Effective January 1, 2010, the corporate tax rate in Massachusetts will drop from 9.5 percent to 8.75 percent, while the financial institution tax rate will drop from 10.5 percent to 10 percent.
Those reductions, combined with the effective lowering of the tax rate for S corporations, will deliver about $56 million in tax savings to businesses in fiscal year 2010.
The reductions are scheduled to continue in tax years 2011 and 2012. The corporate rate is scheduled to go down to 8.25 percent in 2011 and 8 percent in 2012, while the financial institution tax rate is scheduled to drop to 9.5 percent in 2011 and 9 percent in 2012.
How, in the middle of a revenue downturn, is it possible to reduce business tax rates?
You may recall that Gov. Patrick and the Legislature created a tax code study commission in 2007. The commission's recommendations led to reforms in the corporate tax code signed in July 2008, most importantly, the introduction of combined reporting and so-called "check-the-box" reform. Combined reporting is designed to stop corporations from shifting taxable profits to low-tax or no-tax jurisdictions by requiring them to combine the reporting of profits from all locales and then to apportion a share of the total to Massachusetts. Check-the-box means corporations can no longer choose a tax status for Massachusetts that is different from the one they choose for the IRS.
But part of the new law was also a reduction in corporate tax rates. The argument was that while large, multi-state corporations could wind up pay more as a result of these reforms –even with a reduced tax rate — Massachusetts-based businesses would get a boost from lowering the rate. And that is about to happen. Some 35,000 or so Massachusetts-based businesses will see tax rate reductions.
Something worth celebrating at the start the New Year.
DOR’s Participation in the Family Court Workshops posted on Apr 22
Once a month, the Department of Revenue’s Child Support Enforcement (CSE) lawyers and staff volunteer to be a part of the Family Court Workshops for Mothers and Fathers at the Suffolk County Probate & Family Court in Boston. The workshops, a joint venture between community …Continue Reading DOR’s Participation in the Family Court Workshops
DOR Ruling Favorable in First Circuit Judgment posted on Mar 17
The United States Court of Appeals for the First Circuit issued judgments in the Department of Revenue’s (DOR) favor last month, finding that taxpayers in Bankruptcy proceedings cannot discharge late filed tax returns. The court consolidated two similar cases brought before them involving a total …Continue Reading DOR Ruling Favorable in First Circuit Judgment
Five Reasons to E-File with DOR’s WebFile for Income posted on Feb 24
With Tax season well under way; DOR would like to help you make the decision to E-File with WebFile for Income this year. We know, “I’m not computer savvy” or “What about the safety of my information” has been said many times before, but we’d …Continue Reading Five Reasons to E-File with DOR’s WebFile for Income