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Adequate Revenues to Support Critical Investments

SECTION 7.   [Commonwealth Public Infrastructure Fund]
(A) Section 2ZZZ of chapter 29 of the General Laws, as appearing in the 2010 Official Edition, is hereby amended by striking out subsection (c) and inserting in place thereof the following subsection:-
(c) (1) In addition to those revenues credited to the fund pursuant to subsection (a), there shall be credited to the fund all monies received by the commonwealth equal to the Commonwealth Transportation Fund Share of the receipts from sales, as defined by chapter 64H, and the Commonwealth Transportation Fund Share of the sales price of purchases, as defined by chapter 64I, from that portion of the taxes imposed under said chapters 64H and 64I as excises upon the sale and use at retail of tangible property or of services, and upon the storage, use or other consumption of tangible property, or of services, including interest thereon or penalties, but not including any portion of the taxes that constitute special receipts within the meaning of subsection (b 1/2) of section 10 of chapter 152 of the acts of 1997.
(2) For the fiscal year beginning July 1, 2014, the Commonwealth Transportation Fund Share shall be 1.09 per cent; for the fiscal year beginning July 1, 2015, the Commonwealth Transportation Fund Share shall be 1.20 per cent; and beginning July 1, 2016, the Commonwealth Transportation Fund Share shall be 1.27 per cent.
(3) But if in a fiscal year the amount credited to the fund under this subsection is less than the Fund Minimum, then the comptroller shall transfer an amount from the General Fund to make up the difference between the amount credited to the fund and the Fund Minimum, not later than September 1 of the following fiscal year. For the fiscal year beginning July 1, 2014, the Fund Minimum shall be $953,000,000; for the fiscal year beginning July 1, 2015, the Fund Minimum shall be $1,082,000,000; for the fiscal year beginning July 1, 2016, the Fund Minimum shall be $1,168,000,000; and beginning July 1, 2017, the Fund Minimum shall be the Fund Minimum from the previous fiscal year multiplied by the sum of 1 and the per cent change in the unadjusted consumer price index for all urban consumers for the Boston metropolitan area as determined by the Bureau of Labor Statistics of the United States Department of Labor for the preceding 12 months, as certified by the comptroller on March 1 of each year.

(B) Said chapter 29 of the General Laws is hereby amended by inserting after section 2GGGG the following section:-
Section 2HHHH. (a) There shall be established and set up on the books of the commonwealth a separate fund to be known as the Commonwealth Public Infrastructure Fund, which shall be used exclusively for financing public infrastructure.
(b) There shall be credited to the fund all monies received by the commonwealth from the taxes imposed under chapters 64H and 64I as excises upon the sale and use at retail of tangible property or of services, and upon the storage, use or other consumption of tangible property, or of services, including interest thereon or penalties, but not including any portion of the taxes that constitute special receipts within the meaning of subsection (b1/2) of section 10 of chapter 152 of the acts of 1997.
(c) The comptroller shall transfer amounts credited to the fund immediately upon receipt and without encumbrance to the School Modernization and Reconstruction Trust Fund pursuant to section 35BB of chapter 10, to the Commonwealth Transportation Fund pursuant to section 2ZZZ of chapter 29, and to the Massachusetts Bay Transportation Authority State and Local Contribution Fund pursuant to section 35T of chapter 10. Notwithstanding subsection (a), the crediting of receipts to the fund shall not affect any obligation of the commonwealth related to notes issued by the Massachusetts Bay Transportation Authority, the School Building Authority, or the commonwealth, and the pledge of receipts from taxes imposed by chapters 64H and 64I to secure the payment of such notes under the circumstances described in the trust agreements relating to such notes is hereby ratified and confirmed in all respects and shall remain in full force and effect as long as any such notes remain outstanding in accordance with their terms and secured by pledged funds.
(d) Amounts in the fund after transfer pursuant to subsection (c) may be expended, subject to appropriation, for the expenses of the commonwealth, debt service or other obligations of the commonwealth, or for grants to municipalities and other public instrumentalities for design, construction, building, land acquisition, rehabilitation and other improvements to publicly-owned infrastructure including, but not limited to highways, streets, bridges, railways, mass transit, pedestrian and bicycle ways, airports, water treatment systems, wastewater systems, seaports, seawalls, breakwaters, dams, flood control systems, beach replenishment, parks, telecommunications systems, solid waste facilities, public education facilities, public health facilities, public housing, military and public safety facilities, and courts.

(C) Subsections (A) and (B) shall take effect on July 1, 2014.

