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Hot topics at DOR

Follow news on Department of Revenue (DOR) issues that may impact more than one taxpayer. We describe the issue and will provide updates on the progress until it’s resolved.

Table of Contents

11/24/20 Lots going on at DOR this November

On November 1, we launched an online version of the Voluntary Disclosure Program. Taxpayers wishing to voluntarily come forward to report unpaid Massachusetts tax liabilities will now apply through MassTaxConnect. Also on November 1, we opened the renewal periods for the small business energy exemption and the 2021 14-day exemption for short-term rental properties. If you qualify for one of these exemptions, don’t wait too long to take care of your renewal. And finally, the annual filing period for HIRD also opened in November. HIRD filings are due by December 15. Reminder notices were sent through MassTaxConnect to taxpayers with a HIRD obligation and to taxpayers with expiring small business energy exemptions or 14-day exemptions for short term rentals.        

11/24/20 If you close your business, let us know

Although the due date for certain trustee tax returns has been extended to May 20, 2021, small businesses that have been closed temporarily or have closed for good may want to take care of some tax filing obligations before that date. If your business has closed temporarily, you must file state tax returns for sales & use tax, meals tax, withholding tax, and room occupancy excise (except for short-term rentals) even if the tax is zero. If your business has closed permanently, be sure to file all outstanding returns and close your accounts with DOR. To close your account(s), log in to MassTaxConnect; from the Accounts tab choose the Account hyperlink for the tax type you want to close; under “I Want To”, choose “Close my tax account” and follow the instructions for closing.

11/19/20: Sneak Preview of MassTaxConnect Upgrade

Changes to MassTaxConnect are on the way in January 2021. There’s a new design. It will be easier to get around and you’ll find a more convenient third-party management screen and easily accessible account information. Learn more by taking a look at the Sneak Preview.

9/9/20: Notify DOR of legal name changes

DOR must be notified if a taxpayer legally changes his or her name. Changing your legal name with the Social Security Administration, the RMV, or any other agency does not automatically update information at DOR. Sending a secure E-message through MassTaxConnect with the legal name change is the fastest and most efficient way to go. Submit documentation with the request, such as a driver’s license or social security card, reflecting the name change. Confirmation will be sent once the change is complete. The request can also be made by mail to Massachusetts Department of Revenue, PO Box 7010, Boston, MA 02204.

8/18/20: It’s always a good time to get your records in order

If you have a business, whether it’s a sole proprietorship or a partnership or a corporate entity, it’s important to keep good records. Having accurate and organized records will help you prepare accurate sales or meals tax returns throughout the year and an accurate year end return reporting your business income. If you’re selected for audit, DOR will expect you to have records that are in compliance with our recordkeeping requirements. All taxpayers should be familiar with DOR’s Record Retention Regulation and should be sure to keep business and personal records separate. Sales and meals tax filers should also be familiar with Directive 16-1 regarding electronic recordkeeping and the use of point of sale (POS) systems. If you use a POS system, it’s a good idea to verify that it meets the criteria outlined in Directive 16-1, such as providing sequentially numbered invoices or guest checks. Good records will generally reduce the amount of time needed to complete a sales or meals tax audit. Think about discussing your recordkeeping methods with a tax professional — getting your records in order now could save you time and money later.

8/10/20: Duplicate Notices of Refund Applied to Debt or Transferred issued

Over the weekend of August 2nd and 3rd, previously processed 2019 personal income tax returns were updated to reflect the due date change from 4/15/20 to 7/15/20 as required by Technical Information Release 20-4. When the tax returns were re-posted to the accounts, certain types of transfers were also re-posted and related Notices of Refund Applied to Debt or Transferred were issued again. We apologize for any confusion this may have caused. Note that this duplication of notices also occurred on a small number of fiduciary and non-resident composite accounts. 

5/14/20: Are masks taxable?

Yes, the purchase of a mask is taxable. This question may come up these days given the enormous increase in the need for masks. DOR put together a blog to answer the question. Established businesses already know how to collect and pay sales tax and likely know that they need to charge sales tax on face mask transactions. New businesses cropping up in response to the need may not know. New businesses can find some useful startup information and specifics on sales and use tax on the website.

4/23/20: Refund Review Letters Guidance

We are providing some guidance for you to help when you are assisting a client who may receive a refund review letter [Notice of Intent to Assess – Information Request].

