Legislative News

01/21/2022

Massachusetts Budget Leaders Predict $36.9 Billion in FY23 Collections 
Last week, the Chairmen of the Joint Committee on Ways and Means and the Secretary of Administration and Finance announced their FY23 consensus revenue forecast predicting collections will exceed $36.9 billion, reflecting a 2.7% growth in state tax revenue. The FY23 revenue forecast affirms several predictions made by the Department of Reveue (DOR) and other economic analysts who testified during the December 2021 consensus revenue hearing. To learn more, click here.

The consensus revenue forecast will be used as the baseline for building the FY23 budget, which Governor Baker is expected to release in the coming days. Another announcement last week was an adjusted increase of $1.584 billion to the FY22 state revenue forecast. We’ll keep you posted on all developments going forward. 

Brent Addleman of The Center Square has more information on the FY23 consensus revenue forecast, which can be found here

MassCPAs Testifies: Estate Tax Code Overhaul Needed
MassLive's January 14 editorial stated that MassCPAs “uses good logic to support a proposal…that would help mitigate what’s long been a concern” with respect to the efforts to increase the estate tax threshold. You can read the editorial here

As reported last week, MassCPAs submitted testimony in support of House bill 2881, An Act relative to the Massachusetts estate tax code, which would, among other provisions of the bill, increase the exemption level from $1 million to $2.75 million and ensure that only the value of the estate above the exemption is taxed, not the entire estate. To read our testimony, click here

In a press release supporting the legislation, MassCPAs President and CEO Amy Pitter stated: 
 
“MassCPAs members are trusted tax and financial advisors to each of their clients who are obligated to advise them to do what is best for their financial wellbeing, which includes where they reside. Massachusetts is an expensive state to live and work in, and our current low estate tax threshold, exacerbated by the possibility of a new 4% surtax on taxable income of over $1 million, along with the new remote workforce, puts us at risk for losing these taxpayers to states without estate, income or sales taxes. House bill 2881 will, in part, encourage these taxpayers to stay domiciled in Massachusetts, and help keep our economy and communities strong. I urge the Massachusetts legislature to act on this with haste, and I thank Representative Dooley for his leadership and bipartisan support of this bill.

Thanks to MassCPAs' members who submitted testimony in support of this legislation. We will keep you posted on any developments going forward. To get involved with legislative issues like this, become a CPA Advocate. You can learn more about the program here

Massachusetts Legislature Considers $55 Million COVID-19 Bill
This week, the Massachusetts Legislature moved forward with a $55 million piece of legislation relative to COVID-19 spending needs. The House Ways and Means Committee moved the bill out of committee earlier this week and was unanimously approved by the House of Representatives yesterday. Included in the bill is money allocated to boost testing, distribute masks and more. 

The legislation would also set the primary election date for September 6. The Senate is expected to take up the legislation in session next week. 

The Boston Globe's Emma Platoff has more details on the bill, which can be found here

New Health Connector "Simple Sign-Up" Checkbox on DOR Schedule HC
Simple Sign-Up is a new way for Massachusetts taxpayers to get help with health insurance coverage – right from their 2021 state tax returns. By checking the box, taxpayers are letting DOR and the Health Connector know they are interested in getting help enrolling in health insurance. The Health Connector will then reach out to the taxpayer about how to enroll in health insurance coverage.  

As a reminder, Schedule HC is a Massachusetts state tax form where individuals report any health insurance they had during the year. Married taxpayers must BOTH check the box to have their information sent to the Health Connector.

Most uninsured individuals qualify for low- or no-cost coverage through the Health Connector or MassHealth, the state’s Medicaid agency, but may not know it. To learn more about Health Connector coverage, click here. You can also use the Get an Estimate tool to find out what plans are available in your area and see what types of savings you may be eligible for after you apply. Free, in-person help is available to help people apply and enroll in a plan. 

To learn more, click here.

DOR State and Local Tax (SALT) FAQs
The DOR FAQs webpage for the elective pass-through entity (PTE) excise can be found here (last updated January 12). The draft of the 2021 Massachusetts tax form 63D-ELT (entity level tax) can be found here.

