TO: ELIGIBLE BUSINESSES AND THEIR POTENTIAL INVESTORS UNDER THE MAINE SEED CAPITAL TAX CREDIT PROGRAM
RE: Guidelines for FAME acceptance of Tax Credit Applications in 2020
With Seed Capital Tax Credits being claimed faster and faster each year, FAME expects that the $5,000,000 in available credits for 2020 investments will be claimed on the first day, as was the case in 2019. In order to create as reasonable, equitable and transparent application process as possible, we have adopted the following guidelines for filing applications in 2020.
- As has always been the case, Credits are awarded on a first-come, first-served basis, but are SUBJECT TO PRO-RATION if the annual program limit is oversubscribed on the same day. In other words, applications received on January 2, 2020 have priority over those received on January 3, 2020, but all applications received on January 2, 2020 have the same priority, and if there are not sufficient credits to fulfill, in full, all credit applications received on January 2, 2020, the available credits will be pro-rated among all approved credits received on that day. For example, if applications seeking $10,000,000 in credits (representing $20,000,000 in eligible investments) are received on January 2, 2020, and all such applications are ultimately approved, credits would be awarded to all approved applications received on January 2, 2020 at the pro-rated rate of 25% (not the statutorily allowed 50%) of the approved eligible investment amounts.
- Applications will be accepted, without substantive review, commencing January 2, 2019, at 8:00 a.m. at FAME’s Augusta office at 5 Community Drive, Augusta, Maine.
- Applications received by hand delivery, USPS, FedEx, UPS, DHL or other commercial courier received between 8:00 a.m. and 5:00 p.m. will be given identical priority for that day, SUBJECT TO PRO-RATION if oversubscribed on the same day.
- Any applications received PRIOR to January 2, 2020 will NOT be accepted, and will be returned, regardless of method of submission.
- We will NOT accept any applications that are sent electronically.
- Applications that are not complete (including those missing required attachments, fees or signatures, proof of investment (or conversion to eligible investment), or other information deemed material by FAME) may be rejected and if rejected will be reassigned priority if and when application is determined by FAME to be complete.
- We hope to complete a substantive review of all applications received within 4-6 weeks of receipt but actual timing will depend on volume.
The Maine Seed Capital Tax Credit Team at FAME
Call or email:
Michelle MacKenzie at firstname.lastname@example.org or (207-620-3541)
Jennifer Cummings at email@example.com or (207-620-3531) or
Chris Roney at firstname.lastname@example.org or (207-620-3520)
The Maine Seed Capital Tax Credit Program is designed to encourage equity investments in Maine businesses, directly and through private venture capital funds. FAME may authorize state income tax credits to investors for 50% of the cash equity provided to eligible Maine businesses. Investments may be used for fixed assets, research or working capital.
- Businesses located in Maine.
- Investor must own less than 50% of the business.
- Principal owners and their immediate relatives are not eligible.
- Annual gross sales of less than $5,000,000.
- Business must either:
- be a manufacturer;
- provide goods or services with 60% of sales derived from outside the state or to out-of-state residents;
- develop or apply advanced technologies;
- be a value-added natural resource enterprise; or
- be certified as a visual media production company.
- Operating the business must be the professional, full-time activity of at least one of the principal owners.
Amount of credits available each year is limited to $5,000,000.
Starting on January 1 each year, credits are issued on a first-come, first-served basis to investors who submit a complete application. If you have any questions, including whether credits remain available for any year, please contact Jennifer Cummings, Director of Business Programs, or Christopher Roney, General Counsel, at 800-228-3734 or 207-623-3263 (TTY: 207-626-2717).
- Tax credits equal to 50% of the investment.
- An investor may provide up to $500,000 per business.
- Aggregate investment limit per business is $5,000,000 for which tax credit may be received.
- Investments must be at risk for five years. Dividends, royalties, interest, stock options or warrants and other forms of return, which are not in the nature of return of principal, are allowed.
- Credits must be taken in increments of 25% (of the credit) per year starting in the year of the investment. For investment not made through private venture capital funds, credits used cannot exceed 50% of the total tax due by the investor for that taxable year before application of the tax credit, and to the extent this limitation requires the taxpayer to take the credit over more than four years, unused credits may be carried forward no more than 15 years. For private venture capital funds, credits are refundable.
Special Rules for Private Venture Capital Funds
- Investors may provide up to $500,000 per business, including through a private venture capital fund, in any consecutive three-year period.
- No one company can receive investments of more than $5,000,000 qualifying for credits, including investments through a private venture capital fund, but may receive more without credits.
- Private venture capital funds may not own more than 50% of a company receiving investments.
- No member of the private venture capital fund may be a principal owner.
- Business receiving investment from private venture capital fund must keep operations in-state for four years following investment.
- Investment into private venture capital funds must be at risk and principal may not be paid without FAME consent for five years. Dividends, royalties, interest, stock options or warrants and other forms of return, which are not in the nature of return of principal, are allowed.
Businesses receiving investments for which credits are issued, must file annual reports with information on the total investments received, number of employees and jobs created/retained, annual payroll and total sales revenue. Failure to file reports will result in ineligibility and possible revocation of credits issued.
A business must apply for eligibility prior to receiving investments for tax credits. If the business has more than ten (10) employees, the Employment Plan must be included with the Business Application along with all supporting documents referenced in the Enclosures section on page 2 of the application.
Submit the Individual Investor Application along with all supporting documents referenced in the Enclosures section on page 2 of the application.
Private Venture Capital Funds
Submit the Private Venture Fund Application along with all supporting documents referenced in the Enclosures section on page 2 of the application.
The appropriate application and all supporting documents referenced within it must be completed and returned to FAME in order to complete the application process.
- Maine Seed Capital Tax Credit Private Venture Fund Application
- Maine Seed Capital Tax Credit Individual Investor Application
- Maine Seed Capital Tax Credit Business Application
- Employment Plan
For best results, please download .pdf forms locally, then open and complete them with Adobe Acrobat. If you don’t have Acrobat, you can download a free version of Adobe Acrobat Reader here. Save and print your completed forms, then mail to FAME.
The Maine Office of Securities provides industry information and resources. In addition to fielding consumer complaints, the office also welcomes questions about investments, financial professionals, and securities laws. MOS also protects Maine investors by licensing broker-dealers, agents, investment advisers, and investment adviser representatives; reviewing registration statements and exemption filings for securities issuers that are seeking to sell in Maine; and investigating and prosecuting violations of the securities laws.