[Repeal specific personal income tax expenditures]
(D) Paragraph (1) of subsection (a) of section 2 of chapter 62 of the General Laws, as appearing in the 2010 Official Edition, is hereby amended by adding the following subparagraph:-
(J) (1) Amounts excluded under section 132(a)(5) of the Code. [Repeal of parking, T-pass and vanpool fringe benefits]
(2) Amounts excluded under section 121 of the Code. [Repeal of exemption of capital gains on home sales]
(3) Amounts paid by employers for premiums on accident and accidental death insurance and excluded under section 106(a) of the Code. [Repeal of exemption of employer-paid premiums on accident and accidental death insurance]
(4) Amounts paid for premiums on group-term life insurance and excluded under section 79 of the Code. [Repeal of exemption of employer-paid premiums on group-term life insurance]
(5) Amounts excluded as workers' compensation under section 104 of the Code. [Repeal of exemption of workers' compensation benefits. Note: This repeal would include Item 1.010 (workers' compensation benefits) excludable under section 104 of the Code.]
(6) Amounts excluded under section 129 of the Code. [Repeal of exemption of dependent care expenses]
(7) Qualified foster care payments excluded under section 131 of the Code. [Repeal of certain foster care payments]
(8) The rental value of parsonages or rental allowances excluded under section 107 of the Code. [Repeal of exemption of rental value of parsonages or rental allowances to clergy]
(9) Qualified scholarships, fellowships and tuition reductions excluded under section 117 of the Code. [Repeal of the exemption of scholarship and fellowships]
(10) Amounts excluded under section 74(b) and (c) of the Code. [Repeal of exemption of certain prizes and awards]
(11) Amounts excluded under section 126 of the Code. [Repeal of exemption of certain cost-sharing payments related to water and soil conservation projects]
(12) The value of meals or lodging excluded under section 119 of the Code. [Repeal of exemption of meals or lodging furnished for the convenience of the employer]
(13) Earnings of Health Savings Accounts exempted under section 223(e) of the Code. [Repeal of exemptions of Health Savings Accounts earnings]
(14) Amounts excluded under section 137 of the Code. [Repeal of exemption of employer-provided adoption assistance]
(15) Amounts excluded under section 127 of the Code. [Repeal of exemption of employer-provided education assistance]
(16) Amounts excluded under section 132(a)(7) of the Code. [Repeal of employer-provided qualified retirement planning services]
(17) Amounts excluded under section 132(a)(8) of the Code. [Repeal of exemption of payments under a Department of Defense Homeowners Assistance Plan]
(18) Amounts excluded under section 108(f)(4) of the Code. [Repeal of exemption of discharge of indebtedness income for healthcare professionals]
(19) Earnings of Archer Medical Savings Accounts exempted under section 220(e) of the Code. [Repeal of exemptions of Archer Medical Savings Accounts earnings]

(E) Paragraph (2) of said subsection (a) of said section 2 of said chapter 62, as so appearing, is hereby amended by striking out subparagraph (G). [Repeal of exemption of income from the sale, lease or transfer of certain patents]

(F) Paragraph (3) of said subsection (a) of said section 2 of said chapter 62, as so appearing, is hereby amended by striking out subparagraph (B). [This relates to the repeal of exemption of capital gains on home sales above]

(G) Subsection (c) of said section 2 of said chapter 62, as so appearing, is hereby amended by striking out paragraph (2), (3) and (4). [(2) and (4): Repeal of the allowance of a deduction of capital losses against interest and dividend income; (3): Repeal of the 50% deduction for gains on the sale of collectibles]

(H) Paragraph (1) of subsection (d) of said section 2 of said chapter 62, as so appearing, is hereby amended by adding the following subparagraph:-
(Q)(1) The deduction allowed for certain contributions under section 223(a) of the Code. [Disallowance of the deduction for contributions to Health Savings Accounts]
(2) The deduction allowed for certain contributions under section 220(a) of the Code. [Disallowance of the deduction for contributions to Archer Medical Savings Accounts]
(3) The deduction for costs allowed under section 62(a)(20) and (e) of the Code. [Disallowance of the deduction for costs involved in unlawful discrimination suits]
(4) The deduction for certain costs under sections 62(a)(14) and 179A of the Code. [Disallowance of certain deductions for clean-fuel vehicles and certain refueling property]
(5) The election to expense certain capital costs allowable under sections 175 and 180 of the Code. [Disallowance of election to expense certain capital costs of farmers]
(6) No deduction shall be allowed for meals or entertainment expenses that are subject to the 50% limitation under section 274(n) of the Code. [Complete disallowance of the deduction for business meals or entertainment for which the 50% limitation applies for federal income tax purposes]

(I) Paragraph (a) of Part A of section 3 of said chapter 62, as so appearing, is hereby amended by striking out subparagraph (2). [Repeal of the deduction from Part A income for income of trustees, executors, or administrators set aside for charitable purposes]

(J) Paragraph (a) of Part B of said section 3 of said chapter 62 is hereby amended by striking out subparagraphs (2), (3) and (4), as so appearing. [(2): Repeal of the deduction from Part B income for income of trustees, executors, or administrators set aside for charitable purposes] [(3): Repeal of the $2,000 deduction for employee contributions to social security and railroad retirement] [(4): Repeal of the $2,000 deduction for employee contributions to public pension plans]

