On July 11, 2011, Governor Deval Patrick signed the 2012 budget act, which postpones the Statement of Financial Accounting Standards 109 (FAS 109) deduction allowed certain corporations by a year, shortens the tax audit process, allows a deduction related to human organ donation, provides for recalculation of the dairy tax credit or trigger price in certain circumstances, and establishes a life sciences tax incentive program. It also provides certain sales tax exemption and revises certain administrative provisions.
Income tax. Life sciences tax incentive program: Effective as of January 1, 2009, a life sciences tax incentive program is established. The Life Sciences Center, in consultation with the Department of Revenue may authorize incentives not exceeding $25 million annually. Effective for tax years beginning on or after January 1, 2012, a taxpayer who commits to the creation of a minimum of 50 net new permanent full-time positions in Massachusetts is allowed, to the extent authorized by the life sciences tax incentive program, a refundable jobs credit against personal and corporate income taxes.
FAS 109 deduction: The implementation of the deduction allowed to limit the impact of combined reporting on the financial statements of some publicly traded corporation is delayed to 2013. The deduction was to be prorated over the 7-year period beginning with the combined group’s taxable year that begins 2012.
Organ donation related expenses: Effective for taxable years beginning on or after January 1, 2012, a resident individual who donates an organ to another person for human organ transplantation may claim a deduction in an amount equal to the travel expenses, lodging expenses and lost wages not to exceed $10,000 that the individual incurred in donating his or her organ. Human organ means all or part of human bone marrow, liver, pancreas, kidney, intestine or lung.
Daily farmer tax credit program: Effective July 1, 2011, the law requires that the regulations for the implementation, administration, and enforcement of the daily farmer tax credit program must provide that when the board of food and agriculture determines that an error has been made in calculating the trigger price or in reporting or collecting data used in the calculation of the trigger price or the tax credit, the Commissioner must recalculate said trigger price or tax credit.
Sales tax. Effective July 1, 2011, a sales tax exemption is provided for sales of physician-prescribed, medically necessary breast pumps.
Property tax. A person required to file a true list of taxable personal property may not be prevented from inspecting or receiving a copy of his or her submission.
Cigarette tax. Applicable to stamps purchased on or after January 1, 2012, a higher amount that a stamper may withhold as compensation in case of encrypted stamps purchased is provided. A stamper who has complied with cigarette tax law may withhold from each payment to be made by that stamper for such stamps as compensation the following amounts: (1) for encrypted stamps purchased and not returned for an abatement, $12 per roll of 1,200 stamps; and (2) in each fiscal year, $600 per roll of 30,000 encrypted stamps for the first 50 rolls purchased and $200 per each additional roll of 30,000 encrypted stamps purchased. Current law only provides for non-encrypted stamps purchases, which is $1.85 for each 600 stamps purchased.
Administrative provisions. Interests on deficiency assessments: Applicable to interest accruing on deficiency assessments where the audit resulting in the deficiency assessment commences after July 1, 2011, the tax audit cycle is shortened by reducing some interest penalties charged businesses if the Department takes more than 18 months to perform an audit provided the taxpayer meets certain conditions.
Abatement and assessment periods: Applicable to requests for refund or applications for abatement filed with the Commissioner on or after July 1, 2011, the statutes of limitations for assessment and abatements are revised. However, the change will not apply with respect to tax periods where the statute of limitations for refund or abatement, as applicable, had expired prior to July 1, 2011.
A request for a refund or credit of an overpayment of any tax where a required return has not been timely filed must be made by filing the overdue return within three years from the due date of the return, taking into account any extension of time for filing the return, or within two years of the date that the tax was paid, whichever is later. A request for a refund or credit of an overpayment of any tax where no return is required must be made by the taxpayer within two years from the time the tax was paid. A request for a refund or credit of an overpayment of tax where the required return was timely filed must be made within the period permitted for abatement for that return. Where a refund or credit results from an abatement, the amount of the refund or credit must be limited to the amount paid or deemed paid within three years of the date that the application for abatement is filed, taking into account any extension of time for filing the return. Previously, a request for a refund or credit of an overpayment of any tax where a required return has not been timely filed must be made by filing the overdue return within three years from the due date of the return, without regard to extension of time for filing the return, or within two years of the date that the tax was paid, whichever is later.
Any person aggrieved by the assessment of a tax, other than taxes assessed under the laws on taxation of legacies and successions or on taxation or transfers of certain estates, may apply in writing to the Commissioner for an abatement at any time within three years from the date of filing the return, within two years from the date the tax was assessed or deemed to be assessed or within one year from the date that the tax was paid, whichever is later.
