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Hot topics at DOR: Calendar year 2018

Follow 2018 news from DOR that was both current and important to Massachusetts taxpayers and tax practitioners. For more current hot topics, visit the Related section of this page.

Table of Contents

12/27/18: Massachusetts income tax rate to be reduced to 5.05% for 2019

The state income tax rate will drop in 2019 for all Massachusetts residents. The law provides that for each tax year in which certain inflation-adjusted baseline revenue growth requirements are met, the income tax rate will be reduced by increments of 0.05 percentage points until the rate reaches 5%. 

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12/19/18: Form ST-13 to be replaced by online application for small business energy exemption

In some cases, energy sales may be exempt from taxes for qualifying small businesses. For 2019 and later years, small businesses will apply online for an exemption certificate rather than submitting Form ST-13 to their energy provider. DOR has provided additional information.

12/14/18: Surcharge on vehicle rental transactions for police training in Massachusetts

As of January 1, 2019, any vehicle rental transaction in Massachusetts with a duration of more than 12 hours and not more than 30 days, must include a $2 surcharge to be collected by the vendor. DOR has provided additional information.

12/14/18: Massachusetts adopting 10 business day rule for e-filing

DOR is adopting a Federation of Tax Administrators recommendation for 2018 tax returns. Over 30 states have already implemented the change. Users of tax preparation software are now required to download and apply product updates if e-filing a return 10 or more business days after the product update release. Some software vendors have already communicated this change to customers. Check with your vendor if you have questions.

12/7/18: Information about filing HIRD forms for Professional Employer Organizations (Updated)

The Department of Revenue has extended the deadline to 1/31/19 for filing the HIRD form for 2018 to entities utilizing PEOs to file withholding taxes on their behalf. DOR has provided additional information for PEO’s seeking to assist clients with their HIRD filings.     

November 15, 2018: Professional Employer Organizations pay MA withholding taxes to DOR for multiple companies under the PEO’s Federal Tax Identification number. HIRD filings must be submitted for each company individually, much like unemployment filings for DUA. In response to several inquiries, DOR has provided additional information for PEO’s seeking to assist clients with their HIRD filings.   

11/15/18: Information about filing HIRD forms for Professional Employer Organizations

Professional Employer Organizations pay MA withholding taxes to DOR for multiple companies under the PEO’s Federal Tax Identification number. HIRD filings must be submitted for each company individually, much like unemployment filings for DUA. In response to several inquiries, DOR has provided additional information for PEO’s seeking to assist clients with their HIRD filings.    

11/13/18: Tax year 2017 returns must be e-filed by November 17

The IRS will temporarily shut down its Modernized e-file system for maintenance and reprogramming on November 17. That will also be the last day to e-file Massachusetts returns for tax year 2017.  

While the vast majority of individuals have already filed their tax year 2017 federal tax returns, victims of the Merrimack Valley explosions, and any federally designated disaster areas, qualify for additional accommodation. If returns cannot be filed by November 17 electronically, they should be filed on paper.

11/9/18: Filing & payment information for taxpayers affected by the Merrimack explosions (Updated)

Due to the ongoing recovery activities in Andover, North Andover and Lawrence, the Department will waive penalties through December 15th for any late-filed return or payment that was due on or after September 12th and before December 1st.

September 21, 2018: For taxpayers affected by the recent gas explosions in Andover, North Andover, and Lawrence, the Department recognizes that taxpayers in these areas might be unable to comply with their filing or payment due dates that occurred on or after the date of the explosions. The Department would like to assist taxpayers as much as possible. Consequently, the Department will waive any penalties associated with any late-filed return or payment that was due on or after September 12th and before October 1st. The Department will waive penalties for one month, and will later revisit whether any further extensions should be granted. If any taxpayer in the affected areas receives a penalty for this period they should reach out to us at (617) 887-6367.

