| Date: | 01/21/2025 |
|---|---|
| Organization: | Massachusetts Department of Revenue |
| Regulatory Authority: | Massachusetts General Laws |
| Official Version: | Published by the Massachusetts Register |
Proposed Regulation
830 CMR: DEPARTMENT OF REVENUE
830 CMR 63.00: TAXATION OF CORPORATIONS
830 CMR 63.00 is amended by adding the following section:
830 CMR 63.38GG.1: Veterans Hiring Credit
(a) Statement of Purpose. 830 CMR 63.38GG.1 explains the rules for claiming and applying the Qualified Veterans Hire Tax Credit. See M.G.L. c. 62, § 6(u); M.G.L. c. 63, § 38GG. The Executive Office of Veteran’s Services provides for and explains the application process by which it certifies a qualified employer and a qualified veteran employee for purposes of the Credit. See 108 CMR 16.00: Qualified Veterans Hire Tax Credit.
(b) Outline of Topics. 830 CMR 63.38GG.1 is organized as follows:
(1) Statement of Purpose, Outline of Topics
(2) Definitions
(3) General Rule
(4) Prerequisites to Claiming the Credit
(5) Carry Over of Unused Credit
(6) Additional Credit for Continued Employment of Qualified Veterans
(7) Corporate Excise Limitations on Use of Credit
(8) Special Rules Applicable to Pass-Through Entities
(9) Employers Exempt from Taxation Under Code § 501
(10) Record Retention
For purposes of 830 CMR 63.38GG.1, the following terms have the following meanings:
Code. With respect to personal income taxation under M.G.L. c. 62, the federal Internal Revenue Code, as defined in M.G.L. c. 62, § 1(c). With respect to the corporate excise under M.G.L. c. 63, the federal Internal Revenue Code, as amended and in effect for the taxable year, as defined in M.G.L. c. 63 § 1.
Commissioner. The Commissioner of Revenue, or the Commissioner’s duly authorized representative.
Credit. The credit allowed by M.G.L. c. 62, § 6(u) and M.G.L. c. 63, § 38GG.
Employer. A qualified employer, as that term is defined in 108 CMR 16.02.
EOVS. The Executive Office of Veterans’ Services.
Qualified Veteran. Qualified Veteran as defined in 108 CMR 16.02.r, as that term is defined in 108 CMR 16.02.
Pursuant to M.G.L. c. 62, § 6(u) and M.G.L. c. 63, § 38GG, a Credit can be claimed against the tax imposed under M.G.L. c. 62 or the excise imposed under M.G.L. c. 63, as applicable, by an Employer that qualifies for and claims the Work Opportunity Tax Credit allowed under Code § 51, as amended and in effect for the taxable year, for the hiring of Qualified Veterans in the Commonwealth.
(a) For qualified veterans hired on or after July 1, 2017 in taxable years beginning on or after January 1, 2017 and before January 1, 2024, the Credit is equal to $2,000 for each Qualified Veteran hired by the Employer, provided the rules set forth in 830 CMR 63.38GG.1(4) are otherwise met.
(b) For qualified veterans hired in taxable years beginning on or after January 1, 2024. the Credit is equal to $2,500 for each Qualified Veteran hired by the Employer, provided the rules set forth in 830 CMR 63.38GG.1(4) are otherwise met.
(c) The Credit is not refundable and is not transferable.
(d) The total cumulative value of all the Credits annually authorized pursuant to M.G.L. c. 62, § 6(u) and M.G.L. c. 63, § 38GG shall not exceed the amount set forth in M.G.L. c. 62, § 6(u)(5) and M.G.L. c. 63, § 38GG(e).
(a) Requirements for the Employee. For an Employer to claim a Credit with respect to an employee:
1. the employee’s primary place of employment for the Employer and primary residence must be in Massachusetts for six consecutive months, as discussed under 108 CMR 16.02, 16.03, and 16.04;
2. for employees hired on or after July 1, 2017 and before August 8, 2024, the employee must be certified as a Qualified Veteran pursuant to 108 CMR 16.03(1)(b) by the Department of Career Services or any successor agency not later than the day the employee begins employment with the Employer; and
3. for employees hired on or after August 8, 2024, the employee must be certified as a Qualified Veteran pursuant to 108 CMR 16.03(1)(b) by the Department of Career Services or any successor agency not later than 6 months after the employee begins work.
