, P.O. Box 9107, Augusta, ME 04332-9107. For more information, see MRS Rules 102 and 104 at Use the Maine Tax Portal (MTP) to create and manage the franchise tax account, file tax returns, and pay Maine estimated franchise tax at revenue.maine.gov. 6. Interest: For calendar year 2026, the interest rate is 9%, compounded monthly. The interest will be added to the balance of any tax due from the original due date of the return to the date of payment and should be included with any payment. 7. Penalties: a. c For calendar year 2025, the penalty is 10%, compounded monthly. The penalty rate for calendar year 2026 is 9%, compounded monthly. The penalty will be assessed if the required quarterly installment payments are not made. The sum of quarterly estimated tax payments must be at least equal to the lesser of the previous year's Maine franchise tax liability or ninety percent (90%) of the tax liability for the current year. Exception: certain large corporations cannot use the previous year's liability in determining the required amount of estimated tax payments. 36 M.R.S. § 5228(5)(C). b. Late filing and late payment penalties. If a past due return is filed before the receipt, or within 60 days of the receipt, of a demand notice, the penalty for failure to file is the greater of $25 or 10% of the amount of tax due. If the return is filed more than 60 days after the receipt of a demand notice, the failure to file penalty increases to the greater of $25 or 25% of the tax due. For failure to pay a tax liability, the penalty is 1% of the tax liability for each month the payment is delinquent, up to 25%. c. Other penalties. The law also provides for penalties for substantial understatement of tax, negligence, fraud and for payment of tax by check that is returned for insufficient funds. See 36 M.R.S. § 187-B. 8. Accounting period covered: Form 1120B-ME must cover the same period as the equivalent federal income tax return. 9. Accounting methods: A taxpayer's method of accounting for Maine franchise tax purposes must be the same as that used for federal income tax purposes. 10. Federal return must accompany state return: A Maine franchise tax return, Form 1120B-ME, must be accompanied by a legible copy of pages 1 through 6 of the financial institution's federal income tax return for the same taxable period. Maine does not require financial institutions to provide copies of supporting schedules attached to the federal form filed with the Internal Revenue Service (IRS) unless specifically requested. 11. Federal audit changes and amended returns: Taxpayers must file Maine amended returns for any change or correction by the IRS in federal net income per books or total end-of-year assets. The amended return must be filed within 180 days after final determination of the federal change or correction. Attach a copy of the Internal Revenue Agent's report and closing letter with all supporting schedules to the Maine amended return. T axpayers filing amended federal returns must, within 180 days, file amended Maine returns with copies of the federal amended return. When filing returns that reflect federal net operating losses, a copy of federal Form 1139, if applicable, must be attached. In addition, an amended Maine franchise tax return is required to correct errors on a previously filed return. The amended return must be filed within 180 days after discovering the error. Use Form 1120B-ME for the year that is being amended and check the box marked "Check here if an amended return" in the upper right corner of the form. 12. Combined report for unitary members: A financial institution that is a member of an affiliated group and operates in a unitary fashion must file a Maine Franchise Tax Combined Report For Unitary Members (Form CRB). Maine law defines affiliated group to mean a group of two or more financial institutions in which more than 50% of the voting interest of each member financial institution is directly or indirectly owned by a common owner or owners, either corporate or noncorporate, or by one or more of the member financial institutions. Unitary is defined as a business activity that is characterized by unity of ownership, functional integration, centralization of management, and economies of scale. The State of Maine three-factor apportionment formula is used to apportion net income of multi-state financial institutions. The apportionment formula is also used to determine Maine assets from the total end-of-year assets of the financial institution.