  • DOR always recommends that tax preparers let clients know that they may receive a refund review notice around circuit breaker credits, EITC or withholding credits claimed – a heads up can lessen the worry or fear generated by a notice from DOR.
  • Any changes in a taxpayer’s return from one year to the next will increase the chance of a refund review notice being issued.
  • Refund review notices are an important part of tax return processing and DOR has continued to send them this year as part of an effort to continue issuing refunds.
  • This year, DOR is allowing taxpayers additional time to respond to the NIA-Information request. Although the due date in the notices has not been adjusted, we’ve posted this in a separate Hot Topics message.  We hope that preparers will help pass this message on to taxpayers.
  • If at a later date credits are disallowed for lack of response, it’s still not too late to respond. Taxpayers can send in the requested information even after a credit has been disallowed and DOR will reinstate the credit if the documentation supports it.
  • Electronic response through MassTaxConnect is always recommended. If copying or scanning documents is not an option, taxpayers could consider taking a picture of the documents with their phone. The upload feature accepts many types of file formats and documents can be submitted either by taxpayers or tax preparers, or maybe by a family member, and a MassTaxConnect account is not required.  
  • If most, but not all, of the requested information is available, send us an explanation with the response or call us at  617-887-6367 to discuss what’s missing.  There may be alternatives that will help us verify the tax return information or the taxpayer’s identity.

3/17/20: Responding to a Notice of Intent to Assess – Information Request

DOR began sending out Notices of Intent to Assess-Information Request for 2019 tax returns several weeks ago. We understand that some taxpayers may now be having difficulty responding as a result of the current coronavirus (COVID-19) outbreak and we will therefore delay taking any immediate action due to lack of a response.   

The fastest way for us to continue processing your return is if you submit the requested documentation electronically through MassTaxConnect. It’s fast, it’s easy and no account is required. If you  need help submitting your documents, call us at 1-617-887-6367.

We will update information on the DOR response to the COVID-19 coronavirus as it is known.

3/09/20 Differences between printed and online versions of 2019 forms

We always recommend looking at the forms and instructions that are posted online rather than the paper printed versions for the most up-to-date information. DOR prints a small number of paper booklets as of a certain date and is unable to update them if there are changes that need to be made. We published a list of the changes made since the booklets were printed that you may want to review. You can always refer to the 2019 Massachusetts Personal Income Tax forms and instructions for the most current information.

 

2/26/20: Complete all information when filing a paper MA tax return for the Circuit Breaker credit

If you are filling out the paper Massachusetts tax return for the Circuit Breaker credit, or assisting someone, be certain that all appropriate boxes are completed on the first page of Form 1, Line 2c. In addition to filling in the appropriate oval boxes “Age 65 or over before 2020,” you must also complete the “Total” at the end of the line. 

For example, if you fill in both ovals for “You” and “Spouse,” complete the box at the end of the line with “2” so the system will recognize it and not disallow the Circuit Breaker credit.

form line item example with circles highlighting boxes

Helpful hint: Fillable forms are available and they are free to use for anyone. If you are comfortable completing paper forms, you’ll be comfortable with fillable forms and there will be no issues deciphering the handwriting. Take a look.

2/13/20: Update regarding Form 1099-G

February 13, 2020A small percentage of taxpayers received an incorrect Form 1099-G, or didn’t receive one at all, if they elected to have all or part of their overpayment carried forward to the next tax year. Corrected Forms 1099-G will be issued shortly to those who carried forward part of their overpayment. New forms will be issued to those who carried forward their entire overpayment. This does not impact taxpayers who did not itemize deductions on their 2018 federal tax returns. 

1/14/20: Third party access to taxpayer’s PFML account

1/14/20: Third party access to taxpayer’s PFML account

Because taxpayers must specifically authorize all 3rd party access to their accounts, DOR did not automatically grant 3rd party access to PFML accounts.  Third parties can request access to the new PFML account through MassTaxConnect. After logging in, choose Settings (upper right), then choose “Request to manage other taxpayers’ accounts” under I Want To and follow the prompts to request access.  The third party can choose whether the taxpayer will authorize access through MTC or by signing paper authorization form.

1/08/20: Looking for Form 1099-G related to last year’s Massachusetts tax refund?

January 8, 2020: Don’t be alarmed if you don’t receive a Form 1099-G reporting Massachusetts tax refunds received during 2019.   Only taxpayers who overpaid their Massachusetts tax and itemized deductions on last year’s federal tax return must be issued Form 1099-G.  As a result of federal tax reform, many taxpayers did not itemize deductions on their 2018 federal tax return and DOR will not be sending them a Form 1099-G.    

12/23/19: Income tax rate drops to 5% on January 1, 2020

December 23, 2019: The Massachusetts income tax rate will drop to 5% on January 1, 2020. For more information, please see the release from the Baker-Polito administration. Please review the Income Tax Withholding Tables at 5.0% - effective January 1, 2020.

12/20/19: Impact of changes to the federal Form W-4

December 20, 2019As you may already know, there are changes to the federal Form W-4 for 2020 that reflect the elimination of the personal exemption and increase in the standard deduction resulting from tax reform enacted in 2018. You can learn more about the form changes at the IRS website. Massachusetts personal exemption amounts do not rely on federal law and the process for calculating the correct Massachusetts withholding amount has not changed.  Here’s what employees and employers need to do.