(b) Requirements of the Employer. For an Employer to claim a Credit with respect to an employee, the Employer must:
1. be engaged in business in the Commonwealth;
2. employ not more than 100 employees;
3. be certified by the Secretary of EOVS pursuant to M.G.L. c. 115, § 2C and 108 CMR 16.03(1);
4. qualify for and claim the Work Opportunity Tax Credit allowed under Code § 51, as amended and in effect for the taxable year, for the hiring of Qualified Veterans in the Commonwealth, for whom the Employer is claiming the Credit;
5. obtain the applicable certification from the Department of Career Services or any successor agency that the employee for whom the Credit is being claimed is a Qualified Veteran, see 830 CMR 63.38GG.1(4)(a)1, and was hired and employed by the Employer within the timeframe provided in 108 CMR 16.03, 16.04; and
6. otherwise meet the requirements of a qualified employer under 108 CMR 16.02.
An employer who is entitled to claim the Credit for a taxable year may carry over and apply against the taxpayer’s tax liability under M.G.L. c. 62 or M.G.L. c. 63, as applicable, for any one or more of the succeeding three taxable years, the portion, as reduced from year to year, of the credit that exceeds the tax for the taxable year.
An Employer awarded the Credit for a taxable year for employing a Qualified Veteran is eligible to claim a second Credit in the subsequent taxable year with respect to such Qualified Veteran if the Employer has obtained certification of continued employment of the Qualified Veteran during the subsequent taxable year in a manner required by the Secretary of EOVS, pursuant to 108 CMR 16.04(2).
(a) Minimum Excise Limitation. The Credit may not be applied to reduce the minimum corporate excise imposed under M.G.L. c. 63.
(b) 50% Limitation Inapplicable. In determining the amount of the Credit allowable for a taxable year, the 50% limitation imposed by M.G.L. c. 63, § 32C does not apply.
(a) Pass-Through Entities Not Taxed at Entity Level. In the case of an Employer that is not taxable at the entity level, such as a partnership, limited partnership, limited liability partnership, or limited liability company treated as a partnership for tax purposes, or a trust that is not subject to tax at the entity level, the Credit may be passed through to the entity’s partners, members, beneficiaries or other owners pro rata or pursuant to an executed agreement among such persons documenting an alternative distribution method. The total amount of the Credit passed through such entity and claimed by its partners, members, beneficiaries, or other owners in any taxable year, however, shall not exceed the Credit amount that has been issued and is allowable for such year, as further limited by 830 CMR 63.38GG.1.
(b) Pass-Through Entities Taxed at Entity Level. A pass-through entity subject to tax at the entity level, such as a subchapter S corporation or a trust that is taxable at the entity level, may claim the Credit against its entity level tax. Alternatively, the Credit may be passed through to the entity’s shareholders, members, beneficiaries, or other owners pro rata or pursuant to an executed agreement among the entity’s owners, documenting an alternative method. These alternatives are mutually exclusive. A pass-through entity may not apply part of the Credit to its own entity level tax and pass through any remaining Credit. The total amount of the Credit passed through to the shareholders, members, beneficiaries, or other owners, in any taxable year shall not exceed the Credit amount that has been issued and is allowable for such year as further limited by 830 CMR 63.38GG.1.
(c) The Elective Pass-Through Entity Excise. A pass-through entity that elects to pay the pass-through entity excise under M.G.L. c. 63D shall not apply the Credit to reduce such excise.
An Employer that is exempt from taxation under Code § 501 that employs a Qualified Veteran is eligible to claim the Credit and apply it against the Employer’s tax liability resulting from its unrelated business taxable income, as defined in Code § 512 and G.L. c. 63 § 30.4, if any, as reported on the Employer’s tax return.
Records sufficient to substantiate the Credit claimed by an Employer must be maintained by the Employer as set forth in 830 CMR 62C.25.1: Record Retention. Unless the Commissioner consents in writing otherwise, the records must be maintained until the statute of limitations for making additional assessments for the period for which the return was due has expired. Generally, this is three years after the due date of the return or the date the return is filed, whichever occurs later.
Proposed Regulation – Public Hearing 2/25/25
Written comments may be emailed to RulesandRegs@dor.state.ma.us.
