1/10/23: 4% Surtax on Income over $1 million
Impact on 2023 Withholding Tax Obligations
Last year, a statewide ballot measure amended Article 44 of the Massachusetts constitution to impose a surtax of 4% (the “surtax”) on taxable income above $1 million for tax years beginning on or after January 1, 2023. At this time, DOR does not intend to update the Income Tax Withholding Table (Circular M) to reflect the surtax. However, employers should use their best efforts to account for the surtax in determining how much to withhold. To ease compliance with the new law, for withholding tax returns and payments due by or before January 31, 2024, the surtax will not be taken into account in determining whether an employer withheld sufficient tax to avoid penalties or other negative consequences of failing to withhold sufficient tax. For example, the surtax will not be taken into account in determining whether a production company has withheld sufficient tax on any payment to a loan-out or an independent contractor to be eligible for a Film Incentive Credit.
Impact on 2023 Estimated Tax Obligations
At this time, DOR does not intend to update the 2023 Estimated Income Tax Payment Instructions, Worksheets, or the online Quarterly Estimated Tax Calculator to reflect the 4% surtax. However, individuals should use their best efforts to account for the surtax in determining how much to pay in estimated taxes. To ease compliance with the new law, for 2023 estimated tax payments due by or before January 15, 2024, the surtax will not be taken into account in determining whether there has been an underpayment of estimated tax.
1/9/23: IRS delay in changes to 1099-K reporting does not impact Massachusetts requirement
Please be aware that the recent IRS announcement of a delay in changes to the federal 1099-K reporting requirements for third party settlement organizations (“TPSOs”) does not impact the Massachusetts Form 1099-K requirement. TPSOs must report the gross amount paid in settlement to a payee with a Massachusetts address when the amount paid in a calendar year is $600 or greater, regardless of the number of transactions between the TPSO and the payee. A Form 1099-K, which can be either a Massachusetts Form M-1099-K or IRS Form 1099-K, must be provided to the payee by January 31st of the following year and must also be filed with the Department of Revenue by February 28th (March 31st if filing electronically).
For more information see TIR 17-11, 830 CMR 62C.8.1. and Massachusetts reporting requirements for third party settlement organizations – Form 1099-K.
10/12/22: Plan Ahead - MassTaxConnect will be offline for a short period of time
On Friday, October 21, 2022, at 11:00 PM EDT, MassTaxConnect (MTC), including all payment methods, will be unavailable and offline for maintenance. MTC will be back online starting Monday, October 24, 2022 at 6:00 AM. Please plan appropriately for this production downtime. We apologize for any inconvenience this may cause.
9/13/22: Changes to the Application for Abatement Process
We made some changes to the Application for Abatement (ABT) process on MassTaxConnect, and to the paper Form ABT on the website. The changes will help with processing and support the hybrid work model employed at DOR.
Here are the key changes:
- The term “dispute” has been replaced with “appeal”
- Additional information is requested including taxpayer email, spouse email and Account ID
- Reminder added for taxpayers to file abatements electronically if required to e-file returns
- Instruction references added for MV sales/use and Responsible Person appeals
- Bubbles added for taxpayer to indicate Corporate Combined Excise and Pass-through Entity Withholding
- Added “E-mail address of attorney in-fact” prompt on page 2
- Added instructions for appealing a responsible person determination
- Where needed, fields were expanded, and instructions were revised or added.
7/28/22: Email Phishing Campaign
A heads up that we are hearing from several taxpayers about an email phishing effort that appears to be from DOR stating that the person named in the email may be incorrectly claiming an out-of-state location - along with an effort to get them to click on a link to correct it. The hyperlink is titled Massachusetts Department of Revenue and could easily lure some to tap it. You may want to caution clients.
7/28/22: Changes to Process for Third-Party Access
Third-party access to a client’s account on MassTaxConnect will be streamlined in mid-August 2022 to be generated only by a third party and approved by a client/taxpayer. Currently, there is an option for the taxpayer to generate the third-party access through their account. That will no longer be available as of August 17. DOR sent a communication to third parties on the DOR Third-Party Public Directory to let them know about the change. Webpages will be updated on August 17 to reflect the new process.
3/31/22: A Form 1099-G or DOR notice may be sent to individuals for unemployment they didn't receive
A claim for unemployment using a false identity may result in the individual whose identity was stolen receiving a Form 1099-G or a DOR notice for the unemployment compensation paid. If this occurs, the individual should notify DOR by sending a secure message through MassTaxConnect and also notify the Department of Unemployment Assistance (DUA) as further detailed in DOR’s FAQs on this issue.
2/10/22: Important information about elective pass-through entity excise
Eligible pass-through entities must register for the 63D-ELT tax type before making a payment. Do not make 63D-ELT payments on other pre-existing tax types. The pass-through entity must file its annual return and make the election before filing the 2021 Form 63D-ELT. More information on PTE excise.