The DOR released a working draft TIR that can be found here. Please note: The public comment period is open until the close of business today, January 21, 2022. Please email comments here

Guidance for Federal Relief Programs

DOR & IRS Updates
U.S. Department of Labor Announce Online Portal for Paid Leave Eligibility
The U.S. Department of Labor (DOL) released an online portal through which workers can determine their eligibility for paid leave under the Families First Coronavirus Response Act (FFCRA).To view the Families First Coronavirus Response Act FAQs, click here.

Massachusetts Resources

Department of Public Health (DPH): Click here to read updates from the DPH regarding COVID-19.

Division of Local Services (DLS): For those who work with cities and towns across the Commonwealth, the DLS has a dedicated webpage that provides finance guidance to city and town officials related to the state of emergency. For more information, click here.For urgently needed guidance, please email the DLS.

Older Coverage

Massachusetts December 2021 Revenue Collections at $4.235 Billion
The Massachusetts Department of Revenue (DOR) announced December 2021 revenue collections totaled $4.235 billion, which is $1.396 billion (49.2%) more than December 2020 and $1.228 billion (40.9%) above monthly benchmarks.  FY22 year-to-date collections total $17.846 billion, which is $3.549 billion (24.8%) more than the same period of FY21, and $2.142 billion (13.6%) more than year-to-date benchmark.   The DOR noted that the increased collections total was due to many pass-through entities paying the 2021 excise in December to claim a deduction on their 2021 federal return and should not be used as a predicator for the remainder of the fiscal year.For more details on the December 2021 revenue collections, click here.

Forgiven Paycheck Protection Program (PPP) Loans and Massachusetts Growth Capital Corporation (MGCC) Grants Excluded from MA Taxable Income
Last month, Governor Baker signed the $4 billion American Rescue Plan Act (ARPA) into law, which excludes forgiven PPP loans and other federal and state-specific loans and grants, including those administered by the MGCC, from taxable income. You can find the language relating to the aforementioned loans and grants in sections 77 and 78 here.A special thanks to those who contacted your state legislators to support this important piece of legislation. Your advocacy has made a difference. 

U.S. Senate Finance Committee Unveils Tax Provisions in Build Back Better Act
Last month, the U.S. Senate Finance Committee unveiled the tax provisions outlined in the Senate’s version of the Build Back Better Act. There are several provisions that mirror those within the legislation that passed the U.S. House late last month. The tax provisions in the Senate’s bill that were also outlined in the House bill include, but are not limited to:  Unlike the House bill, the Senate’s version does not have any changes to the SALT deduction cap. The Journal of Accountancy has the details of the aforementioned provisions and several other tax provisions of the legislation, which can be found here. It is still unclear whether the Build Back Better Act will pass as no Senate Republicans are expected to vote in favor of it and there are two Senate Democrats who have been vocal with their criticisms of the legislation and its overall cost. 

Governor Baker & Lt. Governor Polito Not Running for Third Term
On December 1, Governor Baker and Lt. Governor Polito announced they will not seek a third term for governor and lieutenant governor. Lt. Governor Polito also announced she will not run for governor in 2022. This decision is likely to open a flurry of interest on both sides of the political aisle. There are three democrats already in the race for governor and it is likely that more will announce intentions to run. Massachusetts Attorney General Maura Healey has indicated for months that she is exploring a run for governor and the recent developments may accelerate her decision to officially declare her candidacy. U.S. Secretary of Labor and former Boston Mayor, Marty Walsh, is also reportedly exploring a run for governor.Former Republican Massachusetts State Representative and candidate for the U.S. Senate, Geoffrey Diehl, declared his candidacy for the republican nomination for governor a few months ago and is currently the only major republican candidate in the race. With Governor Baker and Lt. Governor Polito out of the race, more republican candidates are likely to emerge. 