9/21/18: Filing & payment information for taxpayers affected by the Merrimack Valley gas explosion

For taxpayers affected by the recent gas explosions in Andover, North Andover, and Lawrence, the Department recognizes that taxpayers in these areas might be unable to comply with their filing or payment due dates that occurred on or after the date of the explosions. The Department would like to assist taxpayers as much as possible. Consequently, the Department will waive any penalties associated with any late-filed return or payment that was due on or after September 12th and before October 1st. The Department will waive penalties for one month, and will later revisit whether any further extensions should be granted. If any taxpayer in the affected areas receives a penalty for this period they should reach out to us at (617) 887-6367.

7/2/18: Notice of Credit Determination and related Notices of Assessment

On June 25th the Department started issuing Notices of Credit Determination to taxpayers who did not respond to earlier Notices of Intent to Assess – Information Request. (See March 16th posting below about the NIA-Information Request.) The Notice of Credit Determination explains which credit was disallowed and how much credit was disallowed. Taxpayers will also receive a Notice of Assessment reflecting a $0 amount due.

If a taxpayer has a balance due on their account after the disallowed credit, they will receive a second Notice of Assessment reflecting their actual outstanding liability. Inserted with this second NOA will be a special notice from DOR explaining that the balance due of $0 on the first NOA was incorrect. Note that the correct balance due is also visible on MassTaxConnect.

Going forward, taxpayers who are sent a Notice of Credit Determination will only receive a Notice of Assessment if there is an actual outstanding liability. The Notices of Assessment reflecting a $0 amount due will not be issued. 

Note: Taxpayers who had credits disallowed, but now have the information requested in the Notice of Intent to Assess – Information Request should respond as directed in that notice. It is not necessary to file a dispute. Remember that responses to NIA-Information Requests dated on or after 2/2/18 can be uploaded through MassTaxConnect which will help speed up processing time.

4/23/18: Personal Income Tax Payments Submitted by Paper Check at the Deadline

Although many taxpayers are anticipating refunds from Personal Income Tax returns filed at the tax deadline, others may be waiting for their check to be cashed. Since April 9th, over 200,000 Personal Income Tax checks have been delivered to the Department of Revenue, and timely payments (postmarked by April 18th) are still arriving from the Post Office. And that doesn’t include all of the 1st quarter 2018 estimated tax payments which go directly to the bank for processing. Before April 9th, most checks were being cashed within a day or two but it will take us more than a few days to open 200,000 plus envelopes and process the enclosed payments. If your check hasn’t been cashed by May 7th, give us a call and based on your specific situation, we’ll be able to advise you what to do next. Keep in mind that any mail sent with a return receipt requested takes longer to be delivered from the Post Office to DOR and any check that is not signed, is incorrectly made out or does not have the appropriate document with it (a tax return or a Form PV, Income Tax Payment Voucher) will also be delayed. 

Final thought – next year, send your payment a little bit earlier to avoid the last minute crunch or even better, pay electronically. Whether making a payment through our MassTaxConnect system or with your electronically filed tax return, you can schedule the withdrawal date that works best for you.

3/29/18: Penalties ahead for some non-resident composite (Form MA NRCR) filers

Non-resident composite filers are required to file Form MA NRCR and to make all payments electronically. Some non-resident composite filers are incorrectly sending payments to DOR by paper check with various personal income tax documents including Form PV and Form 1-ES. Non-resident composite payments submitted with personal income tax documents may not be applied to your account correctly or in a timely manner and may result in penalties for failing to pay electronically. The penalty for failing to pay electronically when required to do so is $100 per payment. See TIR 16-9 for all electronic filing requirements.

Note that Form MA NRCR and all payment types for non-resident composite filers may be submitted through MassTaxConnect. Log on to MassTaxConnect or check with your software vendor about additional electronic filing and payment options that may be available.

3/19/18: Notice of Change in Tax Return

DOR has become aware that a small number of Notices of Change in Tax Return have been issued reporting incorrect changes to lines 5, 6 or 23 on Form 1 (resident returns) or to line 27 on Form 1-NR/PY (non-resident/part-year resident returns). This issue involves paper returns only. Not all changes to those line numbers are incorrect but if you believe you may have received an incorrect notice, please contact us at (617) 887-6367 or (800) 392-6089. We apologize for any inconvenience this may cause.

