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9. Maine property in a trust, LLC or pass-through entity is included in the estate of a nonresident decedent. What Maine property held by the trust, LLC or pass-through entity is sourced to Maine under 36 M.R.S.A. § 4104?

Mon, 30 Sep 2013 13:01:48 EDT

Generally, Maine property held by a pass-through entity is sourced to Maine, if included in a nonresident decedent's estate, and:

1) The entity does not carry on a business for the purpose of profit and gain;

2) The ownership of the property in the entity was not for a valid business purpose; or

3) The property was acquired by other than a bona fide sale for full and adequate consideration and the decedent retained a power with respect to or interest in the property that would bring the real or tangible personal property located in this state within the decedent's adjusted federal gross estate.

See MRS Rule 601 & MRS Proposed Rule 603 for further, more comprehensive, information.

Rev. 9/30/13

8. Can I ask to have interest and penalties waived?

Mon, 30 Sep 2013 13:00:39 EDT

Yes. The State Tax Assessor shall waive penalties on a showing of reasonable cause as provided by 36 M.R.S.A. § 187-B (7). The State Tax Assessor may waive interest in certain unusual circumstances. However, these cases are very rare. You can ask for reconsideration of interest and penalty charges in writing within 60 days of receiving an assessment. Use the Petition for Reconsideration form available at for this purpose. Reasonable cause includes erroneous information provided by MRS, death or serious illness of the taxpayer or member of the taxpayer's immediate family, a natural disaster, etc.

Rev. 9/30/13

7. If a nonresident decedent owns property in Maine and the property qualifies for the estate tax marital deduction, is a Maine return required?

Mon, 30 Sep 2013 12:59:56 EDT

Yes, if the federal gross estate plus prior taxable gifts plus Maine elective property is equal to or greater than $2,000,000 for decedents dying in 2013, regardless of whether the property is included in the marital deduction.

Rev. 9/30/13

6. The IRS gives a credit for tax paid on recently inherited assets. Does Maine have a similar credit?

Mon, 30 Sep 2013 12:58:37 EDT

No. Maine law does not provide a credit for Maine estate tax previously paid by another estate on the same property.

Rev. 9/30/13

5. Is the federal value of an estate automatically accepted as its value for Maine purposes?

Mon, 30 Sep 2013 12:57:48 EDT

No. Maine law provides that where an estate has a federal tax liability, the federal value will be the value for Maine purposes unless the State Tax Assessor determines a different value. For estates with no federal filing, the Assessor will determine the value of the estate in accordance with principles of federal tax law.

Rev. 9/30/13

4. Does Maine conform to the federal law and regulations regarding the alternate valuation date?

Mon, 03 Dec 2012 09:34:43 EST

Yes. Maine accepts the federal alternate valuation date, even for gap estates. Alternate valuation is not automatic. It must be elected by checking the box for the alternate valuation election on page 2 of federal Form 706. The election, once made, cannot be changed. When filing the Maine estate tax return, a copy of the entire federal return or pro forma return must be attached. Also, write "Alternate Valuation Date Elected" across the top of Form 706ME.

Rev. 6/25/12

3. How do I request a lien release for real and tangible personal property in an estate?

Mon, 30 Sep 2013 12:56:57 EDT

When someone owning Maine real or tangible personal property dies, Maine estate tax law places an automatic lien on that property. To request a release of the lien, the representative must take the following steps:

1) Complete an appropriate Certificate of Discharge of Estate Tax Lien (either or both for real or tangible personal property). The Registry of Deeds for the county in which the property is located will be able to help if you do not have the proper book and page numbers for the property. 2) Complete Form 706ME, Form 706ME-EZ (for decedents dying before January 1, 2013) or Statement 700-SOV as appropriate.

3) Submit the completed form, including documentation of value if required, with the appropriate Certificate of Discharge of Estate Tax Lien.

4) Make sure to include any payment due with the return (Form 706ME only). The return must show that all tax, interest, and penalties are being or have been paid.

5) The Certificate of Discharge of Estate Tax Lien, signed by the State Tax Assessor, will be mailed back to you. Bring the original document to the county Registry of Deeds and they will record the lien release.

For a list of the county Registries of Deeds, go to:

Rev. 9/30/13

2. How do I file for an extension?

Mon, 30 Sep 2013 12:55:31 EDT

If you are unable to file an estate tax return within nine months of the date of death, Maine allows an automatic six-month extension of time to file. If you received an extension to file your federal return, Maine allows an extension for the same period. If you are making an estimated payment prior to filing a return, send a copy of the federal Form 4768 with the payment.

A request for an extension in addition to the automatic six-month period must be submitted in writing prior to the expiration of the automatic six-month extension period. Generally, the total extension period cannot exceed eight months.

CAUTION: An extension to file the Maine estate tax return is not an extension for the payment of tax. If the estate owes tax, a payment of at least 90% of the amount due must be paid by the original due date for filing the return in order to avoid a failure to pay penalty. Interest is charged on any tax paid after the original due date of the return.

Rev. 9/30/13

1. Do I have to file a Maine estate tax return?

Mon, 30 Sep 2013 12:54:38 EDT

If you answer "yes" to either of the following questions, you must file a Maine estate tax return.

A) Is a federal estate tax return required?

If a federal Form 706 is required, then a Maine estate tax return is also required if there is any Maine property in the decedent's estate.

B) Does the value of the federal gross estate plus prior taxable gifts plus Maine elective property exceed the filing requirement threshold?

For deaths occurring in 2012, the filing threshold is $1,000,000. For deaths occurring in 2013, the filing threshold is $2,000,000 and prior taxable gifts include only those gifts made within one year before the date of death.

If the answer to questions A) and B) is "no," you probably do not have to file an estate tax return. The fact that a federal Form 706 is not required does not mean that an estate is not liable for Maine estate tax. In 2013 the Maine exclusion is $2,000,000 and the federal exclusion is $5,250,000, creating "gap" estates that are taxable to Maine but not to the federal government. More information on Maine's estate taxability threshold for each year can be found at the Estate Tax homepage on our web site at .

If an estate not required to file Form 706ME contains real property (land or buildings) or tangible personal property located in Maine, Form 706ME-EZ may be filed for decedents dying prior to January 1, 2013 or Statement of Value (Statement 700-SOV) may be filed for 2013 decedents with a completed Certificate of Discharge of Estate Tax Lien to release the automatic lien on that property. On the date of death, an automatic estate tax lien applies to any property located in Maine that is owned by the decedent. The purpose of the lien is to prevent the property from being sold before the estate tax is paid. See FAQ #3.

If an estate is subject to the probate process in Maine, you may be required to file either Form 706ME-EZ for estates of decedents dying prior to January 1, 2013, Statement 700-SOV for estates of decedents dying after 2012, or Form 706ME, even though taxes are not owed. The probate court may require a copy of an official letter from Maine Revenue Services certifying that an estate tax return has been filed (Certification of Filing) and that any tax due has been paid.

Rev. 9/30/13