Commonwealth Conversations: Revenue

DOR Catches Up on Backlog of Rhode Island Abatements

By reassigning staff and adding a Saturday shift, the Department of Revenue has been able to significantly reduce the overall backlog of abatements and anticipates that most Rhode Island claims will be processed by the end of November. We appreciate your patience and cooperation while waiting for your abatement claim to be processed.

 DOR received more than 44,000 associated claims as a result of a ruling released in March 2012 (Revised DOR Directive 12-1 ) that allowed Massachusetts residents working in Rhode Island to file a credit against their Massachusetts personal income tax for mandatory payments to Rhode Island according to that state’s Temporary Disability Insurance Act.

Since this influx of claims increased our normal annual volume by more than one-third, a backlog resulted and abatement processing was delayed.  Please note that many of the claims received were filed on paper and paper forms always take longer to process than electronically filed claims.

 Filing an abatement or amended return takes just a few minutes with our secure and easy to use WebFile for Income – using it means you can save time and get your refund quicker!

DOR Commissioner Announces Centerpiece of DOR360 Campaign to Engage Customers

  In an address to tax professionals attending the Massachusetts Taxpayers Foundation's annual tax conference, Revenue Commissioner Amy Pitter announced that she will appoint a 15 member Advisory Council to serve as a liaison between DOR and our varied stakeholder communities.

The purpose of the Advisory Council is to bring taxpayers, practitioners, community advocates and professional associations to the table who will have ideas, input and different perspectives on tax policies, practices and administration. Members will be allowed to propose any idea or topic that’s of broad interest to the group except any individual taxpayer matter. Examples of potential topics include audit practices, federal tax developments impacting Massachusetts, responses to court decisions or legislation, new and proposed business practices, guidance on recent or upcoming tax matters and the status of on-going DOR projects.

The Advisory Council is the centerpiece of the agency’s DOR360 campaign to improve communications with DOR customers and embolden citizen/business participation in shaping tax administration.  Learn More

 

BBJ Profiles New DOR Initiative to Settle Large Tax Disputes Quicker

 The centerpiece of DOR Commissioner Amy Pitter's DOR 360 campaign dominates the front page in the latest edition of the Boston Business Journal story detailing the agency's new Early Mediation Program -- a cheaper, quicker and more collaborative method for resolving tax disputes.

During the next two weeks, appeals officers who will work as impartial mediators, will be trained in mediation techniques. Auditors and litigators will be taught how to evaluate strengths and weaknesses of their cases which will help them negotiate the agency's position. The pilot program will be offered to taxpayers who have more than a $1 million in dispute and want to settle their cases.

The program is modeled after the IRS' "Fast Track Settlement" program which reduced the time it took to settle large corporate tax disputes from over 700 days  to 100 days through mediation.

 

FY13 Community Innovation Challenge Grant Application Submission Announced

Lt. Governor Timothy Murray at the 4th Annual Regionalization Conference in Worcester announced yesterday (Sept. 10) that the process of submitting applications for $4 million in Community Innovation Challenge grants will begin tomorrow with publication of the guidelines and application. "As a Commonwealth, it is in our shared interest to provide communities with tools and resources to implement or improve regional services," he said. "Governor Patrick and I are committed to working with cities and towns as well as our partners in the state legislature to increase local cooperation and make government at all levels more efficient and effective in the delivery of municipal services for our residents." During the first round of CIC grants awarded in 2012, some $4 million was awarded to 27 programs. The guidelines and application for FY13 CIC grants will be published in the website of the Executive Office for Administration and Finance on September 12.

Are You Leaving Money on the Table?

With the recent seizure of a restaurant on Cape Cod, how can Massachusetts cities and towns that adopted the local option meals tax be sure they are receiving all of their local option tax? The answer may surprise you. Each year, cities and towns require restaurants and businesses that pour and sell alcoholic beverages to renew their licenses. As part of that renewal process, cities and towns could require these types of businesses to supply a Certificate of Good Standing. This certificate is issued by the Massachusetts Department of Revenue at the request of any taxpayer. The process is a free electronic request by the taxpayer to the department. The certificate will make sure that the local business has filed and paid the taxes it is registered and responsible for with the Commonwealth. Before any city or town receives the local option meals tax raised for that community, the Commonwealth must receive the tax from the taxpayer. Make sure your community does not leave this revenue on the table, require your businesses to supply a certificate of Good Standing with its next renewal application. To find out further information or request a certificate, click here.