(K) Said paragraph (a) of said Part B of said section 3 of said chapter 62 is hereby amended by striking out subparagraphs (6), (7) and (8), as so appearing. [(6): Repeal of the deduction for interest (up to $100 per taxpayer) on savings in Massachusetts banks] [(7): Repeal of the deduction for business-related child care expenses] [(8): Repeal of the deduction for dependents under 12]

(L) Said paragraph (a) of said Part B of said section 3 of said chapter 62 is hereby amended by striking out subparagraph (11), as so appearing. [Repeal of deduction for tuition expenses]

(M) Said paragraph (a) of said Part B of said section 3 of said chapter 62 is hereby amended by striking out subparagraph (13), as so appearing. [Repeal of charitable contributions deduction]

(N) Said paragraph (a) of said Part B of said section 3 of said chapter 62 is hereby amended by striking out subparagraph (15), as so appearing. [Repeal of the commuter deduction]

(O) Paragraph (b) of said Part B of said section 3 of said chapter 62, as so appearing, is hereby amended by striking out subparagraph (3) and inserting in place thereof the following subparagraph:- (3) An exemption of one thousand dollars for each individual who qualifies for exemption as a dependent under section one hundred and fifty-one (c) of the Code, except that no such exemption shall be allowed for a dependent who earns income in excess of $1,000 in the taxable year, nor for a dependent student has attained the age of 19 years. [Repeal of dependents exemption for certain individuals who qualify as dependents under section 151(c) of the Code]

(P) Said paragraph (b) of said Part B of said section 3 of said chapter 62, as so appearing, is hereby amended by striking out subparagraph (5). [Repeal of the deduction for adoption fees.]

(Q) Section 6 of said chapter 62, as so appearing, is hereby amended by striking out subsections (d) and (e). [(d): Repeal of the renewable energy source credit] [(e): Repeal of the lead paint credit]

(R) Said section 6 of said chapter 62, as so appearing, is hereby amended by striking out subsection (i). [Repeal of the septic system credit]

[Double the personal income tax exemption amounts]
(S) Subparagraph (1) of paragraph (b) of part B of section 3 of chapter 62 of the General Laws, as appearing in the 2010 Official Edition, is hereby amended by striking out clause (A) and inserting in place thereof the following clause:-
(A) a personal exemption of $8,800 for tax years beginning on or after January 1, 2014.

(T) Subparagraph (1A) of said paragraph (b) of said part B of said section 3 of said chapter 62, as so appearing, is hereby amended by striking out clause (A) and inserting in place thereof the following clause:-
(A) a personal exemption of $13,600 for tax years beginning on or after January 1, 2014.

(U) Subparagraph (2) of said paragraph (b) of said part B of said section 3 of said chapter 62, as so appearing, is hereby amended by striking out clause (A) and inserting in place thereof the following clause:-
(A) a personal exemption of $17,600 for tax years beginning on or after January 1, 2014.

[Uniform income tax rate of 6.25%]
(V) Subsection (c) of section 2 of chapter 62 of the General Laws, as appearing in the 2010 Official Edition, is hereby amended by striking out paragraph (3).

(W) Said chapter 62 is hereby further amended by striking out section 4 and inserting in place thereof the following section:-
Section 4. Residents shall be taxed on their taxable income, and non-residents shall be taxed to the extent specified in section 5A on their taxable income, as follows:
(a) Part A taxable income shall be taxed at the rate of 6.25 per cent for tax years beginning on or after January 1, 2014.
(b) Part B taxable income shall be taxed at the rate of 6.25 per cent for tax years beginning on or after January 1, 2014.
(c) Part C taxable income shall be taxed at the rate of 6.25 per cent for tax years beginning on or after January 1, 2014.

(X) Section 183 of chapter 184 of the acts of 2002, as amended by section 44 of chapter 300 of the acts of 2002, is hereby repealed.

[Index the gas tax ]
(Y) The definition of "Tax per gallon" in section 1 of chapter 64A of the General Laws, as appearing in the 2010 Official Edition, is hereby amended by striking out the first sentence and inserting in its place the following sentence: - "Tax per gallon", shall be 21 cents per gallon, adjusted at the beginning of each fiscal year, beginning by the percentage, if any, by which the Consumer Price Index for the preceding year exceeds the Consumer Price Index for the calendar year that ends before such preceding year. The Consumer Price Index for any calendar year is as defined in section 1 of the Internal Revenue Code.

(Z) Subsection (Y) shall take effect as of July 1, 2013.

