18-125 C.M.R. ch. 807 — Rule 807. Residency

18
DEPARTMENT OF ADMINISTRATIVE AND FINANCIAL SERVICES
125
BUREAU OF REVENUE SERVICES
INCOME/ESTATE TAX DIVISION
Chapter 807: RESIDENCY
SUMMARY: This rule addresses the determination and effect of an individual's residency status
with respect to Maine individual income tax.
Outline of Contents:
.01
Definitions
.02
General information
.03
Domicile status
.04
Factors used in determining an individual's domicile
.05
Statutory residency
.06
Residency safe harbors
.07
Resident and nonresident aliens
.08
Military personnel
.09
Students
.10
Application date
.01
Definitions
A.
Nonresident. "Nonresident" means, for individual income tax purposes, a natural
person who is not a Maine "resident individual" as that term is defined by 36 M.R.S. §
5102(5).
B.
Part-year resident. "Part-year resident" means, for individual income tax
purposes, a natural person who is domiciled in Maine for less than a full taxable year and
who is not a statutory resident in that year.
C.
Permanent place of abode. "Permanent place of abode" means a house,
apartment, residential care facility, dwelling place, or other residence that an individual
maintains as a household for the entire tax year, whether or not that individual owns it.
The term does not include a seasonal camp or cottage that is used only for vacations or
a dormitory room used by a student during the school year. A place of abode is not
considered "permanent" if it is maintained only during a temporary stay in Maine for
the accomplishment of a particular purpose.
D.
Resident. "Resident" means, for individual income tax purposes, a natural person
who is a Maine "resident individual" as that term is defined by 36 M.R.S. § 5102(5).
18-125 Chapter 807 page 2
E.
Safe harbor resident. "Safe harbor resident" means a natural person who is
domiciled in Maine, but who is not treated as a resident individual of Maine for income
tax purposes.
F.
Statutory resident. "Statutory resident" means a natural person who is a
resident individual in accordance with 36 M.R.S. § 5102(5)(B).
.02
General information
A.
Maine resident. A Maine resident must pay Maine income tax on all taxable
income regardless of its source. If a Maine resident is subject to income tax by another
state or similar jurisdiction in another country on the same income, the taxpayer may be
allowed a credit against Maine income tax for all or some of the tax paid to the other state
or jurisdiction.
B.
Nonresident or safe harbor resident. A nonresident or a "safe harbor" resident of
Maine must pay Maine income tax on all income from work performed in Maine. The
nonresident or "safe harbor" resident must also pay Maine income tax on all other income
derived from Maine sources, including income derived from business activity in Maine
carried out by sole proprietorships, partnerships, and S corporations; capital gains from
real or tangible property sold in Maine; and income from rental of Maine property. A
nonresident generally is not required to pay Maine tax on interest, dividends, alimony,
pensions, or other income from intangible sources, except on certain sales of a
partnership interest, unless such income is from property employed in a business carried
on in Maine.
C.
Part-year resident. A part-year resident of Maine must pay tax on all income for
the part of the year during which the individual was domiciled in Maine. A part-year
resident must also pay tax on any income derived from Maine sources during the entire
year.
.03
Domicile status
The word "domicile" is a common-law (i.e., judge-made law) term that the Maine courts,
not the Legislature or Maine Revenue Services, have defined. Under the Maine common
law, "domicile" means the place (A) where a person resides, and (B) where that person
intends to remain and, whenever absent, intends to return. Thus, according to the Maine
courts, domicile has two components: residence and the intent to remain or return, if
absent. Once an individual's domicile is established in Maine, it continues here until
domicile is established elsewhere. An individual alleging a change in domicile has the
burden to show that domicile was established in another state or country. The intent to
move in the future is not sufficient to establish a change in domicile.
Maine Revenue Services considers all of an individual's relevant facts and circumstances
allowed by Maine law when it determines where that individual is domiciled. Although
the individual's intent to remain or return is a critical factor in determining domicile, an
individual's statement as to his or her intent is not necessarily determinative. Evidence of
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the individual's intent may be found in many decisions made by the individual. An
individual may retain the ability to make certain decisions and determine his or her
domicile even though that individual is considered incapable of making, or chooses not to
make, other decisions, such as health care choices or financial determinations. Actions
by a person responsible for an incapacitated individual's affairs may be considered when
determining the incapacitated individual's intent to remain. When a guardian has been
appointed and chooses the incapacitated individual's place of abode pursuant to authority
as a guardian, the intent of the guardian for the individual to remain or return to a
particular location becomes a factor in the determination of the incapacitated person's
domicile. Evidence of the guardian's intent may be found in relevant statements and
actions.
