SALT Cap Workaround
Governor Charlie Baker’s FY22 budget recommendation contains a SALT cap workaround effective until the expiration of the SALT cap. The new provisions adopt an entity level tax similar to the Connecticut provisions which have already been blessed by the IRS in Notice 2020-75.
Personal Income Tax Conformity to Federal Income Tax Loan Forgiveness for PPP
Based on recent discussions with the Ways & Means Deputy General Counsel and the Budget Director, it appears that there is hope for changes to Massachusetts law that will permit PPP loan forgiveness without the recognition of Massachusetts taxable income for personal income tax purposes. The cost of this provision could be as high as $.5 billion which may derail this measure. We should hear more in the near future.
A New Focus of MA Auditors
Massachusetts tax attorneys have reported an increasing audit focus on Brownfields credits. For those unfamiliar with these credits, this tax credit program offers eligible businesses and nonprofits a tax credit for the costs incurred in a Brownfields remediation project. The Massachusetts Department of Revenue has begun to question which costs incurred may generate a credit.
Contact your DGC client service team with any questions.
New Hampshire and the Supreme Court
On October 19, 2020, New Hampshire filed a Motion for Leave to File a Bill of Complaint at the U.S. Supreme Court arguing that the Massachusetts "convenience of the employer" regulation violates the Commerce and Due Process Clauses. That regulation sources and imposes a tax on income of nonresidents despite their working from home outside the state.
This regulation constitutes an extraterritorial reach by Massachusetts and the six other states with similar rules. Massachusetts' response argues a lack of standing and disagrees with New Hampshire on the merits of the constitutional claims. The U.S. Supreme Court has requested a “friend of the court” brief from the Acting Solicitor General of the United States indicating a likelihood that they will hear the case.
If you have questions about any of these topics, please reach out to a member of your DGC client service team or Scott Thomas, JD, LLM at 781-937-5172 / sthomas@dgccpa.com. You can also visit DGC's coronavirus web page at dgccpa.com/coronavirus which is frequently updated with new resources to help you deal with the financial impact of the coronavirus on you and your business.
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