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We're working to keep you informed in a world that changes by the minute. If you have anything you'd like to share, or if we can help you in any way, please email Zach Donah or Larry Liuzzo.
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Governor Baker Unveils $48.5 Billion FY23 Budget, Conforms Massachusetts Income Rules to 2022 IRC and Increases Estate Tax Threshold
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Yesterday, Governor Baker unveiled a $48.5 billion FY23 budget, which calls for several investments in economic development, transportation, education and more. Included in the Governor’s budget are two longtime MassCPAs legislative priorities – income tax conformity and estate tax overhaul.
The Governor proposes to conform the Massachusetts individual income tax rules to the version of the International Revenue Code (IRC) in effect on January 1, 2022, but decouple Massachusetts income tax rules from the federal qualified business income deduction. The budget has no broad-based tax increases and includes nearly $700 million in new tax breaks through various tax policy changes, including one to double the estate tax threshold to $2 million, tax only the dollars above the threshold and eliminate the cliff. The Boston Globe's Matt Stout has more information about the tax breaks, which can be found here.
While we will continue to advocate for a higher estate tax threshold such as the one included in the bill we supported, we applaud Governor Baker for including these important tax policy changes and look forward to working with the Legislature to ensure they become law.
The Governor’s budget is the first of several that will be released in the coming months. The Massachusetts House of Representatives is next in line and will release its FY23 budget sometime this spring.
We’ll keep you posted on those developments as we learn more.
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DOR Filing Season News and Video
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The Department of Revenue (DOR) recently released a video with information relative to this year’s tax season, including material that was covered during the DOR’s presentation at MassCPAs' State Tax Virtual Conference. Read a statement from the DOR below:
“As we typically do, we’ll do a soft opening for a few days after the opening date to test the system and make sure things are running optimally. We’ll continue to publish the approved software vendors on our website. Income tax returns will be due April 19 due to holidays in DC and MA. To help you prepare, take a look at our filing season presentation which is full of useful information.”
To sign up to receive important updates directly from the DOR, click here.
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MassCPAs Calls on Massachusetts Congressional Delegation to Direct the IRS to Provide Taxpayer Relief
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In the last two weeks, the Society contacted our Congressional Delegation urging them to direct the Internal Revenue Service (IRS) to provide immediate relief to taxpayers and tax practitioners as we brace for another difficult tax season. Specifically, there are a few measures the agency can do administratively to provide immediate relief – suspend compliance actions that are generated by the more than $6 million in unprocessed individual returns, 2.8 million unprocessed business returns, nearly 3 million unprocessed amended returns and approximately 4.7 million unopened and unanswered pieces of correspondence.
To date, the IRS has been reluctant to use this authority, but we’ve urged Congress to consider legislation to force their hand and will continue to do so. As of today, over half of the Massachusetts Congressional Delegation has signed a letter urging the IRS to act quickly to provide such relief.
We will continue to work with our Delegation to see that much needed relief is implemented as soon as possible.
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Massachusetts Senate Passes $75 Million COVID-19 Bill
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Yesterday, the Massachusetts Senate passed a $75 million COVID-19 spending plan. The plan closely mirrors the $55 million bill passed in the House last week, and includes money allocated to boost testing, distribute masks and more.
The Legislature will need to iron out final details in a compromise bill before it is sent to the Governor’s desk for his signature.
Colin Young with the State House News Service has more details on the bill, which can be found here.
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New Health Connector "Simple Sign-Up" Checkbox on DOR Schedule HC
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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 the DOR and 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 assistance is available to help people apply and enroll in a plan.
To learn more, click here.
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DOR State and Local Tax (SALT) FAQs
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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.
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DOR & IRS Updates
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Guidance for Federal Relief Programs
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