Tuesday, July 12, 2011

Chamber-Proposed Business Tax Reforms Included in FY’12 Budget

The FY’12 state budget, signed into law yesterday by Governor Patrick, includes several important business tax reforms proposed by the Chamber. These reforms (outlined below) were developed with an eye toward strengthening the state's business climate and enhancing fairness and predictability for taxpayers.

Summary of Business Tax Reforms
  1. Audit Cycle Length: Shorten the tax audit cycle by reducing certain interest penalties charged to businesses if the state takes more than 18 months to perform an audit - providing an incentive for the state to speed up the audit process which can be quite lengthy and costly for businesses.
  2. Statute of Limitation Parity: Establish the same statute of limitations for assessments and abatements - addressing an unfair rule that currently exists in which businesses have a shorter period in which to amend a return than the state does to assess a return.
  3. Tax Policy Development: Require the state to post quarterly online reports on tax policies before it takes any action on them - giving taxpayers an opportunity to review tax policies and provide input before they are finalized.
Administrative & Cultural Changes at DOR

In addition to these legislative reforms, the state Department of Revenue (DOR) has also agreed to take administrative actions that will create a more business-friendly environment in Massachusetts:

  • DOR has provided additional guidance about the circumstances where a penalty will be imposed for "substantial underpayment", and will provide additional guidance about situations in which penalties may be assessed.
  • DOR will provide direction to its audit staff, to review operations with a view to improving relations with taxpayers.
The Chamber applauds the Administration and the Legislature for enacting this package of reforms. Coupled with the Chamber-backed “3-in-3” investment incentive and net operating loss carry-forward innovation incentive tax proposals signed into law last year, these reforms are designed to improve Massachusetts' tax climate and strengthen its reputation among states as an attractive place to do business.

No comments:

Post a Comment