| Date: | 04/17/2025 |
|---|---|
| Organization: | Massachusetts Department of Revenue |
| Regulatory Authority: | Massachusetts General Laws |
| Official Version: | Published by the Massachusetts Register |
830 CMR: DEPARTMENT OF REVENUE
830 CMR 63:00 CORPORATE EXCISE
830 CMR 63.00 is amended by adding the following section:
830 CMR 63.38HH.1: Apprentice Tax Credit
(a) Statement of Purpose. 830 CMR 63.38HH.1 explains the general rules for calculating and claiming the Apprentice Tax Credit available pursuant to M.G.L. c. 62, § 6(v) and M.G.L. c. 63, § 38HH.
(b) Outline of Topics. 830 CMR 63.38HH.1 is organized as follows:
(1) Statement of Purpose, Outline of Topics
(2) Definitions
(3) General Rule
(4) Employers Eligible for the Credit
(5) Additional Credit for the Continued Employment of an Apprentice
(6) Credit in Excess of Tax Liability
(7) Special Rules for Pass-Through Entities
For purposes of 830 CMR 63.38HH.1, the following terms shall have the following meanings:
Apprentice Agreement. Apprentice Agreement as defined in G.L. c. 23 § 11H.
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); and 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.
Commissioner. The Commissioner of Revenue, or the Commissioner's duly authorized representative.
Division. The Division of Apprentice Standards.
Employer. Any person or entity employing an apprentice, whether or not such person or organization is a party to an apprentice agreement with the apprentice.
Qualified Apprentice. An apprentice who has been hired and trained in one of the occupations referenced in G.L. c. 62 § 6(v) and G.L. c. 63 § 38HH.
Wages. Wages as defined in Code § 3401(a), periodic payments and nonperiodic distributions as defined in Code § 3405 that are subject to federal withholding, and contributions paid by an employer on behalf of an employee pursuant to M.G.L. c. 32, § 22(10) or pursuant to M.G.L. c. 32, § 65D(i).
A credit against the excise imposed pursuant to G.L. c. 63, § 39 or the tax imposed pursuant to G.L. c. 62 is allowed for Employers that are eligible as described in 830 CMR 63.38HH.1(4). The credit is equal to the lesser of $4,800 or 50% of the Wages paid to each Qualified Apprentice in a taxable year. An Employer may not claim the credit for more than 20 Qualified Apprentices in any taxable year. The credit is refundable, but is not transferable.
An Employer is eligible for the credit if it
(a) is subject to the personal income tax imposed pursuant to G.L. c. 62 or the corporate excise imposed pursuant to G.L. c. 63,
(b) is registered with the Division as an Apprenticeship program sponsor,
(c) employs one or more Qualified Apprentices whose primary place of employment is in the commonwealth for at least 180 calendar days in the taxable year in which the credit is claimed, and
(d) has entered into an Apprentice Agreement with each such Qualified Apprentice for whom the credit is claimed.
Employers awarded the credit for employing a Qualified Apprentice that continue to employ the Qualified Apprentice in subsequent taxable years are eligible to receive an additional credit for the continued employment of the Qualified Apprentice for each succeeding taxable year in which the Qualified Apprentice is employed. In order to be eligible to receive a credit in a subsequent taxable year, (a) the Employer must employ the Qualified Apprentice for at least 180 days in that year, and (b) the Division must certify the continued employment of the Qualified Apprentice for that year in the manner required by the Commissioner.
(a) Credit is Refundable. The taxpayer may claim the credit against the taxpayer's liability as reported on the taxpayer's tax return, as first reduced by any other available credits. If the taxpayer’s tax liability is extinguished and any amount of the credit remains, the remaining balance of the credit may be refunded to the taxpayer. The provisions of M.G.L. c. 62C and M.G.L. c. 62D including, without limitation, provisions addressing offsets of refunds for unpaid tax assessments, child support obligations, or other applicable obligations also apply to refunds under 830 CMR 63.38HH.1. The credit is not transferable.
(b) Application of Credit Balance to Next Year’s Estimated Taxes. If the taxpayer chooses not to have the credit refunded, then the remaining credit balance will be treated as an overpayment and may be carried forward to the Employer’s next taxable year, as an estimated tax payment. Once this choice is made, the Credit cannot be later refunded or applied to any additional tax or excise owed by the Employer for the prior tax year, even if an amended return is filed.
(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 63.38HH.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 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 explained in 830 CMR 63.38HH.1(2) – (5).
(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.
WORKING DRAFT FOR PRACTITIONER COMMENT - 4/17/25