[Extend the sales tax to computer and data processing services and custom software]
(AA) Section 1 of chapter 64H of the General Laws, as appearing in the 2010 Official Edition, is hereby amended by inserting after the definition of "Commissioner" the following definitions:
"Computer and data processing services," services that include but are not limited to programming, code writing, modification or testing of existing programs, feasibility studies and design and installation of computer systems that integrate computer hardware, software, and communication technologies, whether or not such services are rendered in connection with the development, creation or production of standardized or custom software, provision of access to software or the storage of data on the seller's or a third party's server including disaster recovery services, and bundled charges where the value of computer and data processing services is the predominant portion of the bundle and regardless of whether any report that is furnished or made available is unique to a particular customer. "Computer and data processing services" include provision of data or access to data that are sold together with a computer or data processing service, unless the purchase of the data or access to data is optional to the customer and the cost to the customer of the data or access to data is stated separately from any charge for computer or data processing service on the invoice provided to the customer at the time of purchase. Computer and data processing services do not include the provision of (1) downloaded books, music, videos or ringtones, or (2) computer facilities management services.
"Custom software," a software program prepared to the special order of a customer that is not standardized software, including modifications or enhancements to standardized software.

(BB) Said section 1 of said chapter 64H, as so appearing, is hereby amended by striking out, in line 240, the words "item: telecommunications services" and inserting in place thereof the following words:- items: telecommunications services, computer and data processing services.

(CC) Said section 1 of said chapter 64H, as so appearing, is hereby further amended by inserting after the word "standardized", in line 250, the following words:- or custom.

[Lower the sales/use tax rate to 4.5%]
(DD) Section 2 of chapter 64H of the General Laws, as appearing in the 2010 Official Edition, is hereby amended by striking out, in line 3, the figure "6.25" and inserting in place thereof the following figure:- 4.5.

(EE) Section 2 of chapter 64I of the General Laws, as so appearing, is hereby amended by striking out, in line 6, the figure "6.25" and inserting in place thereof the following figure:- 4.5.
Tax security and utility corporations like other business corporations

(FF) Section 32B of chapter 63 of the General Laws, as appearing in the 2010 Official Edition, is hereby amended by striking out, in line 60, the following words:- 38B or.

(GG) Sections 38B and 52A of said chapter 63 are hereby repealed.

(HH) Section 68C of said chapter 63, as appearing in the 2010 Official Edition, is hereby amended by striking out clauses (2) and (3).

[Modernize the sales factor for apportioning the corporate excise, by sourcing to where services are received]
(II) Paragraph (d) of section 2A of chapter 63 of the General Laws, as appearing in the 2010 Official Edition, is hereby amended by striking our subparagraph (xi) and inserting in place thereof the following subparagraph:-
(xi) The numerator of the receipts factor includes receipts from sales other than sales of tangible personal property not otherwise apportioned under this section to the extent that those receipts would be included in the numerator of a corporation's sales factor as determined pursuant to subsection (f) of section 38. For purposes of the receipts sourced pursuant to this subparagraph, subparagraph (xiii) of subsection (d) shall not apply.