President Biden Signs $1.2 Trillian Infrastructure Bill; Massachusetts Expected to Receive $9 - $12 Billion
Last week, President Biden signed the $1.2 trillion Infrastructure Investment and Jobs Act into law. The legislation, which was passed with bipartisan support, will fund investments in roads, bridges, broadband internet access, community revitalization efforts and more throughout the country. As part of that legislation, Massachusetts is slated to receive about $9 - $12 billion for various infrastructure needs across the state. Benjamin Kail at MassLive has more information on where a portion of the federal funds could go. There are several tax provisions included in the legislation, a summary of which can be found here

MassCPAs Meets with MA Congressional Delegation and Staff
In October, MassCPAs' executive and Board leadership and volunteers met with six Massachusetts Congressional offices to discuss the pressing issues facing the accounting profession. Among the topics we have discussed include efforts to:  We are grateful to Congressman Bill Keating for his time and conversation on these issues and for his advocacy of MassCPAs and the accounting profession on Capitol Hill. We are also deeply appreciative to the offices of Senator Markey, Congressman McGovern, Congressman Lynch, Congressman Auchincloss and Congressman Moulton for the opportunity to discuss these issues with key members of their staff.Thank you to Rob Miller, CPA, CFE, MassCPAs board chair and managing partner of Stone & Company, LLC; Julie Quink, CPA, CFE, MassCPAs board member and managing principal of Burkhart, Pizzanelli, PC; and Leanne Scott, JD, LL.M, senior manager at Baker Newman Noyes (BNN), who joined us throughout the week to represent MassCPAs and the Massachusetts accounting profession.   We look forward to continuing our meetings with the Massachusetts Congressional Delegation and their staff and will keep you posted on any developments.  

Massachusetts Department of Revenue – October 2021 News
The information below was included in the Massachusetts Department of Revenue (DOR)’s October 2021 newsletter: DRAFT 2021 Tax Forms Are Available for Review
The DOR worked to get DRAFT TY2021 tax forms for personal income tax and corporate excise up on the DOR website. If you have comments or questions, send them here.
 
Corporate Excise Tax – Massachusetts and Federal Differences
Back in May, the DOR told us about the new Massachusetts/federal differences for the Personal Income Tax page, and now we’ve taken the same steps to outline the differences between the state and federal tax laws for corporate excise as well. To learn more, click here
 
REMINDER: How to handle taxes on unemployment income
Unemployment is generally taxable, but things changed during the pandemic for those receiving unemployment benefits in 2020 and 2021. Make sure you familiarize yourself with the FAQs and guidance on who may be eligible to deduct unemployment benefits. Remember that a taxpayer could be eligible for a deduction on their federal tax return but not on their Massachusetts tax return – this page will help with that.If you missed a previous DOR news issue, you can always find it on the Tax Professionals page here

Massachusetts DOR Withdraws Proposal to Require Sales Tax Breakdown
At a Department of Revenue (DOR) Advisory Council meeting in September, Amy Pitter, MassCPAs president and CEO, and other members of the Advisory Council, encouraged Commissioner Snyder and DOR leadership to reconsider their recent proposal that would have required sales tax filers to break down online sales versus in-store sales. Below is the DOR advisory announcing the news to withdraw the implementation of the proposal: New reporting requirements, that were to begin in 2022, requesting sales tax filers to break down online sales versus in-store sales will not be implemented. At the most recent meeting of the DOR Advisory Council this month, Council members provided feedback from their members that reporting online sales versus in-store sales can be challenging as vendors make this distinction differently and the information may not be available or accurate at the time the return is filed. Council members asked the DOR to reconsider the implementation of the new requirements. The DOR has determined that at this time taxpayers will not be asked to break down sales by in-store versus online on their sales tax returns. To subscribe to receive DOR updates, click here

Influx of Federal Aid to Trigger Spike in Single Audits
As of June 2021, over $5 trillion in federal COVID-19 relief funding has been allocated across the country, of which Massachusetts has received roughly $73 billion, including $13 billion through the American Rescue Plan Act (ARPA).  The American Institute of Certified Public Accountants (AICPA) estimates that such an influx of federal aid will lead to 10,000 new single audits. For tips on working with first-time single audit clients, click here. Renee Davis, CPA, a partner at Powers & Sullivan, LLC, and co-chair of MassCPAs' Governmental Accounting & Auditing Committee, had some advice for how to handle these audits, which was featured in our July issue of SumNews.  

