Maine Estate Taxes

Maine is one of the states that still imposes an estate tax.  Maine Revenue Services within the Department of Administrative & Financial Services is responsible for administration of the estate tax laws in effect for the state.  The laws related to estate tax in Maine have been in place since July 1, 1986.  But for those who die during 2012, the estate tax calculation is based on the laws applicable during 2009.

Following is an overview of the current estate tax laws in effect for Maine.  For more information about federal income taxes, please visit our web site’s “Tax Relief” page.

What are estate taxes?

An estate refers to the property a person leaves behind at the time of his or her death.  It is normal that when a person dies his or her property passes to family, friends, or others through a will.  Or when that person does not have a will, the property passes to others under the guidance of applicable state or federal probate laws.

For the transfer of property through an estate, government agencies—which can be the government of those states that impose estate taxes and the federal government through the Internal Revenue Service (IRS)—impose tax on the estate related to the transfer of property from one person to another at the time of death.  As the property is going to a person or persons who did not pay for the property or an interest in the property, the transfer is treated as income when it exceeds a certain threshold.  Therefore, a tax is imposed on that income, which is known as the estate tax.

Who must file an estate tax return in Maine?

Decedents must file an estate tax return if the decedent was a resident of Maine or the estate includes real or tangible personal property actually located in the state of Maine.

What is the threshold when estate taxes apply in Maine?

If the decedent dies on or after January 1, 2012, the estate of a decedent must pay Maine estate tax if the gross estate has a value of at least $1,000,000.

What forms does Maine require the executor to file related to Maine estate taxes?  Where must those forms be filed?

If the decedent was a resident of Maine at the time of his or her death, the decedent’s estate must file Form 706ME Maine Estate Tax Return.  In addition, the federal estate tax Form 706 must be completed as well to calculate the tax owed.

Estate tax forms may be mailed to the following address:

Maine Revenue Services

PO Box 1065

Augusta, Maine 04332-1065

When are Maine estate taxes due?

An executor must file and pay Maine estate taxes within nine months of a decedents death.  An executor may obtain an extension of time to file estate taxes for up to six months or whatever extension length is granted at the federal level, which time period is longer.  Any request for extensions must be made in writing.  And note the request is an extension of time to file the estate tax return, not an extension of time to pay any estate tax owed.

If estate tax returns is not filed on time, the estate will receive a demand notice.  If the estate tax return is not filed within 60 days of the receipt of the demand notice, the estate will be assessed a penalty of the greater of $25 or 10% of the amount of estate tax due.  If the estate tax return is not filed until more than 60 days after the receipt of the demand notice, the estate will be assessed a penalty of the greater of $25 or 25% of the amount of estate tax due.

In addition, if the estate tax owed is not paid on time, the estate is assessed 1% of the tax liability for each month the payment is delinquent.

Who can help me if I have additional questions about Maine estate taxes or other taxes?

If you have questions about estate taxes, income taxes, or any other tax issues, you can get answers to your questions by calling the telephone number located at the top of this page.  You can have a confidential conversation with a tax attorney free of charge and with no further obligation.  This attorney will be able to answer your questions about Maine estate taxes or any other tax issues you are facing.  Therefore, you have every reason to make the call and get the help you need today.

by Mark Johnston

Mark has been a contributor to legal web sites related to bankruptcy, tax, and criminal law since 2011. He has an Accounting degree from Texas A&M University.