Doc 2014-28510 (2 pgs)

by Neil Downing

A corporate tax amnesty proposed by Massachusetts House Minority Leader

Bradley Jones Jr. (R) would be limited to two months during the current fiscal year and
would extend to C corporations, S corporations, and limited liability companies, Jones
said December 2.
Jones on November 21 proposed a stand-alone tax amnesty for the corporate
income tax -- technically known under Mass. Gen. Laws chapter 63, section 39 as the
corporate excise -- as a way to raise revenue to help offset a looming budget deficit
for fiscal 2015. (Prior coverage .)
On December 2 Jones provided some additional details of the plan. For example,
he estimated that the amnesty would raise between $15 million and $20 million. It would
be made available to businesses organized as corporations, including C corporations,
S corporations, financial institutions, and LLCs, Jones said in a statement. The amnesty
would presumably be extended only to those LLCs treated as corporations for tax
purposes, not as passthrough entities. If an entity paid what it owed, penalties would
be waived, he said.
Associated Industries of Massachusetts (AIM), which represents about 4,500
employers, said it supports the plan. "[AIM] starts with the belief that all businesses
have the responsibility to pay their tax obligations in a timely manner. At the same time,
a corporate tax amnesty holds the promise of helping Massachusetts" close a budget
shortfall without reducing aid to cities and towns, said AIM's Christopher Geehern.
"The proposal by Minority Leader Jones is particularly interesting because it would
affect many types of businesses," Geehern said in a statement to Tax Analysts on
December 2.
Joyce Mohr of the Massachusetts Society of Enrolled Agents said she also would
favor a corporate tax amnesty, if the tax itself isn't forgiven. "Although many individuals
and businesses have recovered or are recovering from the terrible economic times in
the recent past, many have still been carrying tax and other debt," she said.
The amnesty would provide an opportunity for some corporations "to do as some
of the individuals and small businesses were able to do -- get a fresh start and be
caught up," Mohr said, referring to a separate limited amnesty for other tax types that
recently ended. The proposed amnesty would also give the state additional funds "to
avoid at least some painful cuts" in its budget, she said.

(C) Tax Analysts 2014. All rights reserved. Tax Analysts does not claim copyright in any public domain or third party content.

Massachusetts Lawmaker Says Proposed Amnesty Could Net Up to

$20 Million

Doc 2014-28510 (2 pgs)

In response, Jones said, "Cities and towns should be the last place state
government looks to cut costs." The corporate tax amnesty, if approved, would "not
only yield funds that may otherwise have been forgone, but also ensure that
municipalities around the Commonwealth will not be forced to unfairly bear the burden
of Governor Patrick's poor budgeting practices," he added.
Patrick attributed the deficit in part to a likely automatic reduction in the state's
broadest personal income tax rate starting in January 2015. He said the reduction in
the 5.2 percent rate, to 5.15 percent for tax year 2015 and later, will result in a $70
million drop in state revenue for fiscal 2015.
Patrick also said fees and reimbursements "are not achieving the levels forecast
in the budget" and that investments through recent economic development legislation
"were made with the expectation of even higher revenues than we have actually
experienced."
Jones's proposal would represent the second tax amnesty in the current fiscal
year. Massachusetts's recent limited two-month amnesty has raised $39 million from
49,000 participants, according to Department of Revenue figures released November
5. That amnesty, which ran through October 31, was limited to sales and use tax, the
meals tax, income withholding, passthrough entity withholding, and some other tax
types; the corporate excise was not included. (Prior coverage .)
The timing of Jones's proposal suggests that he will introduce a bill for consideration
in the coming legislative session, which begins in January 2015. It's unclear whether
Jones's proposed amnesty would be limited to the corporate excise or be broadened
to include trust fund taxes or other levies.

(C) Tax Analysts 2014. All rights reserved. Tax Analysts does not claim copyright in any public domain or third party content.

Jones's proposal came after Gov. Deval Patrick (D) on November 19 said
Massachusetts was facing a fiscal 2015 budget deficit of $329 million. In response,
Patrick proposed a round of budget cuts -- some of which would need legislative
approval -- including a reduction of about $26 million in state aid to cities and towns.
(Prior coverage .)