U.S. Department of Labor to Conduct Audit Quality Assessment of 2020 Plan Year Filings
The Department of Labor (DOL) Employee Benefit Security Administration (EBSA) Office of the Chief Accountant (OCA) is planning to conduct a study to assess the quality of audit work performed by independent qualified public accountants (IQPAs) with respect to financial statement audits of employee benefit plans covered under the Employee Retirement Income Security Act of 1974 (ERISA) for the 2020 Form 5500 filing year (plan years beginning in 2020). This includes calendar year 2020 filings filed on extension by October 15, 2021. The DOL expects to take a year to conduct its analysis and then to issue a report, which is likely to be released sometime in 2023. The AICPA will assist members and other stakeholders through the process and be a source of information for the DOL.  The AICPA is developing resources about the upcoming EBP study that we’ll share with you as we learn more. To read the AICPA alert with more information, click here

U.S. House Committee on Ways and Means Release Proposed Tax Changes
In September, the House Committee on Ways and Means released a list of proposed tax changes to be included in the budget bill known as the “Build America Back Better” act. The Journal of Accountancy highlighted several of the key tax provisions, which can be found here

Taxpayer Penalty Protection Act Filed in Congress
California Congresswoman Judy Chu recently filed the Taxpayer Penalty Protection Act of 2021, which offers taxpayers targeted relief from the underpayment of estimated tax penalty and the late payment penalty for the 2020 tax year, and it would minimize contact with the IRS as services continue to operate at historic lows.The AICPA and MassCPAs have long been advocates for such penalty relief, and in May, the AICPA submitted a letter to the IRS and the U.S. Department of the Treasury outlining several short- and long-term relief policy recommendations for taxpayers and practitioners. To read the letter, click here.MassCPAs' Government Affairs team has been in contact with the U.S. House Committee on Ways and Means staff and Congressman Richie Neal’s office to coordinate a meeting to discuss the significant issues of the current IRS service levels and potential solutions.

Major Update to Workforce Training Fund
Your upcoming CPE with us could be free, thanks to a recent change to the State Workforce Training and Express Fund! All MassCPAs conferences, customized team trainings and seminars qualify for this program, so work with us to save on your CPE. You must be registered and apply for reimbursement three weeks in advance of the course to qualify – act now! To learn more, click here or contact Julia Ekelund.

Amy Pitter, MassCPAs President & CEO, Featured in Boston Globe Editorial to Overhaul MA Estate Tax
MassCPAs President & CEO, Amy Pitter, was recently featured in a Boston Globe editorial arguing for a long-overdue update to the MA estate tax code. The editorial referenced legislation that would, in part, increase the tax exemption threshold from $1 million to $2.75 million per person and ensures that only the value of the estate above that amount is taxed, not the entire estate.We have been longtime supporters of such legislation and plan to submit testimony in support of House bill 2881, An Act relative to the Massachusetts estate tax code, once a hearing is scheduled for later in this legislative session.

DOR to Issue Refunds for Penalties Related to UI benefits
According to the DOR, due to the COVID-19 pandemic, Massachusetts is waiving penalties related to tax on 2020 unemployment income. Self-assessed underpayment of estimated tax penalties will be included in the waiver. Notices will go out if penalties have previously been paid and the penalty waiver results in an overpayment. The taxpayer does not have to do anything. Refunds will be issued by paper check or the refund will be applied to taxes owed. For other news items or to subscribe to receive updates directly from the DOR,
click here.  

Biden Administration Seeks to Increase IRS Budget by $80 Billion
AICPA Vice President of Taxation, Ed Karl, penned a recent blog regarding the IRS service levels of the last year. According to a May 2021 AICPA survey, the biggest concerns of IRS services involved an inability to connect with the IRS; a lack of IRS response to written communications; and a compression of workload due to COVID-19, laws and regulations. Karl lays out several short-term and long-term solutions that, “would alleviate the daily struggles that taxpayers, their advisers and the IRS face.” As for short-term relief, the AICPA urges the U.S. Department of Treasury and the IRS to:  As reported in April, President Biden seeks to increase the IRS budget by roughly $80 billion over 10 years as a part of the “American Families Plan,” a major piece of legislation that is currently being debated in Congress and throughout the U.S. To read a summary of the American Families Plan, click here. Amy Pitter, MSCPA president and CEO, wrote to Chairman of the House Committee on Ways and Means, Congressman Neal and Senator Ed Markey in April, calling for adequate funding for IRS services as well as the creation of a dedicated practitioner services division, which would increase efficiency, minimize the duplication of services and benefit all tax preparers. The dedicated practitioner services division, along with other proposals, are a part of the AICPA’s long-term solutions to address IRS service levels, which can also be found in Karl’s blog.In her letter, Pitter urged Congress to recognize the valuable return on investment in funding the IRS at appropriate levels and advised them to ensure sufficient funding is allocated to modernize its capabilities and carry out the necessary and critical work of collecting tax revenue and closing the tax gap. To read the letter, click here

