| 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 63.38KK.1: National Guard Hiring Tax Credit
(a) Statement of Purpose. 830 CMR 63.38KK.1 explains the general rules for calculating, and the tax ramifications of claiming, the Credit available pursuant to M.G.L. c. 62 § 6(aa) and M.G.L. c. 63 § 38KK. Regulations issued by MOBD setting forth criteria for authorizing and certifying the credit may be found at 400 CMR 7.00: National Guard Hiring Tax Credit. The provisions of 830 CMR 63.38KK.1 apply to Credits claimed for tax years beginning on or after January 1, 2023.
(b) Outline of Topics. 830 CMR 63.38KK.1 is organized as follows:
(1) Statement of Purpose, Outline of Topics;
(2) Definitions;
(3) General Rule;
(4) Obtaining the Credit;
(5) Excise Limitations on Use of Credit;
(6) Carry Over of Unused Credit;
(7) Special Rules Applicable to Pass-Through Entities;
(8) Recordkeeping.
For purposes of 830 CMR 63.38KK.1, the following terms have the following meanings:
Certification. The written certification issued by MOBD pursuant to 400 CMR 7.03: Certification of Eligibility certifying that a Qualified Employer is eligible to claim the Credit.
Commissioner. The Commissioner of Revenue, or the Commissioner’s duly authorized representative.
Credit. The national guard hiring tax credit authorized pursuant to M.G.L. c. 62 § 6(aa) or M.G.L. c. 63 § 38KK.
MOBD. The Massachusetts Office of Business Development.
Qualified Employee. A member of the Massachusetts national guard who meets the eligibility requirements in 400 CMR 7.00: National Guard Hiring Tax Credit.
Qualified Employer. An individual or entity subject to tax under either M.G.L. c. 62 or M.G.L. c. 63 that meets the eligibility requirements in 400 CMR 7.00: National Guard Hiring Tax Credit.
Pursuant to M.G.L. c. 62 § 6(aa) and c. 63 § 38KK, a Credit is allowed against the tax imposed under M.G.L. c. 62 or the excise imposed under M.G.L. c. 63, as applicable, to a Qualified Employer that has obtained Certification from MOBD. The Credit is equal to $2,000 for each Qualified Employee hired by a Qualified Employer. A Qualified Employer claiming this credit is eligible for a second Credit equal to $2,000 in the subsequent taxable year with respect to such Qualified Employee, subject to Certification of continued employment by the Qualified Employer to MOBD during the subsequent taxable year. The Credit may be claimed for tax years beginning on or after January 1, 2023. The Credit is not refundable and is not transferable.
To obtain the Credit a Qualified Employer must apply to MOBD and complete the process described in 400 CMR 7:03: Certification of Eligibility to receive a Certification. A Qualified Employer seeking to claim the Credit must do so on its tax return filed with the Commissioner. The Qualified Employer must include on its return the certificate number referenced in the Certification. The Credit shall be allowed to a Qualified Employer for the taxable year specified on the Certification issued by MOBD to such a Qualified Employer.
(a) Minimum Excise Limitation. If the Qualified Employer is a corporation, 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 to a corporation for a taxable year, the 50% limitation imposed by M.G.L. c. 63, § 32C does not apply.
A Qualified Employer that has claimed the Credit for a taxable year may carry over and apply against the Qualified Employer’s tax liability under M.G.L. c. 62 or M.G.L. c. 63 for any one or more of the subsequent three taxable years the portion, as reduced from year to year, of the Credit that exceeds the tax for the taxable year.
(a) Pass-Through Entities Not Taxed at Entity Level. In the case of a Qualified Employer that is not taxable at the entity level, such as a partnership, limited partnership, limited liability partnership, 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 63.38KK.1(3).
(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 further limited by 830 CMR 63.38KK.1(3).
(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.
A Qualified Employer must maintain records sufficiently accurate and complete to substantiate the validity of it taking the Credit as set forth in 830 CMR 62C.25.1: Record Retention. Unless the Commissioner consents in writing to an earlier timeframe, 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 timeframe is three years after the due date of the return or the date the return is actually filed, whichever occurs later.
Proposed Regulation – Public Hearing 2/25/25
Written comments may be emailed to RulesandRegs@dor.state.ma.us.
