Tax Article - Massachusetts Tax Legislation Changes
Recent amendments in Massachusetts Tax Legislation have been made regarding corporate excise (income) tax, personal income tax, sales and use tax, property tax, and other tax provisions to close tax loopholes and improve tax administration and collection. Among the highlights of the amendments are the following:
Massachusetts Corporate Excise (Income) Tax Changes
Allocation of income to Massachusetts: For income recognized on or after July 1, 2004, the portion of the taxable net income of a corporation or financial institution that a non-domiciliary state is prohibited from taxing under the U.S. Constitution is allocated in full to Massachusetts if the commercial domicile of the corporation or financial institution is in Massachusetts.
Apportionment sales factor: For corporations that license intangible property, the income-producing activity of a taxpayer is deemed to be performed in Massachusetts to the extent that the intangible property is used in Massachusetts.
Low-Income housing tax credit: The low-income housing credit against corporate excise (income) tax and personal income tax is amended to provide that upon application for state (formerly, federal) tax credits issued by the Department of Revenue, a taxpayer may elect to receive the state tax credit in the form of a loan generated by transferring the credit to the Department or its designee on terms specified by the Department in accordance with its qualified allocation plan.
Massachusetts Personal Income Tax Changes
Nonresident partners: Applicable to tax years beginning on or after January 1, 2005, a nonresident who is a member of a partnership that is engaged in the conduct of a trade or business in Massachusetts or that owns or leases real property in Massachusetts is subject to income tax on his or her distributive share of the income received or earned by the partnership from sources taxable by Massachusetts.
Estimated tax threshold: Applicable to tax years beginning on or after January 1, 2005, estimated tax payments are required if an individual can reasonably expect to have tax liability of more than $400 (formerly, $200) in a taxable year.
Commuting expenses: For income tax years beginning after January 1, 2004, but before January 1, 2005, amounts expended by an individual for tolls paid for through a FastLane account or for weekly or monthly transit commuter passes for MBTA transit or commuter rail may be deducted from Part B adjusted gross income in determining Part B taxable income. The deduction does not cover amounts reimbursed by an employer or otherwise. For a single person, a married person filing a separate return, or a head of household filing a separate return, the deduction applies only to the portion of such expenses that exceeds $150 and the total amount deducted may not exceed $750. For a married couple filing a joint return, the deduction applies only to the portion of such expenses by each individual that exceeds $150 and the total amount deducted may not exceed $750 for each individual.
Massachusetts Sales and Use Tax Changes
Delivery of items in Massachusetts: For purchases made on or after January 1, 2004, the definition of "sale at retail" is amended to add that when tangible personal property is physically delivered by an owner to the ultimate purchaser residing in or doing business in Massachusetts or to any person for redelivery to the purchaser, pursuant to a retail sale made by a vendor not engaged in business in Massachusetts the person making the delivery will be deemed the vendor of the property. In addition, the transaction will be deemed to be a retail sale in Massachusetts by such person, and the person, if engaged in business in Massachusetts will be required to include the retail selling price in its gross receipts, regardless of any contrary statutory or contractual terms concerning the passage of title or risk of loss applicable to any contract or other agreement for sale, transportation, shipment, or delivery.
Massachusetts Property Tax Changes
Property tax bill statement: Beginning in fiscal year 2006, a real estate tax bill must contain a statement of a delinquency for any tax, betterment assessment, water rate, annual sewer use, or other charge that may constitute a lien that is overdue more than 90 days.
List of state lands: The Blue Hills Reservation and certain properties in the Town of Stoneham are added to the list of state lands whose fair market value must be periodically determined by the Commissioner of Revenue.
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