(JJ) Section 38 of said chapter 63, as amended by section 31 of chapter 194 of the acts of 2011, is hereby amended by striking out subsection (f) and inserting in place thereof the following subsection:-
(f) The sales factor is a fraction, the numerator of which is the total sales of the corporation in this commonwealth during the taxable year, and the denominator of which is the total sales of the corporation everywhere during the taxable year. As used in this subsection, unless specifically stated otherwise, "sales" means all gross receipts of the corporation, including deemed receipts from transactions treated as sales or exchanges under the Code, except interest, dividends, and gross receipts from the maturity, redemption, sale, exchange or other disposition of securities, provided, however, that "sales" shall not include gross receipts from transactions or activities to the extent that a non-domiciliary state would be prohibited from taxing the income from such transactions or activities under the Constitution of the United States. Sales of tangible personal property are in this commonwealth if:-
1. the property is delivered or shipped to a purchaser within this commonwealth regardless of the f. o. b. point or other conditions of the sale; or
2. the corporation is not taxable in the state of the purchaser and the property was not sold by an agent or agencies chiefly situated at, connected with or sent out from premises for the transaction of business owned or rented by the corporation outside this commonwealth. "Purchaser", as used in clauses 1 and 2 of this paragraph, shall include the United States government.
Sales, other than sales of tangible personal property, are in this commonwealth if the corporation's market for the sale is in this commonwealth. The corporation's market for a sale is in the commonwealth and the sale is thus assigned to the commonwealth for the purpose of this section :-
1. in the case of sale, rental, lease or license of real property, if and to the extent the property is located in this commonwealth;
2. in the case of rental, lease or license of tangible personal property, if and to the extent the property is located in this commonwealth;
3. in the case of sale of a service, if and to the extent the service is delivered to a location in this commonwealth;
4. in the case of lease or license of intangible property, including a sale or exchange of such property where the receipts from the sale or exchange derive from payments that are contingent on the productivity, use, or disposition of the property, if and to the extent the intangible property is used in this commonwealth;
5. in the case of the sale of intangible property other than as referenced in clause 4. where the property sold is a contract right, government license or similar intangible property that authorizes the holder to conduct a business activity in a specific geographic area, if and to the extent that the intangible property is used in or otherwise associated with this commonwealth; but any sale of intangible property, not otherwise described in this clause or clause 4 is excluded from the numerator and the denominator of the sales factor.
For the purposes of this subsection: (1) in the case of sales other than sales of tangible personal property if the state or states to which sales should be assigned cannot be determined, it shall be reasonably approximated; (2) in the case of sales other than sales of tangible personal property if the taxpayer is not taxable in a state to which a sale is assigned, or if the state or states to which such sales should be assigned cannot be determined or reasonably approximated, such sale shall be excluded from the numerator and denominator of the sales factor; (3) the corporation shall be considered to be taxable in the state of the purchaser if tangible personal property is delivered or shipped to a purchaser in a foreign country; (4) sales of tangible personal property to the United States government or any agency or instrumentality thereof for purposes of resale to a foreign government or any agency or instrumentality thereof are not sales made in the commonwealth; (5) in the case of the sale, exchange or other disposition of a capital asset, as defined in paragraph (m) of section 1 of chapter 62, used in a taxpayer's trade or business, including a deemed sale or exchange of such asset, "sales" are measured by the gain from the transaction; (6) "security" means any interest or instrument commonly treated as a security as well as other instruments which are customarily sold in the open market or on a recognized exchange, including, but not limited to, transferable shares of a beneficial interest in any corporation or other entity, bonds, debentures, notes, and other evidences of indebtedness, accounts receivable and notes receivable, cash and cash equivalents including foreign currencies, and repurchase and futures contracts; (7) in the case of a sale or deemed sale of a business, the term "sales" does not include receipts from the sale of the business "goodwill" or similar intangible value, including, without limitation, "going concern value" and "workforce in place"; (8) to the extent authorized pursuant to the life sciences tax incentive program established by section 5 of chapter 23I, a certified life sciences company may be deemed a research and development corporation for purposes of exemptions under chapters 64H and 64I; and (9) in the case of a business deriving receipts from operating a gaming establishmentor otherwise deriving receipts from conducting a wagering business or activity, income-producing activity shall be considered to be performed in this commonwealth to the extent that the location of wagering transactions or activities that generated the receipts is in this commonwealth.
Notwithstanding the foregoing, mutual fund sales as defined in subsection (m), other than the sale of tangible personal property, shall be assigned to this commonwealth to the extent that shareholders of the regulated investment company are domiciled in this commonwealth as follows:
(a) by multiplying the taxpayer's total dollar amount of sales of such services on behalf of each regulated investment company by a fraction, the numerator of which shall be the average of the number of shares owned by the regulated investment company's shareholders domiciled in this commonwealth at the beginning of and at the end of the regulated investment company's taxable year that ends with or within the taxpayer's taxable year, and the denominator of which shall be the average of the number of shares owned by the regulated investment company shareholders everywhere at the beginning of and at the end of the regulated investment company's taxable year that ends with or within the taxpayer's taxable year.
(b) A separate computation shall be made to determine the sale for each regulated investment company, the sum of which shall equal the total sales assigned to the commonwealth.
The commissioner shall adopt regulations to implement this subsection. This subsection shall not affect the commissioner's authority under subsection (j).

(KK) The third paragraph of said subsection (f) of said section 38 of said chapter 63, as appearing in subsection (II), is hereby amended by striking out clause (8).

(LL) Subsection (KK) shall take effect on December 31, 2018.

(MM) Subsection (II) shall not restrict the authority of the commissioner of revenue under subsection (j) of section 38 of chapter 63 of the General Laws, and shall not affect the continuing validity or application of regulations that were previously adopted under subsection (f) of said section 38 of said chapter 63.

[Repeal the FAS 109 deduction]
(NN) Section 95 of chapter 173 of the acts of 2008 is hereby repealed.

[Revenue anticipation notes authorization]
(OO) To meet the expenditures authorized from the General Fund by this act and by any subsequent supplemental and deficiency appropriations acts for fiscal year 2014, or to retire notes issued for those purposes under section 47 of chapter 29 of the General Laws, the state treasurer shall, upon the request of the governor, issue and sell notes of the commonwealth, in an amount to be specified by the governor from time to time, but not exceeding in the aggregate the sum of $400,000,000. All notes issued by the commonwealth under this section shall be designated on their face: Commonwealth Adequate Revenues for Critical Investments Loan Act of 2013, and shall be issued for a maximum term of years, not exceeding 2 years, as the governor may recommend to the general court under section 3 of article LXII of the Amendments to the Constitution. The notes shall be payable not later than June 30, 2016. All interest and payments on account of principal on these obligations shall be payable from the General Fund. Notes and interest on them issued under this section shall, notwithstanding any other provisions of this act, be general obligations of the commonwealth. This section shall take effect as of July 1, 2013.

