I am very pleased to let you know that the Legislature’s FY’12 state budget Conference Committee report, released last night, includes several important business tax reforms proposed by the Chamber.
These provisions, which are summarized below, have been developed with an eye toward strengthening the state’s business climate and enhancing fairness and predictability for taxpayers. The reforms will now advance to the full Legislature for approval as part of the budget and then to Governor Patrick for enactment in the coming days.
Summary of Business Tax Reforms
- 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.
- 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.
- 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 the tax policies and provide input before they are finalized.
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.
Once the budget is finalized, the Chamber’s Public Policy team will schedule and host a conference call for members in order to discuss these tax changes as well as other relevant policy issues contained in the budget.