.04
Factors used in determining an individual's domicile
All relevant facts and circumstances allowed by Maine law are considered in determining
where an individual is domiciled. The following factors, while not exclusive or of equal
weight, may be used as evidence of domicile.
A.
Property ownership and residence.
1.
Location of the individual's principal residence under the Internal Revenue
Code;
2.
Location of the individual's mailing address;
3.
Where the individual spent the most amount of time; and
4.
Whether the individual applied for a residential property tax exemption or
related benefit in Maine or a comparable benefit in another state.
B.
Family and dependents.
1.
Whether the individual can be claimed as a dependent on another person's
federal income tax return and where that other person is domiciled;
2.
Where the individual's spouse or dependents reside;
3.
Where the individual's dependents attend elementary and secondary school;
and
4.
Where the individual or the individual's dependents qualify for in-state
college tuition.
C.
Licenses and registrations.
1.
Where the individual is registered to vote;
2.
Which state issued the individual's driver's license;
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3.
Where the individual's vehicles are registered;
4.
Where the individual maintains professional licenses; and
5.
Where the individual declares residency for hunting and fishing licenses.
D.
Financial data.
1.
Where the individual qualifies for unemployment insurance;
2.
Where the individual earns wages;
3.
Where the individual filed previous years' income tax returns;
4.
The address recorded for the individual's insurance policies, deeds,
mortgages, or other legal documents; and
5.
Where the individual's safety deposit boxes are maintained.
E.
Affiliations.
1.
Where the individual's fraternal, social, or athletic memberships are located;
2.
Where the individual's union memberships are maintained; and
3.
The location of a church or other house of worship of which the individual is
a member.
F.
Other factors.
1.
Where the individual's personal property is located;
2.
Where the individual conducts business;
3.
The address listed for the individual in a telephone directory; and
4.
Where the individual's pets are located.
G.
Exceptions. Maine Revenue Services does not consider whether a donation was
made to an organization located in or outside of Maine when making domicile
determinations. Also, the geographic location of an individual's professional advisors
(such as doctors, lawyers, accountants, financial advisors, and investment advisors) or the
geographic location of a financial institution with an active account or loan of an
individual is not considered. The geographic location of a political organization or
candidate that an individual supports financially is not determinative of the individual's
domicile.
H.
Presumption. If an individual is married, both that individual and the individual's
spouse are presumed to have the same state of domicile, even though they may live apart
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for a portion of the year. This presumption can be overcome if the facts clearly show that
the spouses are domiciled in different states.
.05
Statutory residency
Even if an individual is domiciled in another state, he or she may still be taxed as a Maine
resident if that individual is a statutory resident. If an individual maintained a permanent
place of abode in Maine but claims to have been domiciled elsewhere and not present in
Maine for more than 183 days during the tax year, that individual must present adequate
records to verify that more than half of the year was spent in another state. Records
confirming whereabouts commonly include planners, calendars, plane tickets, canceled
checks, and credit card and other receipts.
.06
Residency safe harbors
A.
Generally. For tax years beginning on or after January 1, 2007, Maine law
provides that certain individuals are not treated as resident individuals even though they
are domiciled in Maine. In order to qualify for such a statutory "safe harbor," the
individual must fall under either the General Safe Harbor or the Foreign Safe Harbor.
B.
General safe harbor: An individual domiciled in Maine will be treated as a
nonresident if, during the tax year in question, the individual:
1.
Did not maintain a permanent place of abode in Maine;
2.
Maintained a permanent place of abode outside Maine; and
3.
Spent no more than 30 days in the aggregate in Maine (with any portion of a
day counted as a full day).
C.
Foreign safe harbor: An individual domiciled in Maine will be treated as a
nonresident if:
1.
Within any period of 548 consecutive days (the "548-day period") beginning
on or after January 1, 2007, the individual was present in a foreign country
(or countries) for at least 450 days;
2.
During the 548-day period, the individual is not present in Maine for more
than 90 days and does not maintain a permanent place of abode in Maine at
which the individual's spouse (unless the individual and their spouse are
legally separated) or a minor child is present for more than 90 days; and
3.