2/7/22: EITC Look-back Rule
Under federal law taxpayers can use their 2019 earned income to calculate their 2021 EITC if their 2019 earned income was more than their 2021 earned income. In general, Massachusetts adopts federal rules related to the EITC. For tax year 2021, the MA EITC is 30% of the federal EITC whether the taxpayer used 2019 or 2021 income to calculate it. For more information on other recent changes to the EITC please see the Earned Income Tax Credit (EITC) page on DOR’s website. Electronic filing is the fastest way to get your refund and filers using their 2019 earned income amounts are still eligible to file electronically.
1/31/22: Check box on Schedule HC for insurance info
If your clients would like to receive information from the Health Connector about obtaining health insurance coverage – be sure to check the new box on Schedule HC form. It’s just above Line 6 on Schedule HC, and by checking the box it gives DOR permission to notify the Health Connector about a taxpayer’s interest in obtaining health insurance coverage information. The Health Connector will then reach out to the taxpayer about eligibility and coverage options.
1/5/22: April 19, 2022 is income tax filing deadline
Taxpayers in Massachusetts will have until April 19, 2022 to file both their federal and state 2021 income tax returns. The IRS announced a due date of April 18 for filing federal income tax returns, the first business day following Emancipation Day, celebrated in Washington, D.C. on Friday, April 15, 2022. Patriots' Day is celebrated in Massachusetts on April 18, 2022, which moves the deadline for Massachusetts taxpayers to file 2021 income tax returns to the next business day of April 19, 2022.
11/18/21: New electronic filing requirements coming in 2022
For certain trustee taxes, December 2021 returns will be the last filing allowed on paper. All sales/use, meals tax and sales on services filers will be required to submit returns and make payments through MassTaxConnect for tax periods beginning on or after January 1, 2022, including any past-due returns and payments for prior periods. Current paper filers are encouraged to register to use MassTaxConnect sooner rather than later to avoid any last minute issues. Go to mass.gov/masstaxconnect and choose “Sign Up” to get started.
New electronic filing requirements also impact taxpayers filing partnership income tax, corporation excise, financial institution excise and urban redevelopment excise. All returns, regardless of income or number of partners in a partnership, will be required to file returns electronically for periods ending on or after December 31, 2021. Payments must also be submitted electronically.
For fiduciary taxpayers, all payments of $2,500 or more must be made electronically after December 31, 2021. In addition, tax preparers preparing more than 10 fiduciary returns annually must submit them electronically beginning with tax periods ending on or after December 31, 2021.
Go to mass.gov/newefile to find out more.
11/15/21: New! Elective pass-through entity excise
Check out the new webpage with information on the elective pass-through entity excise. Legislation went into effect on September 30, 2021 allowing the new elective excise, which is in response to the $10,000 cap on the federal state and local tax deduction added in the 2017 federal Tax Cuts and Jobs Act. You’ll find FAQs that will shed light on who qualifies and how to elect the new excise.
11/10/21: Tax Practitioners – help clients avoid non-filer notices
Please talk to your clients about past-due tax returns. If you are authorized by your client(s), follow the same process to file returns or update accounts as outlined in a communication that was sent today to taxpayers at risk of receiving a notice. Over the next several weeks DOR will be issuing Business Non-Filer Notices to taxpayers who failed to file one or more Withholding tax, Sales tax, Meals tax, Sales tax on Services and Room Occupancy tax returns. Some past due returns for Sales, Meals and Room Occupancy tax may relate to the monthly periods due March 20, 2020 through June 1, 2021, which were extended under the Covid-19 State of Emergency and became due on October 30, 2021.
11/1/21: HIRD due date approaches
The annual Health Insurance Responsibility Disclosure (HIRD) filing period for employers to report on employer-sponsored insurance runs from November 15 through December 15. This year, a question has been added to the online HIRD form relating to Health Connector Employee Choice. Employers that are no longer in business are not required to file the HIRD form. To learn more about HIRD, visit the FAQ page on our website.
10/22/21: New pass-through entity legislation preserves federal deduction for state income tax
Under the new legislation, if a pass-through entity elects to pay the new entity-level tax, the aggregated income would be subject to a 5% tax at the entity level. Each partner or member would then be allowed a credit on their MA individual tax return equal to 90% of the tax paid by the entity on their share of the entity’s income. Keep an eye out for the new return that’s currently being developed and some FAQs.
6/14/21: New FAQs on penalty relief – FAQs now date stamped
Our FAQ page has been updated with new FAQs about penalties related to unemployment income and the impact of extended COVID-19 relief on vendors and operators required to make advance payments. Also, by request, we have started adding dates to new or updated FAQs, making it easier to identify what’s new on the FAQ page. Check back often for updates!
6/1/21: DOR completes review of returns filed before unemployment deduction legislation passed
DOR has reviewed all 2020 individual income tax returns filed on or before April 9 that included unemployment income.
- Adjustments have been made and refunds have been issued for returns that we determined were eligible for a refund. If you believe you received a refund in error, please contact us at (617) 887-6367 before taking any action. Note that simply not cashing the check will not resolve the problem.
- Today we will begin sending notices to those we determined were not eligible for the Massachusetts unemployment deduction based on their income. Review the eligibility rules and deduction calculation using our Unemployment Deduction Worksheet. Anyone who receives a notice, but believes they are in fact eligible for a deduction, is asked to contact DOR at (617) 887-6367.