# Specific Instructions

Important: If all required lines and schedules (including Form CRB) are not completed, the return is incomplete and will not be considered a filed return. Pages 1 through 6 of the federal return must be attached to Form 1120B-ME. Line 1b. Maine net income: Financial institutions that are not part of an affiliated unitary business group and have income solely from activity within Maine must enter the same amount entered on line 1a. Financial institutions that are members of an affiliated unitary group must file a combined report (Form CRB). A financial institution that is taxable both in and outside Maine must apportion its net income by completing Schedule A. Line 2b. Maine assets: Financial institutions that are not part of an affiliated unitary business group and have income solely from activity within Maine must enter the same amount entered on line 2a. Financial institutions that are members of an affiliated unitary business group must file a combined report (Form CRB). A financial institution that is taxable both in and outside Maine must apportion its assets by completing Schedule A. Line 3. Tax: Each year, a financial institution must elect the tax formula option to apply by placing an "X" in the appropriate box. Option 1 - The sum of 1% of the financial institution's Maine net income plus 0.008% of its Maine assets. Option 2 - The amount equal to 0.039% of the financial institution's Maine assets. Line 3a. Tax on Maine net income: The tax rate on income is 1% (0.01) of Maine net income as listed on line 1b. Leave this line blank if option 2 is elected. Line 3b. Tax on Maine assets: If option 1 is selected, the franchise tax rate on Maine assets listed on line 2b is 8 cents (8¢) per $1,000 (0.008%). If option 2 is selected, the franchise tax rate on Maine assets listed on line 2b is 39 cents (39¢) per $1,000 (0.039%). Apply the appropriate factor and enter the result on this line. Line 3d. Nonrefundable tax credits: Complete and attach a tax credit worksheet for each tax credit claimed. Tax credit worksheets are available at maine.gov/revenue/tax-returnforms. The total of all nonrefundable credits cannot exceed the total tax liability shown on line 3c. Enter on this line the total amount of nonrefundable tax credits used to reduce tax liability, including: • Maine Seed Capital Tax Credit • Research Expense Credit • Pine Tree Development Zone Credit • Employer Support for Volunteer Firefighters and Volunteer Municipal Emergency Medical Services Persons Credit • Employer Credit for Family and Medical Leave • Credit for Disability Income Protection Plans • Credit for Wellness Programs • Certified Visual Media Production Credit • Biofuel Production and Use Tax Credit • Renewable Chemicals Credit • Dirigo Business Incentives Tax Credit. Also claim on this line carryforward of unused credit amounts, including: • Employer credits for payment of employee expenses (long-term care insurance, day care expenses) • "Step 4" Quality Child Care Investment Tax Credit. Line 3e. Net operating loss credit: Leave this line blank if option 2 is elected. Otherwise, a credit is allowed against franchise tax on assets for a taxable entity that sustains a book net operating loss. The credit is computed by multiplying the Maine net income by the franchise tax rate on income (0.01). The amount of the credit allowed in the year of the loss is limited to the franchise tax on assets on line 3b. Excess credit amounts may be carried forward to the next five tax years and may be applied against the total tax on line 3c. Attach a carry forward schedule to support any excess credit amount on line 3e carried forward from a previous year. See 36 M.R.S. § 5206. Line 4a. Estimated and extension payments: Enter estimated tax payments and extension payments made for the tax year. Include on line 4a any overpayment carried over from previous years and applied to this year. Line 4b. Withholding: Enter on this line the amount of Maine income tax withholding credit for the year. For example, enter pass-through entity withholding reported on 2025 Forms 1099ME. Submit copies of Forms 1099 and/or W-2 with the return to support the amount entered on this line. Line 4c. Paid with original return: For taxpayers filing an amended return, include amounts paid with the original, or previously adjusted return on this line. Line 4d. Refundable tax credits: Complete and attach a tax credit worksheet for each tax credit claimed. Tax credit worksheets are available at maine.gov/revenue/taxreturn-forms. Enter on this line the total of the refundable tax credits including: • Historic Rehabilitation Credit • Maine New Markets Capital Investment Credit • Credit for Affordable Housing • Credit for Paper Manufacturing Facility Investment • Dirigo Business Incentives Tax Credit • Credit for Investment in Qualified Professional Baseball Facilities in the State. Line 4e. Total payments and credits: Enter the total payments from lines 4a, 4b, and 4c, as well as any refundable tax credits from line 4d. The amount entered on line 4e may exceed the net tax liability on line 3f. Line 5b. Penalty for underpayment of estimated tax: If the estimated tax was underpaid, complete and attach Form 2220ME, available at maine.gov/revenue/tax-return-forms. Line 7a. Credited to next year's estimated tax: Use this line only if all or part of the overpayment on line 6 will be applied as a payment to next year's estimated Maine franchise tax. Line 7b. Refund: Enter the difference between lines 6 and 7a. Direct deposit of refunds less than $20,000 is available when filing through the MTP at revenue.maine.gov. Refunds of $20,000 or more will be mailed to the address on file.

* For example, if the business does not own or lease property anywhere in the United States, the property factor may be eliminated.

# General Instructions

Schedule A is for financial institutions that are taxable both in and outside Maine. To the extent that a financial institution derives its income from a unitary business carried on by two or more members of an affiliated group, Maine net income and Maine assets are determined by apportioning that part of the net income and assets of the entire group that is derived from the unitary business. Maine employs a three-factor formula to determine income and assets apportioned to Maine. However, one or more factors may be excluded from the apportionment formula under certain circumstances. If a factor is excluded from the apportionment formula, the weight of the remaining factors must be changed. A factor may be excluded only if both the numerator and denominator are zero, * but may not be excluded merely because the numerator is zero. When excluding the receipts factor, the weight of the payroll and property factors is 50% (0.5) each. When excluding either the payroll or property factor, the weight of the receipts factor is 66.67% (0.6667) and the weight of the remaining factor (payroll or property) is 33.33% (0.3333). If two factors are excluded from the apportionment formula, change the weight of the remaining factor to 100%. If any factors are excluded, attach a schedule detailing the factors used and the apportionment computation. If the total of lines 8(C), 9(C) and 10(C) does not equal the amount entered on line 11 of the return, the tax liability will not be computed accurately. Form 1120B-ME, Schedule A - Instructions Apportionment of Income and Assets (See 36 M.R.S. § 5206-E)

