March 5, 1980

As a member of the Massachusetts General Court you ask about the Massachusetts income tax consequences of declining the current salary established by General Laws Chapter 3, Section 9, as amended by Chapter 677 of the Acts of 1979, and requesting payment at the salary level in effect prior to enactment of the amendment.

The amendment of Chapter 3, Section 9 by Chapter 677 was approved by the Governor on November 7, 1979 and took effect on January 1, 1980. Section 9 specifies the rates of pay which members of the legislature and those in leadership positions shall receive.

On November 9, 1979 you notified the Treasurer of the Commonwealth that you did not wish to receive the increment in pay to which you are entitled under Chapter 3, Section 9 beginning January 1, 1980.

You ask whether or not the portion of the salary which you have asked the State Treasurer not to pay to you, is included in your gross income for Massachusetts tax purposes.

Gross income includes all income which a taxpayer has a right to bring within his control without restriction or substantial limitation. It is not necessary that the income actually be in the taxpayer's possession before it be considered received if he has a present right to receive it. Income constructively received is taxed as though it has been actually received.

In Revenue Ruling 56-126, which involved a Congressman who returned a portion of his Congressional salary, the Internal Revenue Service ruled that salary which is payable at a rate specified by law and which must be paid in full, is includible in federal gross income for the taxable year in which it is received.

The District Director of the Boston District of the Internal Revenue Service has stated in a letter to the State Treasurer that the full salary established for members of the General Court by Chapter 3, Section 9, as amended by Chapter 677, constitutes wages which are subject to federal income tax withholding.

General Laws Chapter 62, Section 2 defines Massachusetts gross income as federal gross income with certain modifications which are not here relevant. Unless specifically excluded in Chapter 62, an item of income which is included in federal gross income for a taxable year is included in Massachusetts gross income.

Based on the foregoing it is ruled that the entire salary to which you are entitled under Massachusetts General Laws Chapter 3, Section 9 is includible in your Massachusetts gross income.

Very truly yours,

/s/L. Joyce Hampers

L. Joyce Hampers
Commissioner of Revenue

LJH/RSF/jmcd

LR 80-9