[Repeal the exemption of candy and soda from the sales tax.]
(PP) Section 1 of chapter 64H of the General Laws, as appearing in the 2010 Official Edition, is hereby amended by inserting after the definition of "Business" the following definition:-
"Candy", a preparation of sugar, honey, or other natural or artificial sweeteners in combination with chocolate, fruits, nuts or other ingredients or flavorings in the form of bars, drops, or pieces. "Candy" shall not include any preparation containing flour and shall require no refrigeration.

(QQ) Said section 1 of said chapter 64H, as so appearing, is hereby further amended by inserting after the definition of "Services" the following definition:-
"Soft drinks", non-alcoholic beverages that contain natural or artificial sweeteners, but not including beverages that contain milk or milk products, soy, rice or similar milk substitutes, or vegetable or fruit juice.

(RR) Section 6 of said chapter 64H is hereby amended by striking out, in line 77, as so appearing, the words ", soft drinks".

(SS) Said section 6 of said chapter 64H is hereby further amended by striking out, in line 78, as so appearing, the words ", candy and confectionary".

(TT) Said section 6 of said chapter 64H is hereby further amended by inserting, after the word "include", in line 80, as so appearing, the following words:- soft drinks and candy, as defined in section 1,.

(UU) Said section 6 of said chapter 64H is hereby further amended by striking out, in lines 115 to 116, as so appearing, the words "in the instance in which it sells only snacks and candy with a sales price of less than $3.50" and inserting in place thereof the following words:- to the extent that it sells food products with a sales price of less than $3.50; provided further that candy and soft drinks as defined in section 1 are subject to tax regardless of whether the vending machine from which they are sold is considered an eating establishment or not.

(VV) Said section 6 of said chapter 64H is hereby further amended by inserting after the word "Beverages", in line 127, as so appearing, the following words:- , except soft drinks,.

[Increase the cigarette excise by $1 to $3.51 per pack, and increase other tobacco taxes (cigars, smokeless, roll-your-own, etc.) to reflect the previous and new cigarette excise increases.]
(WW) The first paragraph of section 6 of chapter 64C of the General Laws, as appearing in the 2010 Official Edition, is hereby amended by striking out the first 2 sentences and inserting in place thereof the following 2 sentences:- Every licensee who is required to file a return under section 16 of chapter 62C shall, at the time of filing such return, pay to the commissioner an excise equal to 150 1/2 mills plus any amount by which the federal excise tax on cigarettes is less than 8 mills for each cigarette so sold during the calendar month covered by the return; but cigarettes with respect to which the excise under this section has once been imposed and has not been refunded, if paid, shall not be subject upon a subsequent sale to the excise imposed by this section. Each unclassified acquirer shall, at the time of filing a return required by section 16 of chapter 62C, pay to the commissioner an excise equal to 150 1/2 mills plus any amount by which the federal excise tax on cigarettes is less than 8 mills for each cigarette so imported or acquired and held for sale or consumption, and cigarettes, with respect to which such excise has been imposed and has not been refunded, if paid, shall not be subject, when subsequently sold, to any further excise under this section.

(XX) Said section 6 of said chapter 64C, as so appearing, is hereby further amended by striking out the second paragraph and inserting in place thereof the following paragraph:-
Notwithstanding the other provisions of this section, the excise imposed by this section shall equal 130 per cent of the price paid by such licensee or unclassified acquirer to purchase smokeless tobacco so sold, imported, or acquired.