3/16/18: What is a Notice of Intent to Assess - Information Request?

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. 

New this year is an option to respond to the notice online through MassTaxConnect, no account required. So far, more than 70% of taxpayers responding to this notice are uploading their information using a phone or computer. Whether sent by mail or through MassTaxConnect, it’s important to include page 2 of the notice with the response so we can match the information to the account as quickly as possible. 

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

3/12/18: Form changes for Non-profit taxpayers filing Form 3M, Form M-990T-62 or M-990T

Filers of Form 3M, Form M-990T-62  or Form M-990T are able to file returns and make any type of payment electronically through MassTaxConnect but if making payments by paper check,  Form 3M and Form M-990T-62 filers should no longer use Form 2-ES to make estimated tax payments or Form M-8736 for extensions.   These forms are now for fiduciary filers only.  See below for more about what forms non-profit taxpayers must use this year.     

Estimated tax payments: If making an estimated tax payment by paper check,  all non-profit taxpayers should use the new Form UBI-ES.

  • M-990T calendar year filers must make their first installment by March 15th;
  • M-990T-62 and 3M calendar year filers must make their first installment by April 17ththis year.

Extension payments:   If making an extension payment by paper check, all non-profit taxpayers should use Form M990T-7004. 

  • Extension payments  must be made on or before the due date of the return which is April 17th this year for calendar year filers;
  • M-990T filers are eligible for an automatic 8 month extension if they have paid 50% of tax due;
  • M-990T-62 and 3M filers are eligible for 6 months if they have paid 80% of the tax due;
  • Similar to corporate excise and personal income tax, if no payment is due then no filing is required for an automatic extension.

Electronic filing requirements: 

  • Filers of Form M-990T and M-990T-62 may be subject to an electronic filing requirement – see TIR 16-9
  • Filers of Form 3M are not subject to any electronic filing requirements.  Note: if you file Form 3M and you have been penalized for failing to file or pay electronically, please contact the Office of the Taxpayer Advocate.

2/26/18: Refunds Changed from Direct Deposit to Paper Check

DOR has just released a number of income tax refunds via paper check where direct deposit had been requested on the tax returns. DOR sometimes changes the refund delivery method from direct deposit to paper check as an additional security measure and this action was taken in an effort to honor these early refund requests more quickly. We apologize for any inconvenience this may cause.

2/15/18: Changes in 1099-K requirements

There are new reporting requirements for third party settlement organizations. Beginning with the 2017 calendar year, third party settlement organizations must report, on Form 1099-K, gross amounts over $600 paid to anyone with a Massachusetts address.  

DOR has prepared answers to questions that may be asked by taxpayers who receive a 1099-K this tax filing season.

2/6/18: Notice of Change in Tax Return

Some taxpayers may receive a Notice of Change in Tax Return that shows adjusted payments, and a reduced refund or balance due that seems incorrect. If the notice only shows a change to payment lines and you receive the refund you requested, you can be sure that there is no problem. Refunds are generally issued within a few days of the notice. We are addressing several issues with this notice and a new version is expected to be in use for 2017 returns in mid-February. We apologize for any confusion this notice may cause until then. If the notice shows additional changes and you are unsure of the reason, please call our contact center at 617-887-6367.

1/29/18: Employer's State ID Number on MA W-2s

Some employers may have mistakenly used their Massachusetts withholding account ID in box 15, the Employer’s state ID number field on their W-2s. The WTH account ID is used internally by DOR and should not replace the federal EIN for this purpose. If you are using tax preparation software and you have any problems with your entry for box 15 of a MA W-2, please enter the Employer’s identification number (EIN) from box b for the Employer’s state ID number in box 15 when filing personal income tax returns. DOR will accept either number. (See sample W-2 form.)

Contact

Phone

Tax Department (617) 887-6367
Toll-free in Massachusetts (800) 392-6089

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