# Specific Instructions

Line 8. Receipts factor: The receipts factor is a fraction. The numerator is the Maine receipts of the taxpayer during the tax period. The denominator is the receipts of the taxpayer everywhere in the U.S. during the tax period. See 36 M.R.S. § 5206-E(2) for a complete description of Maine and everywhere receipts. Line 9. Payroll factor: The payroll factor is a fraction. The numerator is the total amount of compensation paid in Maine or paid to Maine-based and Maine resident employees during the tax period. The denominator is the total compensation paid everywhere in the U.S. by the taxpayer during the tax period to all employees working in the U.S. See 36 M.R.S. § 5206-E(4) for a complete description of Maine and everywhere payroll. Line 10. Property factor: The property factor is a fraction. The numerator is the average value of the real and tangible personal property owned or rented by the taxpayer in Maine plus loans and credit card receivables located in Maine during the tax period. The denominator is the average value of such property everywhere in the U.S. during the tax period. Property rented by the taxpayer is valued at eight times the net annual rental rate. Loans and credit card receivables are valued at outstanding principal, without regard to any reserve for bad debt. See 36 M.R.S. § 5206-E(3) for a complete description of Maine and everywhere property.

Purpose of Form Note: Only unitary business group members are to be included on this form. Affiliated non-unitary members are not to be included. Form CRB is used to calculate Maine net income and the Maine assets of a unitary business. Maine net income is a financial institution's net income or loss per books required to be reported pursuant to the laws of the United States and apportioned to this state. 36 M.R.S. § 5206-D(13). Combined Reporting Financial institutions with Maine net income or Maine assets that are members of an affiliated group engaged in a unitary business must file a combined report with Form 1120B-ME for the members of the unitary business that have nexus with Maine. Financial institutions that conduct a unitary business but are not required to file a federal income tax return must be excluded from the combined report. This includes those financial institutions not required, but electing, to file a federal tax return. "Affiliated group" means a group of two or more financial institutions of which more than 50% of the voting stock of each member is directly or indirectly owned by a common owner or owners, either corporate or non-corporate, or by one or more of the member financial institutions. 36 M.R.S. § 5206-D(1). "Unitary business" is a business activity that is characterized by unity of ownership, functional integration, centralization of management, and economies of scale. 36 M.R.S. § 5206- D(22). All financial institutions required to file federal income tax returns that are engaged in a unitary business are required to be included in the combined report of any taxable financial institution with Maine nexus, even if the affiliated financial institution has no nexus with Maine. Column Instructions Column 1. Put a check in this column for those members listed in column 2 that have nexus with Maine. Column 2. Enter the name and federal EIN of each member engaged in a unitary business. Note: Each member participating in the unitary business should have an amount entered in either column 3 or column 4, but not both. Column 3. Enter the separate net income per books of each member in column 2 that was part of a federal consolidated return (member's share of federal Form 1120, Schedule M-1, line 1 or Schedule M-3, line 11). This information can Form CRB - Instructions Maine Franchise Tax Combined Report for Unitary Members Form CRB, when applicable, must be filed with Form 1120B-ME. This report must be accompanied by an affiliation schedule (federal Form 851 for consolidated filers is acceptable) listing name, federal EIN and corporate activity of all members of the affiliated group. be obtained from the supporting statement filed with federal Form 1120 for consolidated returns. Attach the supporting statement from the federal Form 1120 consolidated return. Column 4. Enter the net income per books of each member in column 2 that filed a separate federal return (member's net income from federal Form 1120, Schedule M-1, line 1 or Schedule M-3, line 11, or equivalent income from other federally filed returns such as federal Forms 1065 or 1120-S). Entries in column 4 relate to members engaged in a unitary business that were not included in a federal consolidated return. Column 5. Enter adjustments for eliminations, deferrals and other modifications provided for under federal law and regulations, but not included in column 3. Include any intercompany transactions between members on this report if those transactions resulted in gains or losses. Similar adjustments are required for business members that are not part of the same consolidated filing. These adjustments include, but are not limited to, (a) dividends paid out of income subject to apportionment under 36 M.R.S., chapter 819 by one member to another member; (b) deferrals of gains/losses from intercompany sales of inventory; and (c) deferrals of gains/losses from intercompany sales of fixed assets. Attach a worksheet detailing adjustments claimed in column 5. Column 6(A). Combine columns 3, 4, and 5. This is the adjusted separate income of each member engaged in the unitary business. Column 6(B). For each unitary business member listed, enter the total end-of-year assets from the federal consolidated return or pro forma federal consolidated return. Columns 7 - 9. Enter each financial institution's share of receipts, payroll, and property of the unitary business. 36 M.R.S. §§ 5206-E(2), 5206-E(3), and 5206-E(4). Carry over the totals from line 11 to Schedule A. If a single return is filed for the entire group, the amounts on the "Totals" line of columns 7, 8, and 9 (line 11) of the Combined Report must agree with those entered on lines 8, 9, and 10, columns (A) and (B) of Form 1120B-ME, Schedule A. Line Instructions Line 10. To the extent not already eliminated, remove all intercompany transactions resulting in gains or losses. These eliminations are for columns 6(B) through 9 only. Attach a worksheet that details adjustments claimed on this line. Line 11. Enter the total for each of columns 3 through 9. Enter column 6(A), line 11 on Form 1120B-ME, line 1a. Enter column 6(B), line 11 on Form 1120B-ME, line 2a.