(YY) Said chapter 64C is hereby further amended by inserting after said section 6 the following section: -
Section 7 1/2. (a) As used in this section, the following words shall, unless the content clearly indicates otherwise, have the following meanings:-
"Counter," a device contained in, attached to, or forming part of, an RYO machine, performing in accordance with the manufacturer's specifications, that is designed to accurately count, and is accurately counting, the number of products rolled and wrapped by a machine.
"High volume machine," an RYO machine that is capable of rolling and wrapping tobacco into more than 10 products per minute.
"Low volume machine," an RYO machine that is not capable of rolling and wrapping tobacco into more than 10 products per minute.
"Product," a roll of tobacco or substance containing tobacco that is wrapped in any substance, including but not limited to paper or tobacco, in order to make the tobacco suitable for smoking. "Retailer," a retailer of cigarettes, cigars, smokeless tobacco, smoking tobacco or other tobacco products.
"RYO machine," a mechanical device, by whatever manufacturer made and by whatever name known, that is designed to roll and wrap tobacco into products.
(b) No retailer shall possess on its retail premises or otherwise make available to its retail customers, with or without a fee, an RYO machine, whether such RYO machine is owned by the retailer or another party, unless the retailer has first obtained a license under this section for each RYO machine that it so possesses or makes available. A retailer who possesses or otherwise makes available an RYO machine without first obtaining a license for the RYO machine under this section shall be subject to a civil penalty of not more than $10,000 for the first offense and not more than $25,000 for each subsequent offense, in the case of low volume machines, or a civil penalty of not more than $50,000 for the first offense and $100,000 for each subsequent offense, in the case of high volume machines. Any RYO machine on the retail premises of an unlicensed retailer or made available to the customers of an unlicensed retailer shall be subject to seizure or forfeiture under subsection (g), whether or not the RYO machine is owned by the unlicensed retailer.
(c) The commissioner may license a retailer to possess on its retail premises and make available to its customers 1 or more RYO machines, as specified by the license, if the commissioner determines that the retailer is in good standing with regard to all state tax obligations for taxes subject to chapter 62C, and if the retailer pays the applicable fees before issuance of the license. Each license so issued or a copy of it shall be displayed on or immediately adjacent to the licensed RYO machine. Each license shall apply only to a specified retail location and a specified RYO machine, but a licensee may replace 1 high volume machine at a specific retail location with another high volume machine at that location or may replace 1 low volume machine at a specific retail location with another low volume machine at that location, upon prior written notice to the commissioner. The licensing of RYO machines is retained exclusively by the commonwealth, and no city, town or other political subdivision of the commonwealth may license such use.
(d) The fee for each license issued under this section shall be $25,000 per calendar year for each high volume machine and $5,000 per calendar year for each low volume machine. The fee shall not be pro-rated for any period less than a year. Each license shall expire automatically on December 31 of each year. The licensee must apply for a new license for the following year. Licenses shall not be transferable or assignable except as expressly provided in this section.
(e) The applicant for a license under this section shall file with the commissioner an application in the form that the commissioner requires, and shall pay the license fee with the application. The commissioner shall refund the fees paid, subject to any offsets as may be provided with respect to debts collectible under chapter 62C, to the extent that a requested license is not issued. The commissioner shall investigate the prior activities of the applicant and may deny the application for any of the reasons set forth in clauses (1) to (8), inclusive, of section 67. The commissioner shall grant or deny a license within 90 days after the date of application. If the commissioner fails to act within that time, the license shall be deemed denied. An applicant aggrieved by the refusal of the commissioner to grant a license may, within 60 days after the date of notice of the refusal or deemed denial, appeal to the appellate tax board, whose decision shall be final. Licenses shall be subject to suspension or revocation during a calendar year as provided in section 68.
(f) Every licensee shall keep and preserve suitable records relating to the licensee's purchase of the tobacco contained in a product, including the price and date of the purchase and the name of the vendor, and each such invoice must clearly indicate whether the excise due under section 7B has been paid by the licensee's vendor or will be paid by the licensee. Every licensee shall also provide access to its records, as prescribed by section 25 of chapter 62C and the regulations thereunder. For the purposes of this section, the term "records" shall include a counter. The commissioner shall revoke the license of any licensee who fails to maintain accurate records as provided in this section or who refuses to make its records available to the commissioner or the commissioner's designee.
(g) Any person who owns, leases, or is in control or possession of, and is determined by the commissioner to have, a faulty or inoperative counter or a machine without a counter, or who refuses to allow the commissioner or the commissioner's designee access to a counter and the data recorded by the counter, or who intentionally damages, tampers with, removes and does not replace, or renders sporadically or permanently inoperative, a counter, or who falsifies the data recorded by a counter, shall be punished by a fine of not more an $50,000 or by imprisonment for not more than 1 year, or both.
(h) In addition to the other remedies provided by this section, the commissioner or the commissioner's designee or the state police may seize, seal, or otherwise render inoperative an RYO machine for which a required license has not been issued or where counters or records regarding a licensed RYO machine have not been maintained as required by this chapter or chapter 62C.
(i) It shall be unlawful for any person, whether located within or without the commonwealth, to sell, lease, loan, give, exchange, or otherwise transfer or deliver an RYO machine to a retailer unless the retailer has a license for that RYO machine.
(j) Nothing in this section shall apply to a person who owns, leases, or is in control or possession or control of a low volume machine that is used only for that person's personal use or to that low volume machine itself.

(ZZ) Section 7B of chapter 64C of the General Laws, as appearing in the 2010 Official Edition, is hereby amended by striking out the figure "30", in line 40, and inserting in place thereof the following figure:- 60.