- Learn more about the Massachusetts Unemployment Income Deduction on our FAQ page.
5/28/21: E-mail acknowledgements sent in error
This past weekend, during the conversion from one e-mail system to another, automated e-mail acknowledgements were erroneously sent in response to a group of outdated inquiries. The automated response acknowledged receipt of the email and promised a response from one of our staff. Although the emails were sent in error, they were in fact from DOR. Recipients do not need to report them or take any other action. We apologize for this error and any concern it may have caused.
5/21/21: New webpage highlights differences between Massachusetts and federal tax law
As many of you know, Massachusetts generally follows the Internal Revenue Code (IRC) as of January 1, 2005 for personal income tax. When the federal tax law changes, taxpayers may need to adjust federal amounts when filing their Massachusetts return. We’ve recently posted a new webpage that will help you identify many of the common differences between Massachusetts and federal tax law. Comments and suggested additions to the page may be sent to email@example.com.
4/2/21: Stay up to date with new information on PPP loans and unemployment income
Catch up on the impact of new legislation in Massachusetts on PPP loan forgiveness income and unemployment income for Massachusetts taxpayers by reviewing the FAQs. We will add additional FAQs based on questions we receive from taxpayers or tax practitioners.
3/30/21: Pending legislation related to unemployment income exemption
Please be advised that pending legislation in Massachusetts may exempt a portion of unemployment for qualifying taxpayers. Taxpayers with unemployment income should consider waiting until the legislation is acted on before filing their returns
3/22/21: FAQs for sales/use, meals, marijuana retail taxes and room occupancy excise filers
A provision in the FY21 Budget changed the due date for sales/use tax, meals tax, marijuana retail taxes and room occupancy excise tax returns. In addition, vendors and operators with a tax or excise liability over a certain threshold in the prior year will soon be required to make an advance payment before filing their tax return. Both changes apply to tax periods ending after April 1, 2021. Find out more on our updated FAQ page. These FAQs will be updated so please keep checking back.
3/19/21: Individual Income Tax Returns and Payments Now Due May 17, 2021
The deadline has been extended for both filing individual income tax returns and making payments from April 15, 2021 to May 17, 2021.
What you need to know:
- The income tax filing and payment deadline has been moved to May 17, 2021 for individuals only. The date change does not affect taxpayers other than individuals filing personal income tax returns and making payments.
- The extension date of October 15 for personal income tax filing is unchanged.
- Estimated payments due April 15 are not impacted by the date change and remain due on April 15.
- Taxpayers who have already filed their personal income tax returns, but have not made the associated payment, will have until May 17 to make the payment.
3/10/21: Paycheck Protection Loans and other Filing Season Topics
We’ve launched a special filing season FAQ page with common questions about PPP loan forgiveness and taxability of Coronavirus Relief Fund Grants. The FAQs will be updated as needed and more topics may be added so please keep checking back.
3/5/21: Delay in Small Number of E-file Acknowledgements
On February 20, approximately 780 electronic returns were processed without an acknowledgement being sent out. This was an issue with DOR’s system, not any particular software vendor, and the returns were processed normally with refunds being issued if no additional review was required. If you did not receive an acknowledgement for a return filed around February 20, you can call our contact center at 617-887-6367 to verify that the return was received. Note that we expect the delayed acknowledgements to be issued shortly.
2/10/21: New EITC Look-back Rule
Under the federal COVID-related Tax Relief Act of 2020, taxpayers can use their 2019 earned income to calculate their 2020 EITC if their 2019 earned income was more than their 2020 earned income. Massachusetts will allow this alternate calculation. For 2020, the MA EITC is 30% of the federal EITC whether the taxpayer used 2019 or 2020 income to calculate it. Electronic filing is the fastest way to get your refund and filers using their 2019 earned income amounts are still eligible to file electronically.
Visit DOR's Earned Income Tax Credit (EITC) page for more information.
1/28/21: Form 1099G - Unemployment Compensation – How to Report Fraud
As you know, anyone who received unemployment benefits or pandemic unemployment benefits from the Commonwealth of Massachusetts during 2020 will receive a Form 1099-G, Certain Government Payments, showing the amount of unemployed compensation received. This income is taxable and must be reported on the 2020 Massachusetts Individual Income Tax return Form 1 or Form 1-NR/PY. If a taxpayer receives a Form 1099-G reporting unemployment benefits but did NOT receive unemployment benefits, someone may have used their identity to falsely claim unemployment benefits. Ask them to notify the Department of Unemployment Assistance (DUA) by filing a fraud report online or call the DUA customer service department at 877-626-6800. Obviously, this income should not be reported on their Massachusetts Individual Income Tax return. After DUA reviews the fraud report, they will send a corrected Form 1099-G. Keep a copy of all Forms 1099-G with the taxpayer’s 2020 tax records and be aware that DOR may ask for an explanation of why the amount shown on the Form 1099-G was not reported on the return.
|Last updated:||April 2, 2021|