Actual Local Option Meals Tax Distributions  

Directive on tax treatment of RI Temporary Disability Insurance Act triggers wave of appeals

The Department of Revenue has received more than 30,000 abatement claims resulting from the issuance of revised DD 12-1, on March 15, 2012,: G.L. c.62, s.6(a) Credit for Taxes Paid to Another Jurisdiction: Insurance Fund Payments Made Pursuant to Rhode Island Law. This Directive ruled that mandatory payments made by a Massachusetts taxpayer to Rhode Island under the Rhode Island Temporary Disability Insurance Act should be afforded the credit against Massachusetts personal income tax as taxes paid to another jurisdiction. The Directive allowed Massachusetts taxpayers who have paid the RI Disability tax to claim a credit for tax year 2011, and for the three years previous. Now that the April 18 tax filing deadline has passed, those seeking the credit may file for tax years 2011, 2010 and 2009. The Directive triggered a huge volume of abatements, many of them filed in error. The most frequent of those errors is to calculate the credit incorrectly by claiming the amount paid to the Rhode Island fund as the amount of the requested abatement. This, however, is not a refundable credit. For instance, if your Massachusetts income tax for the period was zero there is no allowable credit for taxes paid to another jurisdiction. The allowable credit is the lesser of the Massachusetts income tax on the income reported to Rhode Island compared with the actual income tax paid to Rhode Island plus the RISDI. Based upon the significant number of abatements and the amount of time needed for our staff to recalculate the allowable credit for all applicable tax years, the length of time to process these abatements has significantly increased. To help address this backlog and time delay, DOR has reassigned staff to assist in working these abatement cases. The Department processes and completes abatement claims on a first in, first out basis. Based upon the high volume of claims received, our processing time is approximately six months. We appreciate your patience in this matter and apologize for any inconvenience this may cause.

Number of residents paying health insurance law penalty dropped in 2010; insured rate holds at 96 percent

The Massachusetts Connector Authority and the Department of Revenue have released the Tax Year 2010 report on the state's health insurance law.

The report shows there was near universal compliance with the requirement to report health insurance information on the Schedule HC.

It also showed a continued high rate of insurance coverage, with more than 96 percent of those filing Schedule HC insured at some point during 2010.

Overall, there were no significant departures from 2009.

One percent of filers who complied with the Schedule HC filing requirement (24,000 who were uninsured for the entire year and 20,000 with part-year insurance, for a total of 44,000 filers) were assessed a penalty in 2010 for failure to have health insurance coverage while being able to afford the coverage.

In 2009, 48,000 filers were assessed a penalty.

Washington Post writer Sara Kliff published today a good overview of the Massachusett health insurance law and how it has worked since enactment in 2006. 

State releases first Tax Credit Transparency Report identifying recipients of transferable and refundable tax credits

The Executive Office for Administration and Finance today released the first-ever Massachusetts Tax Credit Transparency Report compiled by the Department of Revenue based on reports received from the various state agencies that administer thirteen tax credits.

The reporting requirement was proposed by Gov. Deval Patrick and enacted by the Legislature in the FY11 budget. The report identifies receipients of the credits and the amount either received or awarded in calendar 2011.

"The Patrick-Murray Administration continues to build on its record of making government spending more transparent to the public with today's publication of the Tax Credit Report," said A&F Secretary Jay Gonzalez.

"This release, along with other transparency initiatives like the recent launch of 'Open Checkbook' on the state's website gives taxpayers access to information they need and deserve to understand how government funds are being spent and to hold those of us in government accountable for the management of their tax dollars," Gonzalez said.

The credits reported on are the Film Tax Credit, Historic Rehabilitation Tax Credit, Low-Income Housing Tax Credit, Brownfields Tax Credit, Medical Device Company Tax Credit, Dairy Farmer Tax Credit, Life Sciences Tax Incentive Program (with its Investment, Research, User Fee  and Jobs Tax Credits), Economic Development Incentive Program Credit, Certified Housing Development Tax Credit, and Conservation Land Tax Credit. 

A closer look at the issues involved in domicile

Generally, a state may tax the worldwide income of a person who is domiciled there. Although defined by statute or administrative rule in some states, domicile is a common-law term meaning a person’s fixed and permanent place of abode in which the person intends to remain indefinitely or to which the person intends to return.

Domicile differs from residency. Although a person may have multiple residences, a person can have only one domicile. A person may be considered a resident of the state in which he or she currently lives but still be considered domiciled in another state to which the person intends to return.

Once domicile is established in a particular state, it can be difficult to lose.

This reprint of an article that first appeared in The Practical Lawyer in May, 2012, begins by reviewing the key factors that courts and administrative agencies consider in determining domicile and whether the taxpayer has changed his or her domicile as well as the evidentiary standards applied.

The second section of the article examines other tests to determine residency (typically referred to as statutory residency but herein referred to as “residency”) and the definition of a permanent place of abode, residency issues that arise in particular situations, and recent residency cases.

The final section examines dual residency, tax credits available to taxpayers subject to income tax in more than one state, and state legislative efforts and multistate agreements to address double taxation.

DOR's views on domicile are found here. 

DLS offers new do-it-yourself Community Comparison spreadsheet that draws on Municipal Data Bank

The Division of Local Services has come up with a brand new tool that makes searching the Municipal Data Bank much quicker and more focused.

The new Community Comparison Report is up and running, drawing on 65 data elements currently found in the Municipal Data Bank.

The beauty of this application is that users can customize their search using a dozen search criteria.

Let's say you are interested in the average property tax paid in communities of between 5,000 and 10,000 people.

The Community Comparison Report almost instantly will deliver the data which you can then export into an Excel Spreadsheet.

The application is an easy-to-use means of extracting comparative municipal finance and demographic data for multiple communities, which eliminates the often frustrating exercise of opening numerous spreadsheets and sorting, cutting and pasting data from each into a single spreadsheet. 

The latest edition of City and Town has more information on the new application and why it will make data searching easier.