(AAA) Every manufacturer, wholesaler, vending machine operator, unclassified acquirer or retailer, as defined in section 1 of chapter 64C of the General Laws, and every stamper appointed by the commissioner pursuant to section 30 of said chapter 64C, who, as of the commencement of business on August 1, 2013, has on hand any cigarettes for sale or any unused adhesive or meter stamps, shall make and file with the commissioner within 20 days a return, subscribed and sworn to under the penalties of perjury, showing a complete inventory of such cigarettes and stamps and shall, at the time he is required to file such return, pay an additional excise of 50 mills per cigarette on all cigarettes and all unused adhesive and meter stamps upon which an excise of only 1001/2 mills has previously been paid. All provisions of chapter 62C and chapter 64C relative to the assessment, collection, payment, abatement, verification and administration of taxes, including penalties, shall apply to the excise imposed by this section.

(BBB) All additional revenue resulting from the enactment of subsections (WW) to (AAA), inclusive, as estimated by the commissioner of revenue, shall be deposited in the General Fund

[Cap Film Tax Credit at $40 million per fiscal year]
(CCC) Subsection (l) of section 6 of chapter 62 of the General Laws, as so appearing, is hereby amended by adding the following paragraph:-

(8) Notwithstanding any other provision of this section, the cumulative amount of credits allowed under this subsection together with section 38X of chapter 63 for all productions, shall not exceed $40,000,000 for credits deemed attributable to any one fiscal year beginning with the fiscal year commencing on July 1, 2013.
                   
(DDD) Section 38X of chapter 63 of the General Laws, inserted by section 82 of chapter 173 of the acts of 2008, is hereby amended by adding the following subsection:-

(g) Notwithstanding any other provision of this section, the cumulative amount of credits allowed under this section together with subsection (l) of section 6 of chapter 62 for all productions, shall not exceed $40,000,000 for credits deemed attributable to any one fiscal year, beginning with the fiscal year that commences on July 1, 2013.

(EEE) In order to implement paragraph (8) of subsection (l) of section 6 of chapter 62 and subsection (g) of section 38X of chapter 63 of the General Laws, the department of revenue, in this section called the department, shall issue and implement rules or guidelines which may include but are not limited to the following:

(a) Any motion picture production company seeking a credit for a production that commences filming after January 23, 2013 shall file a production notice with the department, stating the amount of estimated expenses qualifying for the credit for the production and other information required by the department.

(b) Production notices received by the department on or after January 23, 2013 and before January 23, 2014 shall be considered to be attributable to fiscal year 2014 and shall reduce the available credit for fiscal year 2014, in the order in which they are received, by not more than the amount of the credit calculated with respect to the estimated qualifying expenses stated in the notices. Production notices received by the department in each subsequent 12 month period shall be considered to be attributable to each subsequent fiscal year and shall reduce the available credit for that fiscal year, in the order in which they are received, by not more than the amount of the credit calculated with respect to the estimated qualifying expenses stated in the notices.

(c) A production company shall not be allowed a credit for a production commencing filming after January 23, 2013 unless filming commences within 90 days after the department has responded favorably to the notice and any credit shall not be allowed in excess of the amount of credit calculated with respect to the estimated qualifying expenses stated in the notice. A production company that does not commence filming within the required 90 day period will not be allowed a credit for that production and the credit otherwise attributable to that production will be available to other productions subject to the notice procedures and credit limits contained in this subsection (C).

(d) All productions commencing filming after January 23, 2013 are subject to the notice procedures and credit limits provided in this subsection (C) and shall not qualify for any credit under subsection (l) of section 6 of chapter 62 or section 38X of chapter 63 of the General Laws in any fiscal year except as allowed through those notice procedures and subject to those credit limits.

(e) Credit certificates issued by the department that are attributed to a particular fiscal year under this section will reduce the available credits for such year regardless of the production dates to which those credit certificates relate.

(FFF) Subsections (CCC) to (EEE) shall take effect upon passage.

[Effective date]
(GGG) Except as otherwise provided, this section shall take effect on January 1, 2014 and shall be effective for tax years beginning on or after January 1, 2014.
 
 

Summary:
This section provides adequate revenues to support critical investments, effective January 1, 2014, by: * Changing the income tax rate to a uniform 6.25%; * Doubling the personal income exemption amounts; * Repealing numerous specific personal income tax expenditures; * Lowering the sales/use tax rate to 4.5%; * Extending the sales tax to computer and data processing services and custom software; * Establishing the Commonwealth Public Infrastructure Fund to expend sales tax revenues exclusively for financing public infrastructure; * Indexing the gas tax; * Taxing security and utility corporations like other business corporations; * Modernizing the sales factor for apportioning the corporate excise, by sourcing to where services are received; * Repealing the FAS 109 deduction. * Capping the film tax credit at $40 million per fiscal year. * Repealing the exemption of candy and soda from the sales tax. * Increasing the cigarette excise by $1 to $3.51 per pack, and increasing other tobacco taxes (cigars, smokeless, roll-your-own, etc.) to reflect the previous and new cigarette excise increases.