  • New employees as of January 1, 2020 will complete both the Massachusetts Form M-4 and the new IRS Form W-4 to give employers an accurate withholding picture.  The Form W-4 can no longer be used as a substitute for the Form M-4.
  • Current employees do not have to do anything unless they want to adjust their withholdings. Employers can rely on the most recently completed form for withholding information if the employee does not want to make adjustments. If an employee does want to revise withholdings, s/he should complete both the new IRS Form W-4 and the Massachusetts Form M-4 to make the changes.

Our Guide to Withholding Taxes on Wages has been updated with this information.

11/21/19: New Notice of Payments on Account

November 21, 2019: On November 25th, DOR will issue approximately 11,000 Notices of Payments on Account to taxpayers who have estimated tax payments or credits, extension payments or return payments on their 2017 personal income tax account but have not filed an income tax return.  Taxpayers are advised to file a return if they meet the filing requirement or if they are entitled to a refund. Taxpayers are not required to respond but if they don’t file, they may later be sent a Notice of Failure to File or they may lose their refund. 

10/29/19: Change in Filing Period for the HIRD

October 29, 2019: The Health Insurance Responsibility Disclosure launched last year is a required annual filing for employers to report on employer-sponsored insurance offerings.The filing period was moved back a couple of weeks this year to November 15 through December 15. Visit Health Insurance Responsibility Disclosure (HIRD) FAQs for more information.

4/29/19: Personal Income Tax Payments Submitted by Paper Check at the Deadline

April 29, 2019:  Although DOR received over 200,000 payments by mail since April 8th, we expect to have most timely payments (postmarked by April 17th) processed by May 3rd, more than a week ahead of last year. If your check hasn’t been cashed by May 3rd, give us a call. Based on your specific situation, we’ll be able to advise you what to do next. Keep in mind that any mail with  a return receipt request takes longer to be delivered from the Post Office to DOR. An unsigned check, a check that is incorrectly made out, or one that is not accompanied by appropriate documentation (a tax return or a Form PV, Income Tax Payment Voucher) will also cause delays.

Next year please consider paying electronically. You can schedule the withdrawal date that works best for you whether making a payment through our MassTaxConnect system or with your electronically filed tax return. If your goal is electronic payment, don’t choose your bank’s online bill pay system. Your bank will issue a paper check with no payment voucher, which will delay processing. 

2/22/19: Understanding a Notice of Intent to Assess - Information Request

February 22, 2019: DOR will soon begin sending out Notices of Intent to Assess-Information Request for 2018 tax returns.   A Notice of Intent to Assess-Information Request is sent if DOR needs information to verify certain credits claimed on a tax return. It does not mean the tax return was incorrectly prepared. The request may ask for more information regarding:

  • Massachusetts withholding credit,
  • Earned Income Credit  or
  • Circuit Breaker Credit. 

Last year we added an option to respond to this notice online through MassTaxConnect, no account required. Uploading your response from a phone or computer helps speed up the process. Whether the response is sent by mail or through MassTaxConnect, it’s important to include page 2 of the notice so we can match the information to the account as quickly as possible. 

Don’t risk losing these credits by not responding on time.

2/12/19: Third party access now available to register for client’s small business energy exemption

February 12, 2019: A third party, with access rights to a client’s MassTaxConnect account for at least one tax type, may register for the exemption on behalf of the client.  The certificate will be mailed to the client. Only the client will be able to obtain a copy of the exemption certificate or view the certificate through MassTaxConnect. Learn more about the small business energy exemption.

2/1/19: Massachusetts income tax refunds for tax year 2018

February 1, 2019: DOR launched filing season on Monday, January 28, and we’ve been testing our system with small batches of returns. Today we’ll be taking in all returns electronically filed to date and we expect to issue our first refunds on Monday, February  4. In general, the expected turnaround time for a MA income tax refund is 4-6 weeks for an e-filed return or 8-10 weeks for a paper return. Taxpayers can check on the status of a refund online. Unlike the IRS, DOR is not required to hold certain refunds until mid-February for purposes of detecting fraud, but DOR does take identity fraud very seriously. If any taxpayer information (address, bank account, etc.) changed since last year, we may take additional steps to verify identity to protect taxpayers and the Commonwealth. This may result in extended refund turnaround times and a notice asking for identity verification or additional information for the tax return

1/4/19: Short-term rental legislation

January 4, 2019: Recent legislation imposes state and local room occupancy excise taxes on short-term rentals of property for more than 14 days in a calendar year. The new law applies to rentals starting on or after July 1, 2019 for which a rental contract was entered into on or after January 1, 2019. You’ll find more information about the taxes and fees involved and the obligations of operators and their agents on our new Short-term rentals webpage. Please continue to check back to that page for updates.    

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Tax Department (617) 887-6367
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