AICPA & NASBA Unveil CPA Evolution Model Curriculum
The AICPA and NASBA recently introduced the CPA Evolution model curriculum for colleges and universities, designed to help accounting programs prepare students for the ever-changing demands of the CPA profession.Under the CPA Evolution model, CPA Exam candidates will all take three Core sections, testing their knowledge in accounting, audit and tax. The fourth section will be one of a candidate’s choosing in one of three disciplines of tax compliance and planning, business analysis and reporting or information systems and controls.The AICPA anticipates rolling out a new version of the CPA Exam based on this model in 2024.For more information on CPA Evolution model curriculum, click here.

Massachusetts Pandemic Policies Extension Bill Signed into Law
On June 15, the Massachusetts Legislature voted on a compromise bill that extends certain pandemic-era policies, which expired at the end of the State of Emergency order on June 15. The Governor signed the legislation into law yesterday morning.The legislation allows for, among other provisions, remote meetings for public bodies (i.e., City Council, Board of Public Accountancy, etc.) until April 2022; allows for restaurants to provide outdoor seating until April 2022 and to include cocktails to go until May 2022; and extends tenant protections on evictions. 

Fair Share Amendment, or the “Millionaire’s Tax,” to be a 2022 General Elections Ballot Question
Two weeks ago, the Massachusetts Legislature passed the Fair Share Amendment, which would amend the Massachusetts Constitution and impose a 4% surtax on individuals with annual taxable income of over $1 million, by a 159-41 margin. The amendment is set to appear as a ballot question during the 2022 General Elections. We believe that this approach sidesteps the legislative process and that etching the surtax in our Constitution comes with extremely high risks. Should unintended consequences arise where business is driven from Massachusetts to a more competitive state, it would take a minimum of four years to reverse the course.
 
There are plenty of discussions to be had to make the Massachusetts tax code fairer and more equitable for individuals and businesses across the board. However, doing so through a constitutional amendment is not good tax policy and will not allow for a quick legislative fix if one is needed.  If Massachusetts voters adopt the amendment, the tax will be implemented in 2023.

U.S. Treasury: American Rescue Plan Act (ARPA) Funds Can Replenish Unemployment Insurance (UI) Trust Fund
The U.S. Department of the Treasury released guidance on Monday that outlines how state and local governments may use the funds from the American Rescue Plan Act (ARPA) and green-lights the usage of funds to replenish the Unemployment Insurance (UI) Trust Fund. As we have noted in the last few weeks, administration officials and legislative leaders have been waiting for official federal guidance before publicly discussing where ARPA funds would be dedicated. On a call with Massachusetts business leaders last week, Secretary Rosalin Acosta of the Massachusetts Department of Labor (DOL) and Workforce Development stated the administration is working on a solution that they hope will be announced soon, which could be imminent now that the U.S. Treasury has weighed in.  Amy Pitter, MSCPA president and CEO, called on the administration to act with urgency “to offset the unanticipated surge in rates impacting thousands of businesses by injecting federal stimulus dollars to address the UI Trust Fund’s insolvency.” Pitter stated that the significant increase to the employer’s solvency rate contribution overturned any relief for small businesses from the recent freeze to UI contribution rate. To read Amy’s letter to Governor Baker, click here.Please note: The Department of Unemployment Assistance has extended the Q1 payment deadline to June 1.

Massachusetts Unemployment Insurance Fraud Resources
Unemployment Insurance Fraud is on the rise again.If you believe you may have had a false unemployment claim filed using your identity, contact the DUA here or at 877.626.6800. Please stay vigilant.For more information and resources, click here.

Professional Resources

MassCPAs Legislative Brief
This newsletter offers information and resources available through the federal and state governments regarding business loan programs, updates from the Departments of Labor and Health, and news as it relates to the impacts of COVID-19 on the accounting profession, the economy and the Society. Check out past issues here.

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