During the nonresident portion of the taxable year with which or within
which the 548-day period begins and during the nonresident portion of the
taxable year with which or within which the 548-day period ends, the
individual is present in Maine for a number of days that does not exceed an
amount that bears the same ratio to 90 as the number of days contained in the
nonresident portion of the taxable year bears to 548.
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.07
Resident and nonresident aliens
A.
Certain Maine-source income of a nonresident alien, (i.e., an individual who is
not a citizen of the United States and who resides outside the United States) may be
subject to Maine income tax. An individual who is a resident alien (i.e., an individual
who is not a citizen of the United States but who resides in the United States) for federal
income tax purposes and a Maine resident for state income tax purposes must pay Maine
income tax on all income. This subsection does not apply to tax years beginning on or
after January 1, 2020.
B.
For tax years beginning on or after January 1, 2020, Maine residency and Maine
income tax of resident and nonresident aliens are determined under Maine law without
reference to federal resident or nonresident alien status, unless otherwise provided in
Maine law.
.08
Military personnel
A.
Service member. A military service member's legal residence does not change
solely because of a change in duty assignment. The legal residence designated at the time
of entry into the service remains the same until the member establishes a new legal
residence. A completed DD Form 2058, "State of Legal Residence Certificate," is
evidence of a change in domicile.
1.
Nonresident service member: The military income of a nonresident stationed
in Maine will not be taxed by Maine, nor will income from intangible sources,
such as interest and dividends. However, additional wages earned performing
services at a non-military job in Maine or income from operating a business in
Maine are all subject to Maine income tax.
2.
Resident service member: Subject to the provisions of 36 M.R.S. §
5122(2)(LL), military compensation earned by a Maine resident service
member for service performed outside Maine under written military orders
will not be taxed by Maine for:
a.
Active duty service in the active components of the US Army, Navy,
Air Force, Marines, or Coast Guard by a service member whose
permanent duty station during such service is located outside Maine;
and
b.
Active duty service in the active or reserve components of the US
Army, Navy, Air Force, Marines, or Coast Guard or in the Maine
National Guard by a service member in support of a federal operational
mission or a declared state or federal disaster response when the orders
are either at federal direction or at the direction of the Maine Governor.
A "federal operational mission" is limited to activity in support of
overseas deployment and excludes standard duty activity, such as
training and administrative activities.
An individual domiciled in Maine who is a member of the Armed Forces of the United
States, the National Guard, or Reservists who received federal orders for active duty
continues to be domiciled in Maine for income tax purposes for the period of time
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stationed outside of Maine. The residency safe harbors in section .06 may apply to a
service member or spouse if eligibility requirements are met.
B.
Spouse of a service member.
1.
Residency of a military spouse. For tax years beginning on or after January
1, 2009, the spouse of a service member does not lose or acquire residency or
domicile for income tax purposes when the spouse is in a state solely to be
with the service member in compliance with the service member's orders.
The nonresident spouse of a nonresident service member will not be
considered a Maine resident individual if the spouse is in Maine solely to be
with the service member who is in Maine in compliance with that service
member's orders and the residence or domicile is the same for the service
member and the spouse. In addition, for tax years beginning on or after
January 1, 2018, if the spouse of a nonresident service member has elected
under 50 U.S.C. § 4001(a)(2)(B) to use the same residence for purposes of
taxation as the nonresident service member, the spouse will not be considered
a Maine resident individual.
2.
Income of a military spouse. Income earned from services performed in
Maine by the nonresident spouse of a service member is not Maine-source
income subject to Maine income tax if the spouse is in Maine solely to be
with the service member who is in Maine in compliance with orders.
.09
Students
Students generally remain residents of the state in which they were domiciled prior to
attending college, even if they attend college full-time in another state. Thus, a Maine
resident who attends school in another state remains a Maine resident and must pay
Maine income tax on all taxable income from all sources until that individual establishes
a domicile in a different state.
.10
Application date
Except as otherwise specified, this Rule applies to tax years beginning on or after January
1, 2011.
STATUTORY AUTHORITY: 36 M.R.S. §112
EFFECTIVE DATE:
December 5, 2010 - filing 2010-610
February 11, 2012 - filing 2012-17
AMENDED:
February 8, 2017 - filing 2017-010
December 26, 2020 - filing 2020-254