The State of Maine offers Business Equipment Tax Programs to provide eligible Mainers with tax relief and to encourage capital investment in Maine. The Business Equipment Tax Exemption (BETE) and Business Equipment Tax Reimbursement (BETR) are two programs that can provide a tax break to eligible businesses in Maine.
Business Equipment Tax Exemption (BETE)
BETE is a Maine personal property tax exemption for eligible business equipment. You must file this application by April 1st (on account of an automatic extension, filing is considered timely until May 1st) of each year with the local assessor, even if there hasn’t been a change in your property status since filing for the prior year.
In most cases, eligible business equipment will be 100% exempt from property taxes that would have been first subject to tax in Maine on or after April 1, 2008, for each year that is filed.
For the equipment to be eligible, it must have been placed in service on or after April 2, 2007, and first subject to property tax assessment on or after April 1, 2008. Eligible business equipment is depreciable personal property used in the business, as well as personal property that, had it not already been fully depreciated, would be depreciable. According to Maine law, eligible business equipment includes repair parts, replacement parts, replacement equipment, additions, accessions, and accessories to other eligible business equipment. Eligible business equipment also includes inventory parts, if subject to an allowance for depreciation under the Internal Revenue Code when placed in service.
Land, land improvements, buildings, and components of buildings, such as heating, air conditioning, and plumbing, are not eligible, nor are office furnishings, lamps, and lighting fixtures.
Business Equipment Tax Reimbursement (BETR)
BETR is a taxpayer reimbursement for varying amounts of local personal property taxes paid on eligible and qualified business property. To be eligible, the business property must have been placed in service in Maine after April 1, 1995, and before April 1, 2007. It must also be used exclusively for a business purpose.
For refunds of property taxes paid in 2019, there isn’t much time left to file Form 800, the BETR application, with Maine Revenue Services. The application period began on August 1, 2020, and will end December 31, 2020. Prior to filing Form 800, your local assessor must complete Form 801A and/or Form 801(B), as completed assessor notification(s) must be attached to Form 800.
Just as with BETE, land, land improvements, buildings, and components of buildings, office furnishings, lamps, and lighting fixtures are generally not eligible. Leased equipment is not eligible; however, a lessor that has received reimbursement must repay a lessee for property taxes paid by that lessee. And it doesn’t exclude property purchased from another Maine business, as long as the previous owner placed it in service in Maine.
In most cases, property tax paid and claimed on eligible property will be reimbursed in full for the first twelve years. For year 13, the reimbursement rate drops to 75%, and, for subsequent years, the reimbursement rate drops by 5% every year until it reaches an annual rate of 50%.
ARB’s Business Tax Services Team would welcome the opportunity to help you take advantage of these business equipment programs. For more information, or for help filing an application, contact us today.
by David V. Jean, CPA, CCIFP, CExP