DOR released today the December revenue report and the story is all about income tax cash estimated payments, or the lack thereof.
December's collection of $1.969 billion was $87 million less than projected, due almost entirely to a $93 million shortfall in income tax cash estimated payments.
The December summary spreadsheet lays out the numbers. Whiles sales tax revenue was above benchmark and corporate/business tax below benchmark, they offset each other. But there was no offset for the shortfall in income tax cash estimated payments.
There is no certain explanation for the shortfall. These payments are frequently received in December so that taxpayers may use them as deductions on their federal 2011 tax returns. This year, there were two fewer December deposit days than a year ago, and the final deposit day fell on a holiday weekend, so some of these payments may be pushed into January.
Indeed, DOR has always cautioned that December and January need to be viewed as a whole when it comes to cash estimated payments.
Income tax cash estimated payments are made by taxpayers who have reason to believe they will owe tax on income earned from gains recorded on investments or dividends.
It is possible that some taxpayers who continued to make estimated payments in 2011 based on their gains in 2010 have now realized that they do not owe any additional tax, and thus they are not paying additional income tax cash estimated payments.
The Commonwealth received $192 million in such payments last month, which was $90 million less than December 2010 and $93 million less than forecast. On a year-to-date basis, however, income tax cash estimated payments of $686 million are just $33 million less than a year ago, down 4.6 percent, and $84 million less than forecast.
The flow has not stopped, but it has slowed down. "We should have a more complete picture on income tax cash estimated payments later this month," DOR Commissioner Amy Pitter said.
Overall, revenues of $9.847 billion for the first half of FY12 finished $252 million ahead of a year ago, an increase of 2.6 percent, and $49 million below the revised FY12 benchmark of $21.010 billion.
EITC – Helping Low and Moderate Income Families in MA posted on Jan 29
EITC, also known as the Earned Income Tax Credit, has been helping low to moderate income families in Massachusetts and across the country for over 40 years. In recent months, Governor Charlie Baker and members of the Legislature have worked hard to ensure that working …Continue Reading EITC – Helping Low and Moderate Income Families in MA
DOR Homepage gets a facelift posted on Jan 14
Today, DOR unveiled a brand new homepage intended to making it easier for taxpayers to find what they’re looking for when it comes to filing and paying their state taxes. DOR’s communications team used consumer insights and online analytics to better understand how taxpayers use the site, …Continue Reading DOR Homepage gets a facelift
Did You Know Home Heating Oil is Mass Sales Tax Exempt? posted on Jan 14
In preparation for the winter months, we want to remind you that home heating oil is exempt from Massachusetts sales tax. This winter season, DOR wants you to be prepared. Here’s what you need to know when purchasing your home heating oil: Who is exempt …Continue Reading Did You Know Home Heating Oil is Mass Sales Tax Exempt?